Contracts are vital to almost any organization or company. Any agreement becomes valid and legal with that piece of paper. It contains every relevant bit of information that will ensure that everyone holds their end of the deal.
While the horror stories of the fine print are frequently mentioned, a well-made contract can protect both parties when deals go sour. It outlines the expectations, obligations, prices, and deadlines, among many other things that are often contested when people start to shift the blame.
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Contracts And Day To Day Business
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Contracts do not only appear when things get out of hand. They have daily purpose use since these agreements are what push the business forward. However, a contract can only be enforced when you have access to the agreement itself.
Many companies use outdated methods for storing and managing their paperwork. Fragmented data affects the current partnership. How can you enforce details that are not readily available? How can you renew partnerships without a reference for the details that you would like to improve?
The absence of that document can make it difficult to proceed without incurring some loss. Filing and retrieving contracts alone is a logistical nightmare that could delay negotiations and decisions.
When your business does not have easy access to their contract, it can lead to nowhere good. Poor awareness of obligations missed renewals, and wasted human resources become an everyday norm. Mistakes like unnecessary duplications, poor supplier performance, and non-compliance can slip past your attention and lead to more losses.
That is why companies need to have a repository. Learn more about contract repositories and how it can help your business create more efficient transactions below.
Defining “Contract Repository”
source:contractworks.com
The definition is in the name. A contract repository is a location in which contracts are stored and managed. This location varies and changes depending on the maturity of a particular business. Some companies opt for a traditional setup while others go for digital solutions. Regardless of what system you have, it allows the company to have all its deals in one place, thus allowing them to store, track, and manage contracts easily.
Types Of Contract Repositories
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Whether you are aware of it or not, every company has its own type of repository. An extremely outdated, but the most widespread way of keeping contracts is in the office with large filing cabinets that house the company archives.
Its popularity mostly stems from how often people use them. While the early fears of going digital were about viruses and accidental erasures, we now know that just because there is a physical copy does not exempt it from being destroyed or altered. A poorly managed filing system can also be exploited.
The current approach is to digitize your contracts. As your business moves forward with digitalization, one software you shouldn’t ignore is a Contract Management Software (CMS). Contractnow offers businesses a centralized repository, which means they will get to store, view, track, and manage their deals all in one place.
By using CMS, a company can prevent the fragmentation of data and take existing contracts out of their siloed storage. This step will then help companies make informed and accurate decisions regarding any future agreement. Which ultimately decreases points for exploitation.
Benefits of Contract Repositories
source:contractworks.com
The points above outline the benefits of contract repositories. The entire list can be condensed into one point: access to information. If you do not have the right information, it can lead to poor decision making, which leads to bad business. Everything else is an effect of having that power. Let’s see the real-world application of those features in your business:
More Data For Renewals
CMS takes out essential information and presents you with that data. When dealing with vendors with an expiring contract, it’s crucial that you have all the data. Did they meet all the agreed-upon KPIs? Were there any problems that occurred during the deal? Is it worth it to renew their contract or not? With this tool, you get to determine the ROI of specific transactions.
Minimizing Human Error
Instead of reading someone’s reports or working with other second-hand information, you can get a clear timeline and history with your CMS. More than giving you a centralized repository, a CMS can also help minimize human error and lessen the administrative burden of the responsible parties. Your employees can work with the same kind of information at any given time.
It can also help businesses organize and employ methods to reduce your expenses, evenly distribute their cash flow, and identify which relationships they will need to manage more effectively. Instead of working with estimates for inventory, you can get better numbers and avoid excessive orders. Getting only what you need allows you to have more space in your storage for other things. The small amount you save every month can build up and save your company more money in the long run.
source:pxfuel.com
Mitigating Non-Compliance
Lastly, a central repository from a CMS may be able to give a company the oversight of crucial information to help reduce the risk of non-compliance. It will enable them to take note of important dates and set reminders for suppliers, as well as point out any issues or non-compliances that may occur. Non-compliance issues typically happen with long-term partners. Whether it is a once in a while slip or strategic way to cheat your business, you have to know when these things happen.
In Summary
That is why every company must have a contract repository that works well for their needs. Whether it is a measly filing cabinet or the most sophisticated software, what’s important is that they can help create strong, long-lasting relationships with their vendors or suppliers.
You need to make sure that your agreements are efficiently managed and monitored. Your contracts are a vital part of that process. Even when your business moved past certain agreements, every failed partnership can also be a learning point. With a little bit of trial and error, you can lead your business to new heights.
