Tripped Up By the Fine Print: Why Better Contract Management Should Be a Cost-Reduction Strategy

By: Judy Tucker, business consultant, Blueridge Software, Inc.

With 3/4 or more of business relationships today governed by contracts, the booby traps hidden in the fine print can threaten the health of your organization.

Overlooking an automatic renewal date on an unfavorable contract can multiply your costs over a period of years.

Lack of a timely review, a missed escalation clause, or failure to give required notice of a price increase simply because of an unnoticed deadline can have an immediate negative impact on your bottom line.

Let’s face it: doing the deal gets a lot more attention than managing the signed agreement. Once a contract is inked it all too often disappears into a filing cabinet, or onto a spreadsheet that can’t begin to do a decent job of tracking.

Improving the management of its contracts became a top priority for one technology company when it discovered that it had just signed an excellent multi-year agreement for telecommunications services. Unfortunately, their existing contract for the same services still had more than a year to run. The overlap cost them more than $100,000.

The true boogeyman, of course, is the potential of costly litigation.

Fortunately, the fix for this problem is relatively easy. Technology comes to the rescue.

Any number of software developers have turned their attention to the issue and come up with applications designed specifically for contract management.

With relatively little effort, you can find dedicated software packages that are affordable, simple to implement, and easy to use.

The business case is compelling. The measurable benefits are clear. ROI is favorable, payback speedy.

You may even find that reducing this risk has an unexpected upside. One small city in the southwest recovered $70,000 in overpayments for expired contracts in the first six months after implementing a contract management system and an additional $200,000 in the next fiscal year.

If you’re currently in the market for a contract management software solution, consider Contract Assistant™. With Contract Assistant, users in organizations of all sizes can manage their contracts and negotiated agreements with confidence by quickly accessing information, generating reports, receiving automatic reminders of critical dates, and more. Contract Assistant is available in single-user Standard Edition, multi-user PRO Edition, and powerful, SQL-based Enterprise Edition.

A Milestone Shiny as Tin: 10 Years in Business

This month, Blueridge Software celebrates the 10-year anniversary of Contract Assistant – the leading contract management software for organizations of any size and budget!

Ten years of stable growth, product releases, and customer support is a proud milestone. And it’s something our customers can also appreciate, considering Contract Assistant is the business tool they use to help manage the contracts and documents that govern the operations of their organizations.

Many software companies tend to present themselves today as software-as-a-service (SaaS), offering their services on a subscription basis via the web. However, hidden implications and risks of choosing such a vendor must be carefully explored and evaluated.

A few months ago, our industry reported the hasty closure of Mumboe, a SaaS contract management company. It gave clients just two weeks to access and download all of their stored data before shutting down its site and web-based service for good in November 2011. Such a rapid fold was a tough enough situation for its customers, let alone them having to begin yet another search and implementation of a replacement contract management software.

This situation again presents the argument for whether to trust your critical documents to a SaaS company or traditional software. SaaS companies store your information and records on their system. And in the event of a service failure or company shuttering, you may or may not get those records back; and if you do, they may not necessarily be in a viable file format for you to use. Granted, the anytime/anywhere access and instant software updates have a certain appeal, but keep in mind the drawbacks of vulnerability to internet service interruptions and application closures.

When you purchase and own the software outright, your critical contracts and other legal documents remain on your system and under your full control. Access to your data and to the program is indefinite, regardless of the selling company’s future state, your internet service connection, or whatever else. With virtualization options available, you can setup anytime/anywhere access to the program across the devices and access points you use to run your business. Plus, you can rest assured that with your information stored on your network, your security serves as the best protection.

If you’re currently in the market for a contract management software solution, consider Contract Assistant™. With Contract Assistant, users in organizations of all sizes can manage their contracts and negotiated agreements with confidence by quickly accessing information, generating reports, receiving automatic reminders of critical dates, and more. Contract Assistant is available in single-user Standard Edition, multi-user PRO Edition, and powerful, SQL-based Enterprise Edition.

What’s Popular About Contract Management Software

Contract Management Software

We started Contract Assistant Connection – our blog focused on contract management software – 18 months ago. It’s now filled with articles about best practices to manage contracts, tips on selecting the best contract management software for your organization, and news and updates about our own solution.

Let’s take a moment to reflect on what has been said here so far, specifically: what drives readers to this blog? And what posts are the most popular? Here are the answers in a digest recapping the high points over the past year and a half.

Top Three Most Popular Posts

1. News Flash: Introducing Contract Assistant PRO Edition 3.7!
2. Key Benefits of Contact Administration
3. 8 Steps to Choosing a Contract Management Solution

It’s not much of a surprise that readers are interested most in Contract Assistant, the benefits of properly managing contracts, and ideas about criteria to identify and select the right solution.

Why? Because businesses today have more contracts than ever — and those contracts are increasingly complex! Add to that situation an ever-increasing pressure to drive costs lower and the result is longer-term agreements with suppliers of all types. But organizations need to be aware and vigilant before, during, and after signing those and any other contracts. A sure-fire tool to help is a contract management system to protect them from the costs and risks of less than optimally managing the stacks of agreements.

Instead of overstretching employees who are responsible for administering contracts and increasing the chances for human error, implement contract management software to help those employees more carefully manage the documents governing organizations. The best solutions help to manage all types of contracts and negotiated agreements by providing quick access to important information, sending automatic reminders of critical dates, generating useful reports, and more.

Top Topic Drivers

1. Contract management and software benefits
2. Contract and document retention practices
3. Contract management use cases

Considering the list of risks associated with no or poor contract management, is it any wonder why readers are exploring the benefits, best practices, and case studies? What business doesn’t want to reduce and avoid: “lost” contract information; unwanted auto-renewals; unnecessary expense resulting from duplication or overlap of contracted services; missed critical milestones; potential liability due to inadvertent breach; and voiding of contracts due to neglect or inaccurate administration?

For more information about document retention policies, see these prior posts. And here is a quick case study of how Texas A&M-Corpus Christi solved their contract management issues with Contract Assistant. It’s all in their spotlight profile in NACUBO’s Business Officer magazine!

If you’re currently in the market for a contract management software solution, consider Contract Assistant™. With Contract Assistant, users in organizations of all sizes can manage their contracts and negotiated agreements with confidence by quickly accessing information, generating reports, receiving automatic reminders of critical dates, and more. Contract Assistant is available in single-user Standard Edition, multi-user PRO Edition, and powerful, SQL-based Enterprise Edition.

Contract Management Software Keeps You from Overpaying

One of the most valuable advantages to implementing contract management software is the discovery of contracts for duplicative services and worse, outright overpayments. Continuing unnoticed, these errors can rob your organization of thousands of dollars and accelerate the road to fiscal distress.

Multiplying contracts that grow in complexity is a very familiar situation – and each of those contracts creates rights and imposes obligations for each party. The moral of the story here is contract compliance – but how are you supposed to keep track of all the different obligations across all the varied documents and agreements that help structure your business operations?

As mentioned in the most recent post in the Apex Expert Blog, “How to prevent millions from slipping through the cracks”, compliance can’t keep up with the numerous contracts because many companies have yet to setup a central contract repository. Well, at least one that’s more up-to-date than that dusty file cabinet in the back of the office.

There are plenty of stories and real-world examples out there of companies who have overpaid shocking dollar amounts all because there wasn’t a system in place to align contract terms with purchase orders and invoices. (The Apex Expert Blog post contains a few.) But here’s a testament to the upside of reducing such business risk: one small city recovered $70,000 in overpayments for expired contracts in the first six months after implementing contract management software, and an additional $200,000 in the next fiscal year.

A business case like that is compelling. Young businesses and start-ups should implement contract management software as an important part of building their infrastructure. More mature firms should take this same step to reduce existing risks and enable them to proactively manage their negotiated agreements. Who wouldn’t prefer the peace of mind of knowing the status of each contract in their organization rather than the harrowing day-to-day wonder when a missed milestone will cost them a significant sum of dollars?

A contract management software solution can not only store all your agreements digitally, but also enable CFOs, executives, and other administrators to realize a host of bottom-line benefits:

• Keeping all contracts current by attaching relevant documents and notes to the electronic contract file
• Launch automated emails and alerts for actions needed during and prior to the end of a contract term
• Meet contract deadlines, improving customer service to your vendors and internal stakeholders
• Review contract statuses well in advance, to research and prepare for renegotiation
• Maintain flexibility to cancel a contract in the required timeframe to avoid incurring penalty charges or increased escalation costs

If you’re currently in the market for a contract management software solution, consider Contract Assistant™. With Contract Assistant, users in organizations of all sizes can manage their contracts and negotiated agreements with confidence by quickly accessing information, generating reports, receiving automatic reminders of critical dates, and more. Contract Assistant is available in single-user Standard Edition, multi-user PRO Edition, and powerful, SQL-based Enterprise Edition.

New Year’s Considerations for Contract Management Software

 Admittedly, contract management software isn’t a topic that gets a lot of play on search engines and social media. But there are still articles broadcast on the Internet worth taking a read through. Consider one from Law.com published a few months ago: Contract Management Software Helps Lawyers Gain the Upper Hand, written by John Edwards.

Under the heading of Law Technology News, Edwards builds the case for why attorneys need to be using a contract management software (CMS) system. He also fairly points out the advantages and disadvantages of using such systems, including thoughtful views from practicing lawyers about their experiences.

Some notable considerations from the post include:

• “The myriad of benefits, such as return on investment, compliance, standardization of terms, contract life-cycle management, and system visibility, outweigh the perceived hurdles.” 

  The tasks of searching, evaluating, identifying, and implementing a contract management solution can feel daunting and overwhelming. But the end benefits justify the means! Plus, a quick web search will bring up tips and best practices for the selection process, including this list of eight steps. 

• Not all CMS products are suitable for law offices and legal departments. Many offerings are targeted at sales, marketing, human resources, and various other types of business users. 

  While this is true, many systems – including Contract Assistant – include the functions valuable for attorneys and corporate counsel departments. Read on for more information specific to these use cases and how other departments within an organization can also expect to benefitfrom contact management software. 

• CMS products can be delivered as a web-based service or traditional office server-based software. Most web-based CMS applications are sold on a subscription basis, offer anytime/anywhere access and include instant software updates. A drawback is the fact that web-based apps are highly vulnerable to internet service interruptions. 

  Keep in mind, we’re discussing critical contracts and other legal documents – these need to stay in the most secure location possible. Choosing a vendor delivering a web-based contract management system presents its own category of risk. The prime example: Mumboe shut down its SaaS application at the end of November and warned customers they had just two weeks to retrieve all of their stored data and documents. While a sizable trend in software is a move to the cloud, perhaps some categories are still safest delivered on-premise?

For the New Year, one of the best resolutions you can make for your organization is to get your contracts and obligations in order. Not only are you going to be more organized and prepared, but you also will increase your compliance and reduce your risk – all things necessary whether or not you are in the legal field.

If you’re currently in the market for a contract management software solution, consider Contract Assistant™. With Contract Assistant, users in organizations of all sizes can manage their contracts and negotiated agreements with confidence by quickly accessing information, generating reports, receiving automatic reminders of critical dates, and more. Contract Assistant is available in single-user Standard Edition, multi-user PRO Edition, and powerful, SQL-based Enterprise Edition.

It’s Q4: Do You Know Where Your Contracts Are?

With Halloween at its end, October is the month for frights and scares. If you’re wondering how this theme might play into a blog focused on contract management software, just stop the ferocious pace we naturally work at these days and take a look at your calendar. What’s scary about that? If you’re like many busy professionals and business leaders, the very fact it’s already weeks into the fourth quarter of 2011 is sure to make many hearts skip a beat.

End-of-year preparations entail a slew of different tasks depending on your organization’s industry and which department your job responsibilities fall in. But undoubtedly, the vast majority of us are now reflecting on the previous nine months and amassing lessons learned into a focused strategy of shaping future plans for 2012. A smart review of your contract management system—or the plan to select and implement one—can be integral to helping you successfully wrap up this year and kick off next year on the right foot.

Consolidate Duplicative Services

It’s not rare for a company to implement a contract management software system and then begin discovering they are paying on several contracts with same or similar services. To stop that bleed of financial resources, look for an overlap of contracts you can consolidate.

A best practice to identify these opportunities is to categorize and tag contracts with customizable user-defined fields. Then, search and report on a specific category and begin to assess any patterns or trends of unnecessary coverage, overpayment, etc.

Example: maybe you opted to purchase extended warranty coverage for new computer equipment your organization purchased earlier in the year. However, the contract you signed with an external IT services provider already encompasses ongoing service and support of the same equipment. Which contract offers more services for a lower cost?

Prepare to Renegotiate Current Contracts & Agreements

If you’ve input critical dates into your system, a quick search will bring up the list of current contracts that need to be renewed—and therefore renegotiated—in the coming period. And if you are diligent in keeping track of related notes or events pertaining to each contract, you’ll benefit by building your case over time and reduce any last-minute scrambling for supporting information.

Perhaps you can reduce your cash outlay by negotiating a reduced subscription pricing plan or monthly fee schedule. Or, even maintain the current pricing structure, but enhance the arrangement by picking up an added service or benefit at no additional cost.

Example: think about your personal car insurance rates. At times of policy renewal, many insurance companies are open to renegotiating rates with profitable, long-time customers, especially when presented with quotes from competitor insurers! And if a price reduction isn’t feasible, maybe the addition of complimentary roadside assistance will suffice.

Dates to Beware

And while on the topic of highlighting critical dates in your system, pay extra attention to note any re-enroll dates that automatically take effect. You want to maintain the flexibility to proactively decide whether to continue your contractual obligations or avoid being trapped in another period of forced payments with a vendor you no longer want to engage with.

Your contract management system should support reminder alerts to keep you informed of these and other important dates that can have far-reaching implications for your business. Just one miss of a brief period to opt out of an automatic contract renewal can be frustratingly expensive over months or even years.

Example: mobile phone service providers are notorious for exploiting this tactic. Surely you know someone who didn’t take action after waiting months or more for their service contract to expire, only to be looped back in for another two years. Ask them about the personal ramifications of that mistake and then amplify it to a magnitude relative to the scale of your business. Ouch.

More Treats, Less Tricks

As you approach the final two months of 2011, your contract management software can help you: catch duplicated contractual obligations, prepare for renegotiations, and deftly maneuver around tricky automatic renewals. Considering the significance that contracts play in your everyday business governance, taking time to review the state of your agreements can reduce any unforeseen scares and make this a season to enjoy.

 

If you’re currently in the market for a contract management software solution, consider Contract Assistant™. With Contract Assistant, users in organizations of all sizes can manage their contracts and negotiated agreements with confidence by quickly accessing information, generating reports, receiving automatic reminders of critical dates, and more. Contract Assistant is available in single-user Standard Edition, multi-user PRO Edition, and powerful, SQL-based Enterprise Edition.

Avoiding the Crisis Trap: Figuring Out What’s Important vs. What’s Urgent

By: Judy Tucker, business consultant, Blueridge Software, Inc.

Image: renjith krishnan / FreeDigitalPhotos.net

I had the luck to be caught up in the early days of the PC industry. Knowing nothing about computers, I stumbled into a fledging software company and soon found myself climbing what passed for a corporate ladder.

Those were heady times, as the power of computing moved from huge machines kept behind locked doors to small boxes sitting on the desks of ordinary people.

The growth rate of our young company was insane. As events piled on top of one another, time became our most precious resource. We didn’t have to go looking for the future; it slammed into us.

Contract Management for Corporate Counsel

Sura Nualpradid / FreeDigitalPhotos.net

All too often, attorneys working in a law department of a corporation need to serve in job roles and functions other than just that of a lawyer. Human resources, financial resources and technological resources of a corporation are now always under constant scrutiny – forcing practitioners to search, validate and implement solutions that boost productivity and increase compliance while reducing liabilities and business risk.

Technology is a sought-after category to accomplish more with less, and this is where attorneys act as tech experts. First they must investigate software and other tools applicable to the specialized functions of their department, then partner with Finance to determine potential return on investment and gain purchase approval, and finally work with Information Technology to deploy the solutions. At this point, the external technological resources must become integral in the internal corporate counsel processes in order to maximize the potential benefits of the technological investment.

Key Benefits of Contract Administration

In previous posts, we’ve talked about how contracts are an important part of administering your business operations and how contract management software is a leading tool to help you stay organized, up-to-date, and maintain quick and easy access to your most important documents.

If you stop for a moment and really think about the significant influence contracts exert on your business, you cannot dispute the importance of accurately managing them through their entire lifecycle. Maybe that’s why you are investigating – or have even already purchased – contract management software. But implementing such a solution isn’t just about importing contracts to have electronic copies and then maybe setting a few alarms to remind you of key dates. To proactively reduce risk and business liability, and maximize operational efficiency and profitability, you need to practice effective contract administration – the ongoing governance of each contract.

How Are You Maintaining Your Document Retention Policy? (And Do You Have One?)

If you were asked about how well you adhere to your business’s document retention policy, how would you answer? Could you even answer? Do you know what your document retention policy is – or if one even exists in your organization? A full-functioning contract management software system can help you answer those and related questions quickly and easily.

Depending on your industry, document and record retention can be vital – if not regulated and required – for you to actively participate. From the Sarbanes-Oaxley Act to the Health Insurance Portability and Accountability Act (HIPAA) and Fair and Accurate Credit Transactions Act (FACTA) to other government policies, document management and retention has become an all-too-important task for CIOs and other business executives.