Around 80% of business between companies is based on legally binding contracts. Most of these contain clauses and terms and conditions that must be managed to give the maximum return and to minimise costs and risks. However, many companies have no active management process for their contracts. Instead the contract is stored on the file server or in the filing cabinet in different departments where nobody sees them again before a problem occurs or the contract's validity period has already expired.
It is no longer sufficient to produce a contract signature on the request of an auditor. Organisations will increasingly need to provide evidence that they have control over the whole contract process. This includes both drawing up, archiving and management, if companies are to fulfil requirements contained in directives such as US SOX or EuroSox.
The business case for contract management
An effective solution for contract management helps to steer the two central areas in each organisation - revenues and spending. The solution also provides great benefit in terms of complying with laws, regulations and standards, and minimising risks.
Solutions for contract management also make it possible for an organisation to proactively manage all of its contracts. In addition, an organisation that uses a contract management solution obtains a deeper and more contextual understanding of the commitments and opportunities each contract implies.
The five foundation stones of contract management
There are five key components in contract management:
- Automation of contract creation.
- Secure negotiation.
- Electronic contract archiving.
- Integration with the back office.
- Proactive reports and alert functions.
Contract management affects purchasing departments that manage large parts of the cost base in a company, sales teams who draw up customer contracts, internal legal personnel who manage contract templates, the personnel team and the CEO and other managers who often approve and sign contracts.
Example of application areas:
- Customer contracts
- Supplier contracts
- Partner contracts
- Employment contracts
- Salary agreements
- Secrecy agreements
How does CANEA solve contract management?
CANEA ONE is a fully integrated program family which includes solutions for managing business information such as goals, projects, documents, processes, cases and other data.
The CANEA Document module is designed to support contract management through the whole contract life cycle:
- Create new contracts quickly and simply.
- Permission-controlled access to contracts.
- Clear overview and structure.
- Templates for terms and conditions and clauses.
- Automatic alert function when contracts are due for renewal.
- Contract archive.
Read more about CANEA Document here.