According to research compiled by PwC, most organizations maintain 20,000 to 40,000 contracts—with such a high-volume, mistakes and bottlenecks are bound to occur. The goal of any organization is to preemptively identify those risks and mitigate them before they happen.
Implementing an annual contract management audit process can help you ensure that your organization:
- Remains compliant across all contracts
- Identifies revenue leaks
- Knows where and when to shorten (or extend) sales cycle times
- Retains strong, consistent customer relationships
Where to Begin-
You can avoid the risks that come with a poor contract management process by implementing a quarterly audit. Most organizations believe there are somewhere between seven to nine stages of the contract lifecycle. While stages for your organization may slightly differ, to navigate this audit, we suggest you consider the contract management lifecycle in the following eight areas:
Storage, Generation, Negotiation, Execution, Reporting, Compliance, Review, and Optimization.
For this example, we will identify questions you should address with your staff on a quarterly basis to ensure that your contract management process is running as smoothly as possible. Here we go :-
1. Storage: Can our contracts be easily accessed by staff who need them in an online repository?
2. Generation: Are we maintaining up-to-date templates for recurring contracts/contract types? What additional templates should we create for new types of contracts that have been appearing more frequently?
3. Negotiation: What is the chain of command for contract negotiation? Has any staff left the organization or changed departments and left a hole in the process?
4. Execution: Where do we house relevant documents related to each contract? If the data in these documents is not machine-readable, how can we make that switch?
5. Reporting: What issues has the last quarter seen in internal and external reporting? Could these reports be automated? Do new reports need to be created/old reports updated to meet new needs or standards?
6.Compliance: In the past quarter, what contract compliance issues have come up? Have we failed to comply with any performance or payment related obligation?
7.Review: What contracts are we maintaining that are no longer useful in our organization?
8.Optimization: What new systems can we implement to avoid the issues identified during this audit?
To know more about how our state of art audit software can help you achieve your best practices in audits click here