As a Chief Finance Officer, you’re responsible for ensuring the financial health of your organization. One key aspect of this is effectively managing contracts, which have a significant impact on your organization’s bottom line. Did you know that the average cost of poorly managed contracts is about 9.2% of an organization’s annual revenue?
This is where contract lifecycle management (CLM) software comes in. Some benefits include:
- Cost savings: By using CLM software, CFOs can identify opportunities for cost savings, like negotiating better terms with suppliers or identifying unnecessary contracts. CLM software can track spending by category, supplier, or contract, and identify areas where the organization is overspending.
- Improved budgeting and forecasting: CLM software can provide real-time visibility into contract performance and analytics, allowing CFOs to budget and forecast future financial performance more effectively. CLM software allows you to forecast future financial performance based on past contract performance.
- Better cash flow management: This software allows for effective management of cash flow by providing visibility into when payments are due and automating the invoice and payment process. When an invoice is generated in the accounting software, it can automatically be linked to the corresponding contract in the CLM platform and the payment status can be updated in real-time.
- Better financial reporting: CLM platforms can easily generate financial reports by providing real-time visibility into contract performance, spend, and supplier payments. You’re able to see a bigger overview of the organization’s financial performance.
- Reduced risks: You can reduce the risk of financial losses through CLM platforms by ensuring contracts are compliant with relevant laws and regulations, and by identifying and mitigating potential contract-related risks. CLM platforms can automatically flag contracts that are approaching expiration or are not in compliance.
But Contract Lifecycle Management software isn’t the only solution.
CFOs can get more insights by integrating the CLM software with other tools or software like accounting software, enterprise resource planning (ERP) software, business intelligence (BI) and data analytics software, and electronic signature software. By integrating CLM with these tools, you’re able to gain valuable insights and improve the overall financial management of the organization.
Not only does this integration allow for better cash flow management (like mentioned in point #2 above), it also allows the CFO to get a better understanding of the financial performance of the contracts. You can see how much revenue a specific contract is generating, how much is spent on a particular vendor or supplier, and any unpaid outstanding balances.
Enterprise Resource Planning (ERP) Software
Integrations with ERP software allows for easier management and tracking of the entire contract lifecycle, from creation to renewal. When a new contract is created in the CLM, the relevant information can be automatically populated in the ERP system and the contract’s performance can be tracked in real-time.
CFO can also get real-time visibility of the contract spend, which can be used to identify cost savings opportunities and manage the organization’s resources more effectively.
This integration can also help ensure compliance with relevant laws and regulations by automatically flagging contracts that are approaching expiration or aren’t compliant.
Supply Chain Management Software
Supply chain management software is critical in ensuring suppliers, vendors, and/or service providers are meeting your needs. Integration of CLM software with your supply chain management software allows you to manage your relationships more effectively with vendors, etc.
As an example, when a new contract is created in the CLM platform, the relevant information can be automatically populated in the supply chain management software, allowing the contract’s performance can be tracked in real-time.
This integration can also identify your best-performing suppliers and negotiate better terms. You’re also able to track suppliers’ performance and ensure timely delivery of the goods and services.
Data visualization is also available within CLM platforms. You can use data visualization tools to represent contract-related analytics and visualize different trends in the data including:
- Contract Performance: Identify contracts that have consistently lower profit margins than others or declining revenue with certain contracts over time.
- Spend: Track spend proportions and notice if there’s a disproportionate amount of spend on a certain category/service or increasing spend with specific suppliers.
- Compliance: Record contract compliance of specific organizations and manage contract expirations that lack renewals.
- Supplier Performance: Consider and see supplier performance over time to make better decisions of which suppliers to continue partnerships with.
- Renewal: Note the frequency of renewals with various contracts.
- Overall Financial Performance: Visualize which departments have larger expenses and notice if organizational revenue has declined over time due to poor contracts.
By visualizing these patterns and trends, CFOs can gain a better understanding of the financial performance of the organization and take actions to improve performance, reduce costs, and mitigate risks.
Beyond CLM to Contract Intelligence
Any organization can purchase a contract lifecycle management system, but is that platform intelligent? Does it allow for integrations and data visualization tools that allow various members of the organization to understand how hundreds (if not thousands) of contracts affect company performance?
When selecting a CLM tool, it’s important to think about the long-term needs of your organization, especially when it comes to growth, scalability, and agility. And you’ll want an organization to seamlessly integrate your new platform across your organization – and an organization to guide you through the years.
There are tons of software to choose from, but the Icertis Contract Intelligence Platform is a unified, digital, and intelligent system of record for every contract across the enterprise. It allows you to transform contracts into structured, connected, and on-demand data but goes beyond to include contract creation, automation, and insights.
CloudMoyo has more than a decade in the technology industry and we’re a preferred Icertis partner. Well-versed in the ICI platform, we empower companies in their digital transformation journeys with contract management across buy-side, sell-side, and corporate contracts. CloudMoyo’s Center of Excellence services works with customers end-to-end during their ICI implementations, providing support even beyond implementation to accelerate customers’ contract intelligence.
It’s time to reduce contract costs and prepare your organization for the future! Contract intelligence makes that easy.
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