A professional contract management strategy is all about reducing costs, ensuring control and removing staff dependency. But what separates haphazard management from a deliberate strategy that strengthens your company's overall financial management?
Here are 10 steps to take you from basic contract overview to advanced control. We'll look at how to go from simple filing routines to an integral part of your business management systems.
Person dependency occurs when there is a lack of central control. In practice, this means that agreements are stored in personal inboxes, in folders on a local server or as physical documents in a drawer. Often there is an overview, but usually in a spreadsheet that only one person understands and maintains. When employees leave, the overview often disappears, while the obligations continue as before. This creates a blind spot in the accounts that no company can afford.
Contractual obligations make up a significant part of a company's costs and are fundamental to accurate budgeting. Without a complete overview of commitment periods and expiration dates, it is challenging to give management and the board of directors accurate answers to what the actual costs will be in the coming year. Equally important is the control of which expenses continue to run, or which obligations can be terminated if operating conditions change.
By linking contract data directly to specialized budgeting and forecasting tools, you can significantly increase the precision of your financial projections. This integrated way of working saves many weeks of manual work and ensures a reliable basis for decision-making. As a result, accurate documentation and reporting are only a few keystrokes away – a peace of mind that frees up time for other tasks.
For companies that follow the IFRS standard, IFRS 16 sets strict requirements for how leases should be handled, estimated and reported. This requires full control of start dates, extension options and discount rates. These details quickly become confusing in manual spreadsheets.
Using a dedicated contract management solution automates these calculations. This not only gives you peace of mind that your reporting is correct, but also makes your company more attractive for investors and auditors.
ESG is no longer optional; it is a global legal mandate. Modern transparency laws require companies to provide verifiable due diligence on human rights and labor conditions throughout their entire supply chain.
Manually tracking this data is high-risk and inefficient. By digitizing supplier management, you shift the documentation burden directly to your partners. This automation ensures full traceability, simplifies reporting, and protects your business from the sanctions and reputational hits of the modern transparent market.
Notification well in advance of contract expiry is crucial to avoid unwanted automatic renewal. Good notification gives room for maneuver to renegotiate prices and terms, rather than being locked into existing terms. In order to ensure compliance, the contract manager should receive multiple trackable notifications so that no critical deadlines are overlooked.
Contracts with subcontractors are often entered into by employees who have a here-and-now need for a service or license. This is particularly true of contracts where the individual costs appear small. However, when these purchases are added up across the entire business, they add up to significant amounts. Significant savings can be achieved by establishing an overview of the company's total contract portfolio.
A real-time overview of agreements with both customers and suppliers is essential for keeping track of the status of your business. Modern dashboard solutions make this information easily accessible with ready-made KPIs. By linking these tools directly to the company's ERP and CRM systems, you get a seamless flow of data without the need for extensive consultancy.
Manually entering contract data, such as future costs, expiration dates and contact information, is both time-consuming and increases the risk of errors. Today, it's possible to automate this process using technology that reads PDF documents and other file formats directly.
Automating the capture of key information ensures that important contract details are recorded faster and with significantly higher precision than with manual work. This frees up valuable time and provides a much safer data basis for further follow-up.
Manual processes involving printing, signing and scanning are both time-consuming and outdated. Today, an all-digital workflow is expected, and digital signatures have become a standard that ensures both professionalism and efficiency. With digital solutions, there is never any doubt about who has signed and when.
By integrating digital signatures directly into contract management, the entire process becomes seamless. The tool is also very useful for other purposes, such as signing board documents or formal confirmations from employees.
User-friendly systems should be intuitive and largely self-explanatory, without the need for extensive training. However, should questions arise, good self-help tools should be readily available for quick clarification.
Sometimes, however, direct assistance or input on new functionality is needed. In such cases, it's crucial to have access to personalized customer support that speaks your language and understands your needs. A dedicated supporter who takes suggestions to their own developers ensures that the solution is continuously improved in line with users' wishes.
Contract management is an integral part of your company's core processes, where technology, systems and people need to work together. The safest choice is to invest in software that supports your business objectives both today and in the future.