This week, research analyst firm Forrester, released a report stating that demand for Contract Lifecycle Management solutions is steadily increasing. It makes perfect sense: all businesses use contracts, and contracts govern over 80% of your business. More importantly, they play a critical role in eliminating risk and cost from your customer engagements.
CLM solutions are a critical tool in helping firms “create, manage, and achieve maximum value from your contracts.” In particular, they can drastically reduce revenue leakage – the dollars and cents that slip through the cracks when contracts aren’t as tight as they should be.
Here is a look at 5 ways an effective SaaS-based contract management solution reduces revenue leakage:
1. Implement Increase Clauses
Many contracts have automatic price increase clauses – typically about 2% to 5% for cost of living adjustments – that are often forgotten when it’s time for renewal. Having a renewal process that automates this functionality can easily add several percentage points to renewal value with little (re: no) effort.
2. Automate Renewals
Despite sales teams’ best intentions, sometimes contracts expire because of a simple lack of attention. This could be caused by territory realignment, different distributors or just a high volume of contracts. Don’t be that department that loses track of an important deal: automating the renewal process, with defined escalations, can help ensure no renewal is forgotten.
3. Prevent Deal Slippage
Most companies experience a deluge of sales contracts that are submitted for approval at the very end of the quarter. This often results in a large backlog of deals receiving only cursory reviews, or having some deals slip to the next quarter. Intelligent contract self-service, standard legal templates and automated workflows all ensure that a fast yet thorough review process is applied to every contract.
4. Eliminate Invoice Errors
It’s critical to send accurate invoices, so your company gets paid what it deserves. However, industry analysts estimate that manual entry of sales contract data into ERP systems results in about 3% of contracts having inaccurate prices, incorrect quantities or missing products. Three percent can make a break your revenue goals in a heartbeat. Integrating contract data with ERP can reduce contract and invoice mismatches that impact revenue.
5. Prevent Unearned Discounts
Many sales contracts offer discounts if customers can meet certain volume commitments, payment timeframes or other guidelines. However, Aberdeen estimates that lack of visibility into this data can result in 10% lower revenue because discounts are granted even though customers.
Keep these tips in mind, liberally apply both common-sense and a CLM solution to your business practices, and you’ll save yourself a huge amount of hassle and headache down the line.
For more information on the capabilities of CLM, download the Forrester report. If you are attending Dreamforce thsi month, RSVP for the Dreamforce session “Let’s Make a Deal! Extend Your E-Signature Solution to Close Better Deals Faster,” where Forrester will join the stage with Apttus and Salesforce.