May 25 by Steve Feyer
Under a pile on a desk. On a USB stick forgotten in a filing cabinet. Buried in an inbox with 100,000 other emails. Is this where your contracts are? Do you really know?
There are many places where contracts can get lost inside a company. Here at Apttus, many of the companies approaching us first realize they need a contract management solution when they run across some of these forgotten files.
Buy-side supplier contracts are especially easy to lose. They might not be considered as important as sell-side contracts, which create revenue, and suffer from a corresponding lack of process. Supplier contracts might be disregarded as soon as a supplier invoice is paid. Companies build sales teams before they build procurement teams, giving a boost to sell-side contract management earlier in a company’s growth.
But companies need to make sure their supplier contracts are accurate, complete and accessible to those who need them. Without this attention, critical information will be lost leading to business risk.
Five Reasons Companies Need to Manage Supplier Contracts
Consider these five common ways in which companies fail to manage supplier contracts and contract terms.
1. Intranet: Contracts and contract drafts are placed on company networks, often disorganized, and often embedded in ways that make them impossible to search.
2. Hard Drives: Individual employees store contracts on local drives, where they are inaccessible to others and get totally lost if there is turnover.
3. Verbal: Contract terms are agreed verbally and can be forgotten or ignored.
4. Ticketing systems: Formal workflow systems can transmit instructions, but do not capture the service level agreements (SLA) important to the individual contract.
5. Devices: Increasingly, important terms are stranded on corporate and personal devices when shared via text, voicemail, or an app.
Despite their best intentions, an employee acting alone is very likely to lose important supplier contract information in one of these places. The risk and potential cost to the company rises with every new agreement.
Do you know where all your supplier contracts are? If you can’t answer yes, then your company may be leaking revenue, overspending, and exposing itself to unnecessary risk. Fortunately, a contract management solution can solve these issues beginning with a single, searchable repository for all buy-side contracts.
Learn about the full lifecycle for supplier contracts with The Ultimate Guide to Contract Management.