Calculating ROI is a very daunting task. However, a range of variables come into play, and every factor changes depending on the investment’s nature and the type of project it benefits. For Contract Management Software, the ROI is calculated by looking at whether the company’s overall profitability has increased since the platform was implemented, rather than focusing on a single area and identifying specific gains. It’s difficult to calculate the ROI of your Contract Management Software without first thoroughly understanding the platform’s overall contribution to your company.
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There is always a need to tighten control over contract collection when your business implements Contract Management Software. This means that a high degree of automation is also being used to increase profitability across your organization by increasing the efficiency of processes. As a result, it’s easy to assume that the only criterion we should use to evaluate the return on investment of Contract Management Software is overall business efficiency. Contract Management Software is designed to help your business achieve a balance between the two regarding efficiency and profitability. This means that any comprehensive ROI analysis must go through these layers of detail to get a correct overview.
Let’s dive in!
Time Spent on Audits
It is crucial that businesses conduct regular audits. This is because they play a vital role in compliance processes and enhance data security and employee accountability. It takes plenty of administrative work to conduct audits because they demand proof of activity and adherence to policies and procedures. Lack of it means a massive waste of time and resources since the audits will be conducted manually instead. In the area of audit trials, Contract Management Software includes a high degree of automation. That’s because a good Return on Investment Contract Management Software package cuts down on the time it takes to complete audit-related tasks.
The Amount of Time Invested in Obligation Management
A company’s contractual obligations are managed through a collection of processes known as obligation management. Usually, managing obligations should take less time if an organization is effective and works efficiently. Businesses, for example, should be able to meet all of their obligations – milestones, deliverables, and renewal deadlines, without creating any workflow bottlenecks anywhere in the organization.
Increase in Sales
Better Contract Management results in more sales through shortening the cycle of sales. As long as a contract is being negotiated, drafted, and signed but has not yet been implemented, your teams will be unable to make the next sale until the contract lifecycle has been completed. A more efficient contract lifecycle means more sales and less time spent on administrative tasks. Additionally, when a company’s sales increase due to using Contract Management Software, the platform generates a high return on investment.
Internal Compliance
Compliance does not revolve around audit trails only. The audit trails are used to demonstrate compliance. Internal compliance refers to both a company’s adherence to company policy and procedure and the degree to which the business is meeting its contractual obligations. An increased level of internal compliance will be evident in audits when Contract Management Software is performing well and generating a high return on investment.
Creation of New Opportunities
The goal of Contract Management Software’s reporting and data analysis features is to help you discover new business opportunities that might otherwise go unnoticed during the ordinary course of business. This is made possible by a flexible and powerful filtration system that turns your centralized contract collection into a single, searchable database. Afterward, this resource is processed to produce valuable data that aids your company’s decision-making. You’ll discover new connections, information, and ideas that can help you expand your business in new directions, and you’ll learn about previously unknown intellectual property. Therefore, an increase in the number of new opportunities of this nature shows that Contract Management Software has generated a high return on investment.
Lowering the costs of contract disputes
This risk management strategy involves taking a proactive approach to the task at hand to increase the efficiency of Contract Management processes. As a result of taking a proactive approach, there is a higher likelihood of conflict prevention rather than resolution. When your company is proactive, it can avoid costly legal disputes by identifying potential areas of disputes before they arise. Due to its risk management focus, Contract Management Software significantly lowers the cost of contract disputes when used in conjunction with a high return on investment (ROI).
Time Taken on Missed Renewals
It’s a sign of inefficiency when a company’s Contract Management processes are constantly falling behind. Missed contract renewal dates are a sign of poor Contract Management, which results in poor performance and wasted resources for the contracts involved. Furthermore, a proactive approach to contract management can be created by implementing Contract Management Software if missed renewal times have been cut.
Conclusion
Contract Management Software is a significant financial commitment for any company. A software package can be a substantial financial outlay for companies with small contract collections. Moreover, the implementation of Contract Management Software can represent a significant financial and human resource investment for large corporations with thousands of contracts. Not forgetting that Contract Management Software ROI needs to be calculated in both cases to ensure that your company receives maximum benefit from the implementation.
