4 Key Benefits of Contract Automation
Contracts run across your organisation, touching everything from customers to vendors to HR. When contract-related inefficiencies occur, margins get squeezed and reputations can suffer; balls dropped as a result of seemingly minor inefficiencies might even result in fines, risk and loss.
Companies that leverage contract management software avoid costly pitfalls. According to Forrester research commissioned by DocuSign, each year, agreement inefficiencies cause:
- 46% of organisations to delay valuable projects
- 45% to deliver poor customer experiences
- 42% to realise revenue delays
- 39% to incur unnecessary printing, mailing and faxing costs
All in all, the Global Contract Management Association (IACCM) estimates that ineffective contract processes cause businesses to lose on average of 9.2% in revenue.
Here are the four key benefits of contract automation.
Faster time to revenue
A delayed sales contract represents delayed revenue. By automating contract workflows (and eliminating manual tasks), you can cut contract processing from weeks to minutes—and realise revenue rapidly.
Overcomplicated processes can even lead to a worst-case scenario: abandonment. According to DocuSign’s commissioned research by Forrester, 32% of organisations report reduced completion rates and abandoned deals as a consequence of inefficient agreement processes.
Simply put: contract management software facilitates revenue. It’s easier and faster to prepare contracts, agree on terms and execute when all parties can access a contract from anywhere, on nearly any device.
Your legal teams are more productive; your sales teams are freed up to prospect, upsell and cross-sell; and no one is tied up for hours doing yesterday’s work of printing out marked up copies—or faxing.
Improved contract value
When you hear the phrase “improving value,” you probably think of ways to increase sales, manufacturing or marketing productivity. But do you consider the value you can drive from your contracts?
Contract management software can eliminate lapses in renewals; call attention to upcoming expiration dates; and create uniformity in pricing, terms and performance specifications. This results in more value from every contract your teams execute.
When contracts fail to provide adequate safety nets, companies are left with contract leakage. Over time, the lost value (the difference between an agreements potential and realised values) impact profitability. Instead of X revenue, you settle for Y: a lower figure. For instance, are the discounts deeper than your sales team intended? Are specifications accurately priced? And clearly delineated? Did your customer insert costly penalties for not meeting these? Conversely, are you billing your customer for additional services being provided?
A 2017 survey of businesses found that the average annual cost of compliance was around $5.5 million, while the average cost of noncompliance was almost three times higher, at $14.8 million. By creating templates and standard clauses, contract management software offers the double bonus of saving your legal team time and preventing compliance errors. Templates tailored to specific regulations can be used across counter-parties, including customers, vendors and hires.
Along with accruing fines, companies who fall out of compliance risk experiencing delays, cancellations, damaged reputations and reduced investor confidence. In the world of contract renewals, a major risk is compliance. Have regulatory or other changes been instituted in order for you to be in compliance? For example, do your vendors need to comply with new sustainability measures, and are these explicitly laid out in your contract? Contract lifecycle management can alert you to required changes, avoiding expensive fines and penalties.
In weighing the cost and benefits, it’s clear that you need everything in your power to contractually support your compliance efforts. The money you save all around—both in avoided costs and increased productivity from your legal team—points to automated contract workflows.
Better customer experience
According to a 2018 Salesforce survey, 80% of customers say the experience a company provides is as important as its products and services.
Many companies invest heavily in their sales teams and processes, only to find their efforts undone at the contract stage. Automated contracts quickly and effortlessly push customers past the finish line. (Because who wants to be bogged down with printing, signing, scanning, faxing or mailing when every other aspect of their professional and personal life is digitised?)
A positive experience at initial signing pays huge dividends later on, in contract renewals, up-selling and cross-selling. According to Qualtrics XM Institute’s “ROI of Customer Experience 2020” report, a positive customer experience is likely to coincide with future purchase considerations.
Unlock contract value, realise benefits
Contracts are ubiquitous throughout your organisation—and so are the benefits you can accrue through contract automation. From faster transactions to better customer experiences, from improved contract value to greater compliance, contract management software has the power to save money, increase revenue and strengthen relationships.