In regards to legal work, 68% of companies say that human error affects their contract processes very often. In fact, poor contract management costs companies up to 9% of their bottom line! Read on if you are keen to know how you could turn your contracts into your competitive advantage.
Contracts are often directly connected to either a financial gain or loss for a company, but in many cases, contracts are actually not used for the purposes that they should be used for; the problem being that most businesses tend to perceive the contract as primarily a legal document, rather than an economic vehicle. Time to change the thinking!
Just imagine the size of the missed opportunity, as up to 80% of all business transactions are actually governed by contracts in one form or another, highlighting the importance of being able to determine the value of legal documents.
How to possibly stay up-to-date on the vast amount of contractual data?
Medium to large companies maintain an average of 30’000 contracts at any one time, raising the question of how it is possible for them to stay updated on the content of the huge number of contracts they manage.
Recent surveys have shown that over 80% of the data flowing through organizations is unstructured, meaning that data is saved on private servers in a non-standardised way. This makes it incredibly hard to retrieve, share and find information within documents. It also leads to the risk of companies missing important deadlines that are entailed within the documents as there is no proper system that manages and reminds of key dates. As a matter of fact, 52% of companies are not even aware of the termination date of their contracts!
This leads to a good example to showcase the impact of poor contract management; the auto-renewal of contracts. If there is no management system to keep dates or send reminders about auto-renewals, the information can easily get lost between the lines. Consequently, a contract will renew without notice, which can quickly lead to unnecessary costs of several € 100’000 for a company.