Contract management is way beyond authoring contracts and entering into a deal after having a win-win negotiation. Unified contract lifecycle management can positively impact supplier relationship management by ensuring that the contract terms are followed and that the supplier meets their obligations. By regularly monitoring suppliers' performance and enforcing the contract's terms, organizations can improve their relationships with suppliers and ensure they receive the value they are paying for. Furthermore, it can improve companies' bottom line by tracking obligations and reducing spend leakage. AI-enabled CLM solutions offer proactive vendor and contract risk management recommendations and compliance checklists which can help organizations mitigate risks and boost overall compliance. This can lead to better overall source-to-pay performance and outcomes for the organization.
Connected Contract Management Experience Across Source-to-Pay Processes
From scouting potential suppliers and onboarding them post-proper evaluation to signing best-negotiated contracts, ensuring contract obligations and SLAs have been met, and paying vendor invoices on time – this entire Source-to-Pay cycle can be enhanced much better to maximize outcomes across the organization by connecting data that comes out of each process. This connectivity can be achieved well by your robust CLM solution.
So, what is the hype about connected contract management experience? Various functions across the source-to-pay process in your organization can immensely benefit if your CLM solution is pre-integrated with your RFP Management, AP Automation, Supplier Management, and Obligation Management Solutions. This pre-integration solves the greatest challenge of data replication because a central system enables teams to look at the same data (without redundancy or duplication), which drives data-driven decisions.
How Connected contract management drives efficiency across Source-to-Pay Processes
Contract management can be a valuable tool for legal, sales, finance, sourcing, and procurement teams, as it involves tracking, negotiating, and executing contracts with vendors, partners, and customers.
1. Identifying Cost Savings Opportunities
CLM solution offers features like contract analytics that can help legal teams analyze data on contract terms and conditions. This analysis helps procurement teams identify areas where they can negotiate better pricing or more favorable terms. This could include AI-based insights on payment terms, missed discounts, discrepancies between contract terms and invoices, and other factors that may impact supplier performance. The same numbers and analysis can provide AP teams with insights into an organization's spending patterns, helping them identify opportunities for cost savings. Also, the pre-built workflows of contract management systems, automatic obligation assignments, SLA tracking and dashboards help realize the full value of the contract. This connectivity of contract management with other systems, such as procurement, legal, or finance, can help IT teams generate automated reports, saving time and improving efficiency.
How to strategically align IT & Procurement through a common platform? Watch Now.
2. Negotiating Favorable Terms
A CLM solution might include features such as automated contract renewal reminders, which can help organizations avoid costly contract expiration or auto-renewal. This can be particularly useful for organizations that have a large number of contracts, as it can help them stay on top of their obligations and avoid missing opportunities to negotiate better terms.
On the other hand, by analyzing data on the terms and conditions of contracts, vendor performance and compliance, volume discounts, and category discounts - legal teams can identify opportunities for negotiation and work with finance teams to achieve more favorable terms in future contracts. This can include information on industry benchmarks, past performance, and the company's negotiating position.
How to align legal and procurement functions to improve procurement contract negotiations on ServiceNow? Read More.
3. Enhancing Supplier Performance and Mitigating Risks
Supplier management and contract management are the two sides of the same coin. A contract lifecycle management (CLM) solution can help with vendor performance management by providing a centralized platform to manage contracts with vendors and track their performance. An AI-enabled CLM solution can seamlessly track supplier performance, including delivery times and quality of goods or services, helping accounts payable teams make informed decisions about which suppliers to continue working with.
By tracking data on the performance of vendors and partners, procurement teams can identify which ones are meeting their obligations and which ones may be falling short or need to improve. For example, the integration of the ServiceNow GRC platform with the CLM solution can provide proactive vendor and contract risk recommendations and ensure appropriate risk mitigation steps have been taken
This can help make informed decisions about which suppliers to work with in the future. Overall, it can streamline the process of managing contracts with your vendors, reducing the risk of errors, boosting their performance, improving overall efficiency, and strengthening vendor relationships.
Drive value creation and contract performance excellence through vendor management portals and effective obligation management. Watch Now.
4. Streamlining the Procurement Process
By tracking data related to the process cycle times, procurement teams can identify inefficiencies or bottlenecks in the procurement process and take steps to address them. A process compliance checklist can be assigned through automated workflow and can be monitored for completion to ensure organization-wide standard processes.
Procurement process checklist to find the perfect supplier(s) to satisfy those needs and negotiate favorable contract terms and pricing. Download Now.
5. Tracking Invoices and Payments Terms
When pre-integrated with your AP automation solution, the CLM solution can track the payment terms for each contract, helping accounts payable teams ensure that payments are made on time and avoiding late fees or penalties. The system can track invoices sent for processing and match them with the contract's terms and obligations to highlight discrepancies related to payment terms, PO and invoice mismatch, discounts and rebates, duplicate invoices, and other disputes. The invoice approval workflow ensures that non-compliant invoices are not processed, helping accounts payable teams ensure that all compliant invoices are received, matched, and processed in a timely manner to avoid late payment penalties.
How to close the gap between procurement and accounts payable? Read More.
6. Discovering and Fulfilling Obligations
Identifying hidden contractual obligations has always been a constant battle for contract management teams. An AI-enabled CLM solution can discover those hidden obligations and help meet them on time. For example, Aavenir Contractflow, the CLM solution on ServiceNow, extracts contract obligations with AI and matches and reconciles these with contract compliance requirements defined in the GRC workspace. On top of it, it creates various workflows to assign fulfillment tasks, notify the stakeholders wherever discrepancies or misses occur, and update the fulfillment status in GRC.
7. Enhancing Compliance
The CLM solution built on the ServiceNow platform offers the added advantage of leveraging pre-built GRC workflows. By enabling the evaluation and tracking of data from the clauses, terms, and conditions of contracts, legal and procurement teams can improve the process and contract compliance related to security, quality, regulatory requirements, and payments. It helps identify potential legal risks and take steps to mitigate them. And the same contractual data can help procurement teams ensure that their organization and suppliers comply with relevant laws, regulations, and policies. Parallelly, finance teams can use contract data insights to ensure that the company complies with its contracts' terms and conditions. Again, this can help avoid costly disputes and legal issues.
How can AI-enabled solutions auto-discover key contract obligations and fulfill them on time using a digital workflow to increase compliance, save time and reduce business risks? Watch Aavenir Obligationflow in action!
And the List of Connected Contract Management Experience isn’t Exhaustive!
The above-listed use cases are merely an example of what all magic a connected contract management experience can create. Various functions can work together without friction and boost overall organizational efficiency, resulting in impressive Source-to-Pay ROI. To practically learn more about it, register for this webinar wherein our contract management and Source-to-Pay experts will shed light on what connectivity across processes, data, AI-driven insights, and internal and external teams should be about and how to achieve the same.
Say goodbye to silos with connected contract management. Register Now
