Of all the teams in a business, the procurement team is often the one using contract management software the most. Contract management in procurement is critical, because the contracts that procurement teams manage are often the foundation of the company.
If you’ve ever been in a procurement role, then you know how important it is to have control over your contracts — and how difficult it can be to achieve.
Why is contract management so important for procurement?
Procurement teams are responsible for managing the contracts that businesses have to vendors, suppliers, and contractors. These contracts are the foundation of business relationships, and they’re legally binding agreements that must be managed with care.
Procurement teams are in charge of the product and service providers in a company, and they must ensure that the vendors are meeting the terms of their contracts. Procurement teams are also responsible for managing the budgets that companies have to vendors.
If a vendor is not meeting the terms of their contracts, then it’s up to the procurement team to take action. This action could include cancelling the contract, modifying the terms of the contract, or negotiating a different contract with the vendor.
How can good contract management help procurement teams?
Procurement teams can benefit from good contract management in a number of ways:
- Helps procurement teams save time. When contracts are managed well, it’s easier for teams to stay on top of all of their contracts and manage them effectively. Good contract management also means that it’s easier to track changes in contracts over time.
- Helps procurement teams save money. If you have a contract with a vendor that isn’t meeting the terms, then you can save a lot of money by cancelling that contract and finding a new vendor.
- Increases consistency. Contract management software makes it possible for procurement teams to manage contracts in a consistent way across the business. When you’re managing contracts for a business, it’s important that you’re able to track all of the information related to those contracts. This includes things like the date the contract was signed, the terms of the contract, and any changes to those terms.
- Eliminates manual processes. If you’re manually tracking contracts, then it’s easy to make mistakes and errors. With contract management software, you can eliminate that risk.
- Allows procurement teams to make better business decisions. If you can easily track contracts and the changes that are made to them, then it’s easier to make decisions about those contracts.
- Streamlines purchasing. Contract management software is used by procurement teams to help them manage the process of purchasing products and services from vendors, speeding it up and shortening the purchasing cycle.
- Reduces the chance of disputes (and speeds up dispute resolution). If you have a good contract management system in place you can avoid disputes with your vendors, which can help you avoid costly legal battles.
You can read more about the essential elements of a procurement contract in a superb article by the SIPMM Institute here.
What you should look for in contract management software for your procurement team
When choosing a contract management system for your procurement team, you should look for:
- Contract management software that can be used by your entire team. If you have multiple users, you should be sure that it can be used by everyone in your team.
- Contract management software that’s easy to use and integrate with your existing systems. If you’re already using other software for procurement, you should be sure that it integrates with your other systems.
- Contract management software that’s compatible with your existing business processes. If you already have a way of doing things, then you should find software that works with your existing business processes.
- Contract management software that’s easy to learn. If your team isn’t familiar with contract management, then you should look for software that’s easy to learn.
- Contract management software that’s secure. If you store sensitive information in your contracts, then you should find software that keeps this information safe.
- Contract management software that allows you to easily track metadata such as deadlines.
- Contract management software that offers a comprehensive view of your contracts. If you’re managing a lot of contracts, then you should look for software that gives you a complete view of all of the vendor agreements you have in place.
Top Contract Management Solutions for Modern Procurement Teams
If you’re looking for contract management software for your procurement team and your company has fewer than 100 employees, then it’s worth your time to take a look at our list of the best contract management software options for smaller business. You’ll find it here.