3 Reasons Why Medium-Sized Businesses Need Contract Management
Contracts are essential for large companies. It is a part of the normal business protocol. Even if employees do not understand how essential contra
Contracts are essential for large companies. It is a part of the normal business protocol. Even if employees do not understand how essential contracts are, they are usually aware of the existence of contracts.
In those businesses, there is likely a certain protocol in place for how to handle contracts. There is also likely a certain person or certain people that are designated within the relevant department that sign the contracts. There are also procedures that are used to handle the signed contract after it has been returned from the other party and signed by their authorized person.
The Medium-Sized Business and Contracts
More than likely there are conventions in place for medium-sized companies as well. However, as we funnel down to small business or single-person (sole proprietorship) businesses, the likelihood goes up that there is a lack of conventions that are used for the management of contracts.
While small businesses and sole-proprietorships may be able to survive without having systems in place to manage contracts, medium-sized companies actually need to have a process around this. And, with more and more creative methodologies in place and creative contracting of freelancers (outsourcing) happening, there is much more need for consistent practices around contract management.
Enter Contract Management
Simply put, contract management is a specific system that is put in place to create and maintain a contract.
As we mentioned, above, there is a need for this contract management, particularly for medium-sized businesses. There are three key reasons why this is crucial.
Reason 1: Rely on the Management Rather Than Memory
The first reason is to use contract management is so that you don’t have to rely on your memory to recall key details of contracts. While this can be done for freelancers or sole proprietorships, a medium-size business has many moving parts, including the management of the company, and requires a better processing system.
When a medium-size business is growing, it likely will have a dozen contracts or more. It is not possible to keep all the information from these contracts in your memory. Furthermore, there may be certain stipulations or details that you are not able to recall, which can prove to be key in certain scenarios.
Even if you are able to do so, do you really want to base the profit of your medium-sized business on all the factors that could go wrong with a reliance on memory?
Reason 2: Easy Access to Contracts (Efficiency)
Even if you do have contracts and a basic contract management process of filing them, you will also need a process to retrieve them. A physical file cabinet may be work for a small amount of contracts, but not for a medium-sized business that needs a digital filing system and has multiple employees involved in any given contract.
By developing some sort of centralized, digital storage of contracts, you allow for easy access. The key is to define the contract management policies (how the contracts are filed) and then ensure that employees understand it. The importance of understanding is that employees will be able to electronically file the contracts and other employees will be able to retrieve the contracts when needed.
By setting up your centralized, digital storage, you will find that the process of handling your contracts is that much more efficient. With this efficiency comes other benefits, such as less time lost, less confusion and increased productivity. Those types of benefits definitely help a medium-sized company, but can also benefit any sized company.
Hey, if we are automating our social media campaigns, for improved efficiency in our medium-sized companies, why not automate our contract management?
Reason 3: Future Enhancement of Contract Strategy
Let’s say you pull up your financial reports and you notice that this time last year you made 25% more profit than this month. Maybe, you decide that something needs to be done to encourage additional contracts and additional income.
Granted, I’m sure there are systems in place for how you go about this. You could continue with the status quo and attempt to close more deals, convert more leads, and whatever it takes to increase your profit.
But, what if you decide that you need a creative approach? Maybe you and your team have decided that you want to offer a creative sale deal.
The specifics of creating these types of sales deals go beyond the scope of this article. However, since we are talking about contracts, these specialized types of contracts should be included in this discussion.
With a special service deal, you may need to develop a new contract that goes with that special service deal. You will want to include the definition of the included services. You will also want to include the definition of the scope of the included services. That would include the length of time and other additional factors. All of this would accompany the contract. You can likely find another contract that is similar and copy it and modify it to meet the standards of the special deal.
With all of this going on and all of the marketing that is required to get the job done, you really need a way to make it easier for you and your team. This is where contract management comes in.
By being able to access a digital version of all contracts, it is easier for you to access a copy of a contract that is the most similar to your special offer. You are then able to copy it and create a new contract while copying over all the original information that is needed for any contract within your organization. You have saved time and you are on your way to making money!
Whether you choose to use a contract management system or not, as a medium-sized company, that is your choice (of course!). But, there are some really good reasons why it may be a benefit to your company. It can even be a benefit to an online content marketing company. One of the easiest ways to sum it up is that the benefits typically include efficiency improvements. As a result, profit increases and your organization will be on its way to being able to generate more sales at a faster rate.