The Risks Of Not Using Source-To-Pay Software
CONTRACT MANAGEMENT SERVICE
The pitfalls of not using source-to-pay software to manage contracts can have serious repercussions. Simply put, the lack of an automated system to manage contracts impedes overall financial performance, impacts the ability to adhere to legal requirements and maximizes risk to the organization.
Financial Performance. Without an automated system, Contracts Managers are charged with the responsibility of manually managing the entire life cycle of contract. This includes negotiating, drafting, completing, executing and tracking all contractual documents. This is heavily labor-intensive process and leads to errors, delays and inefficiencies. This inefficient process can lead to overpayments due to non-compliant discounts or correct pricing, costly invoice processing time and lost payables.
Legal Obligations. Companies must abide by applicable legal requirements when executing contracts. Unclear language, omissions and discrepancies may lead to contract not being legally valid or enforceable. Furthermore, organizations may lack insight into the variations of contracts that are in circulation. In any case, manual contract management makes it difficult to adhere to legal requirements and organizations can find themselves exposed to significant risks by not having an automated system in place.
Organizational Risk. Manual contract management is prone to human error. The process allows very few signs of alerts to identify potential risks and issues before it is too late. Potential risks such as security breaches, compliance failures, non-compliance with regulatory rules, inadequate monitoring of contracts and untimely renewals of contracts can all be avoided by investing in an advanced automated system for contract management.
To summarize, using source-to-pay software is an essential step in effectively managing contracts. It provides scalability and cost efficiency, with tools to assist in the management of contracts from initiation to completion. In addition, secure data and digital archiving ensures that an organizations contracts are secure and organized for reference. Automated contracting means fewer mistakes, fewer risks and improved compliance which translates to increased organizational performance and success.
