Managing contracts on paper, no matter what type of business you’re running, is time consuming and riddled with potential for making errors. It this type of paper management that can lead to clerical errors, possibly resulting in contract noncompliance.
For this reason, many companies upgrade to cloud-based contract management systems. Using a cloud-based system helps reduce these clerical errors and can help you improve compliance in a few of these common areas.
Duplicate, Overpaid, or Missed Invoices
Contracts and agreements, especially with vendors and suppliers, contain provisions for compensation, to be agreed upon and paid. A common error is when payments are duplicated or are overpaid. Duplicated, overpaid, or simply altogether missed payments are much more likely to happen when you’re managing your contracts by hand. Your team has to remember when a payment is due, search through and find the exact amount that was to be sent, make sure that the invoice matches the agreement that was signed, pay the vendor, and then remember that the payment was sent. It can be a huge hassle to make vendor payments by hand.
With an online system, however, none of that is necessary. The software will alert you when payments are due and when deliveries are due to arrive, all from the same system. Important terms and payment conditions are easy to find. In many cases, there is a record with all of the important information that your team will need to remember, and you can mark a task as “complete” as soon as it’s finished. Collaborative efforts will reduce the time wasted searching for required information, and it will reduce the amount of noncompliance due to clerical error.
Overcharging of Products and Services
There will be occasion when a vendor overcharges you for a service provided or a product purchased. With a paper contract, this sort of thing slips through the cracks much more easily. The solution that more and more businesses and individuals are turning to is an automated contract system. Automation increases accuracy through alerts, reminders, and increased organization.
When you use a cloud-based contract management system, not only you, but your vendor, will have 24-hour access, no matter where they are, to the terms of the contract. They will be able to see precisely what the contracted payment amount was. Even if they fail to find the correct information, remember that it will be just as easy for you to verify the payment information as it was to draft the contract in the first place.
Breach of Contract
There is a certain level of non-compliance which no level of contract managing can prevent or mitigate. Such events are tantamount to outright rejection of the contract terms. They deal with more than deadlines, but with the goods and services contracted for themselves. Breaches of contract cannot be undone with a contract management system, but they can be more easily prevented and managed with one.
The real value of the cloud-based software in the event of a breach of contract is that your contract is in a central repository with a visible audit trail. The contract was signed electronically by the breaching party, which is a valid form of signature in nearly every country in the world, and you know precisely which term was breached.
When the time for litigation comes around, your company has been completely compliant with every term of the contract. The courts will be looking to see if you fulfilled your contractual obligations in order to determine if you are to be awarded damages. When they see the visible audit trail, the clearly defined terms of the contract, and your compliance with the contract, the courts will be far more inclined to award damages. The cloud-based contract management software is a good way to improve compliance, and effectively mitigate damages incurred if non-compliance leads to a breach of contract.
3-29-2016 | by Ben Fleshman