Contracts are the lifeblood of any business, governing relationships, expectations, and obligations between parties. However, ensuring that every contract complies with legal, regulatory, and internal policy requirements can be a daunting task. This is particularly true for organisations that do not use a Contract Lifecycle Management (CLM) system. The absence of a CLM system can lead to compliance gaps, increased legal risks, and potential penalties due to overlooked obligations or outdated contract clauses. In this blog post, we’ll discuss the challenges of managing contract compliance without a CLM system and explore how implementing one can mitigate these risks, ensuring your business remains protected from costly penalties and non-compliance issues.
The Challenge of Ensuring Contract Compliance Without a CLM System
Contracts are not static documents. They evolve over time as laws change, regulations are updated, and business policies are refined. Ensuring that every contract remains compliant with these evolving standards is crucial for protecting your organisation from legal and financial risks. However, without a CLM system, managing contract compliance can be incredibly challenging.
1. Difficulty in Tracking Regulatory Changes
One of the biggest challenges businesses face without a CLM system is staying on top of regulatory changes. Laws and regulations can vary significantly by jurisdiction, and they are frequently updated. Ensuring that all contracts comply with the latest legal requirements is a time-consuming and complex task, especially for organisations with a large portfolio of contracts. Without a centralised system to track these changes, businesses risk overlooking important updates, which can lead to non-compliance and subsequent penalties.
2. Inconsistent Contract Management Practices
In many organisations, contracts are managed in a decentralised manner, with different departments or individuals responsible for their own contracts. This can lead to inconsistent contract management practices, where some contracts are regularly reviewed and updated, while others are left untouched. Without a CLM system to enforce standardised processes, it is easy for outdated or non-compliant clauses to slip through the cracks, increasing the risk of legal issues.
3. Overlooked Obligations and Deadlines
Contracts often include specific obligations and deadlines that must be met to maintain compliance. Without a CLM system, these critical details can be easily overlooked, especially when managing a large number of contracts. Missed deadlines or unfulfilled obligations can lead to breaches of contract, which can result in legal disputes, financial penalties, and damage to your organisation’s reputation.
4. Lack of Centralised Control
When contracts are stored in multiple locations—whether in physical files, shared drives, or individual email accounts—ensuring compliance becomes even more difficult. Decentralised storage makes it challenging to monitor and control who has access to contracts and to ensure that all contracts are regularly reviewed and updated. Without centralised control, your organisation is more vulnerable to compliance gaps and the associated risks.
The Solution: How CLM Systems Ensure Contract Compliance
Given the significant challenges of managing contract compliance without a CLM system, it’s no surprise that more and more organisations are adopting these systems to mitigate legal risks and ensure compliance. A CLM system offers several key benefits that can protect your business from costly penalties and non-compliance issues.
1. Automated Compliance Checks
One of the most powerful features of a CLM system is its ability to automate compliance checks. The system can be configured to automatically review contracts for compliance with legal, regulatory, and internal policy requirements. This includes checking for outdated clauses, ensuring that all necessary provisions are included, and verifying that obligations and deadlines are clearly defined. By automating these checks, a CLM system significantly reduces the risk of non-compliance and helps ensure that your contracts are always up to date with the latest standards.
2. Centralised Control and Visibility
A CLM system provides a centralised repository for all contracts, making it easier to manage and monitor them. With all contracts stored in one location, authorised users can quickly access and review them, ensuring that they are compliant with legal and regulatory requirements. This centralised control also allows for better oversight, as the system can track who has accessed or modified a contract, providing a clear audit trail. This level of visibility is crucial for maintaining compliance and mitigating legal risks.
3. Standardised Contract Management Practices
A CLM system enforces standardised contract management practices across your organisation. This ensures that all contracts are created, reviewed, and updated in a consistent manner, reducing the likelihood of non-compliance due to inconsistent practices. The system can also include templates and workflows that incorporate legal and regulatory requirements, making it easier for your team to create compliant contracts from the outset. Standardisation not only improves compliance but also enhances efficiency and reduces the time spent on contract management.
4. Proactive Management of Obligations and Deadlines
One of the key features of a CLM system is its ability to proactively manage contract obligations and deadlines. The system can send automated reminders for upcoming deadlines, ensuring that your team is aware of important dates and can take action as needed. It can also track contract obligations, helping to ensure that all parties fulfill their responsibilities in a timely manner. By proactively managing these aspects of your contracts, a CLM system helps prevent breaches and ensures that your organisation remains compliant.
5. Reduced Legal Risks and Penalties
Ultimately, the goal of a CLM system is to reduce legal risks and protect your organisation from penalties due to non-compliance. By automating compliance checks, providing centralised control, enforcing standardised practices, and proactively managing obligations and deadlines, a CLM system significantly reduces the likelihood of compliance gaps. This not only protects your organisation from legal disputes and financial penalties but also enhances your reputation as a reliable and compliant business partner.
Protect Your Business with a CLM System
In today’s complex regulatory environment, ensuring that all contracts comply with legal and regulatory requirements is more important than ever. Without a CLM system, managing contract compliance can be a daunting and error-prone process, leaving your organisation vulnerable to legal risks and costly penalties.
An Agiloft CLM system offers a powerful solution to these challenges by automating compliance checks, centralising control, enforcing standardised practices, and proactively managing obligations and deadlines. SaaSam is a recognised partner of Agiloft and we have been leveraging Agiloft’s no-code CLM platform for 12+ years. By implementing an Agiloft CLM system, you can mitigate legal risks, ensure compliance, and protect your business from the costly consequences of non-compliance.
Don’t leave your organisation’s legal and regulatory compliance to chance. Invest in an Agiloft CLM system and take control of your contracts today. With automated checks and centralised control, you can ensure that your contracts are always compliant, reducing the risk of legal issues and safeguarding your business’s future.
Ready to take the next step in your digital transformation? Let SaaSam help you implement the Agiloft Contract Lifecycle Management software tailored to your business goals.
About SaaSam
SaaSam is a global software consulting and implementation provider, with a proud association and history of delivering solutions through software. SaaSam has been leveraging some of the world’s most innovative no-code and low-code software platforms that empower our customers to drive business outcomes.
SaaSam is headquartered in Cambridge, New Zealand. We have a team of 26 expert employees spread across five company offices in New Zealand, Australia, the United Kingdom, the European Union (Ireland), and the United States. SaaSam has long-standing relationships with a diverse range of successful organisations across the following industries: IT and Telecommunications, Finance and Banking, Primary Industries (mining and horticulture), Pharmaceuticals and Biotechnology, Utilities, Government bodies and many others.
Our culture, driven by values of Integrity, Innovation, Commitment, Passion, and Accountability, embodies the Kiwi spirit.
