In today's complex business environment, maintaining detailed records of contract-related actions is essential for ensuring compliance, defending against disputes, and safeguarding sensitive information. However, without a Contract Lifecycle Management (CLM) system, tracking these actions can be challenging, leading to poor audit trails and increased security risks. This lack of oversight not only makes it difficult to prove compliance during audits but also exposes the business to potential legal and financial liabilities.
In this blog post, we'll explore the challenges businesses face when managing contracts without a CLM system, the benefits of implementing a CLM solution, and how it can help your business remain audit-ready at all times by providing secure, traceable contract management processes.
The Challenges of Manual Contract Management
Managing contracts without a CLM system often involves a patchwork of manual processes, which can lead to several significant challenges:
1. Inadequate Audit Trails
One of the most critical challenges is the inability to maintain comprehensive audit trails. In a manual system, tracking every action related to a contract—from creation and negotiation to approvals and amendments—is a daunting task. Important details, such as who made changes to a contract, when those changes were made, and why, can easily be lost or misrecorded. This lack of detailed records can become a major issue during audits or in the event of a dispute, where precise documentation is needed to prove compliance and defend the company's actions.
2. Difficulty in Proving Compliance
Compliance with legal, regulatory, and contractual obligations is a key aspect of contract management. However, without a CLM system, ensuring that all contracts meet these requirements is challenging. Manual processes are prone to errors and omissions, making it difficult to track compliance across the entire contract portfolio. Additionally, if compliance issues do arise, the lack of a clear audit trail can make it difficult to demonstrate that the company acted in accordance with relevant laws and regulations.
3. Increased Security Risks
Security is another significant concern when contracts are managed without a CLM system. Contracts often contain sensitive information, such as financial terms, proprietary data, and personal information. Storing and managing these documents in unsecure environments, such as shared drives or email, increases the risk of unauthorized access, data breaches, and information leaks. Moreover, without proper controls in place, it can be difficult to ensure that only authorized personnel have access to specific contracts or that changes are made in a controlled and secure manner.
4. Inefficient Dispute Resolution
When disputes arise, having detailed and accurate records of all contract-related actions is crucial. Without a CLM system, gathering the necessary documentation to defend against claims or resolve disputes can be time-consuming and difficult. The lack of a comprehensive audit trail can weaken the company's position in legal proceedings, potentially leading to unfavorable outcomes.
The Solution: Implementing a CLM System
A CLM system offers a comprehensive solution to the challenges of manual contract management by providing robust audit trails, enhancing security, and ensuring compliance. Here's how a CLM system can transform your contract management processes:
1. Comprehensive Audit Trails
One of the most significant benefits of a CLM system is its ability to generate detailed audit trails for all contract-related actions. Every action taken on a contract—whether it's a modification, approval, or even a view—is automatically recorded with a timestamp and the identity of the user who performed the action. This level of traceability ensures that you always have a clear and accurate record of the contract's history.
These audit trails are invaluable during both internal and external audits, as they provide a complete and transparent view of all contract-related activities. Whether you need to demonstrate compliance with regulatory requirements, prove that a specific clause was added to a contract at a certain time, or identify who approved a particular contract, the CLM system's audit trails make this information readily available.
2. Enhanced Compliance Management
A CLM system simplifies the process of managing compliance across your entire contract portfolio. By automating key aspects of contract management, such as approval workflows, compliance checks, and reporting, a CLM system ensures that all contracts adhere to relevant legal, regulatory, and internal policy requirements.
Moreover, the detailed audit trails provided by the CLM system make it easier to demonstrate compliance during audits. Instead of scrambling to gather documentation or explain discrepancies, you can provide auditors with a clear and comprehensive record of all contract-related actions. This not only saves time and resources but also reduces the risk of non-compliance and associated penalties.
3. Improved Security
Security is a top priority for any business, especially when it comes to managing sensitive contract information. A CLM system enhances security by centralizing contract storage in a secure, controlled environment. Access to contracts is tightly managed, with user permissions ensuring that only authorized personnel can view, edit, or approve documents.
In addition to access controls, a CLM system typically includes features such as encryption, secure document storage, and regular backups, further protecting your contracts from unauthorized access and data breaches. By maintaining contracts in a secure environment, you can significantly reduce the risk of information leaks and ensure that sensitive data is protected at all times.
4. Efficient Dispute Resolution
In the event of a dispute, having access to detailed audit trails can make all the difference. A CLM system provides a clear and accurate record of all contract-related actions, which can be used to defend against claims, clarify misunderstandings, or support your position in negotiations. The ability to quickly access this information not only improves your chances of a favorable outcome but also helps resolve disputes more efficiently, minimizing disruptions to your business operations.
The CLM Difference: Audit-Ready, Secure, Stable
Implementing a CLM system offers several key benefits that can help your business maintain compliance, enhance security, and ensure audit readiness:
· Detailed Audit Trails: Automatically record all contract-related actions, providing a comprehensive and transparent history of each contract.
· Simplified Compliance: Automate compliance checks and reporting, ensuring that all contracts adhere to legal, regulatory, and internal requirements.
· Enhanced Security: Centralize contract storage in a secure environment with access controls, encryption, and regular backups, reducing the risk of unauthorized access and data breaches.
· Efficient Dispute Resolution**: Access detailed records quickly and easily, improving your ability to defend against claims and resolve disputes.
Without a CLM system, managing the processes required to ensure audit readiness and security manually can be challenging, and can lead to poor audit trails, increased security risks, and difficulties in proving compliance.
A CLM system offers a powerful solution by providing comprehensive audit trails, automating compliance management, and enhancing security. SaaSam is a recognized partner of Agiloft and we have been leveraging Agiloft’s no-code CLM platform for 12+ years. By implementing an Agiloft Contract Lifecycle Management (CLM) system, your business can remain audit-ready at all times, with the peace of mind that comes from knowing your contracts are managed securely and in full compliance with all relevant requirements.
Investing in a CLM system is not just about streamlining contract management—it's about safeguarding your business's future. With a CLM system in place, you can focus on growing your business, confident in the knowledge that your contract management processes are secure, compliant, and ready to withstand any audit or dispute. Don't wait until a compliance issue or security breach forces your hand; take proactive steps to protect your business today with a robust CLM system.
If your organization would like to make the jump to higher level of contract management maturity with the Agiloft Contract Lifecycle Management solution, reach out to SaaSam using the form here.
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.
