Compliance contract managers are under constant pressure to deliver higher business value while at the same time bringing down contract risks, decreasing contract costs and improving their contract performance.
Research by IndustryWeek has found that organizations can easily save up to 80% more than others in costs by having a clearly defined contract compliance process in place.
When businesses regularly measure the success of their contracts against the Key Performance Indicators (KPIs) of contract management, the need for a new and innovative contract strategy becomes vital. This blog gives you the details on five key KPIs compliance risk managers need to track to ensure that your contract compliance management remains effective.
Differences in Contract Terms
This KPI is essential to have complete visibility of your contracts. Contracts need to be tracked at all times. This will ensure that all your terms and conditions are met by your contractor. It’s important that you are able to spot obvious trends that could put your business at risk. This includes incomplete execution of your agreement or outdated language that needs to be updated to ensure compliance with current regulations. If you fail to constantly monitor key data points, you could end up facing serious financial liabilities.
Use key data and information to estimate the impact of making changes to existing agreements and resolve potential complications before they happen.
Monitoring Renewal Dates
When your contract comes with an expiration date, it is vital that you monitor it closely. If you miss a renewal, it can cost your business significantly, as insurance contracts become legally binding once they are activated. If these contracts aren’t monitored closely, it could lead to missed opportunities when it comes to renegotiating the contract terms or ending non-performing relationships.
Your contract management software should be set up in such a way that it alerts you about upcoming renewal dates and uses that information to renew, renegotiate, or terminate existing agreements based on the performance of the contract.
Vendor Authorization
Most corporate agreements will need to follow and comply strictly with policies which pertain to authorizations and signature approvals. When you’re compliant with your organization’s authorization policies, you reduce the risk of excessive spending and minimize or eliminate possible security breach issues by ensuring high levels of control over your agreements. When paired with a digital signature process, contract management solutions provide you with an audit log. This will give you greater insights into contract signatures, ensuring that you and your organization can avoid negative impacts such as the loss of intellectual property and potential lawsuits.
Approval Delays
One of the most common issues with the contracting process is the delays that occur in the approval process. This KPI allows you to identify the contract reviewers who cause consistent delays. When you have this information, you can intervene and take the necessary steps to improve the approval process, minimizing the risk of missed opportunities.
When you reduce the number of delays, you will eventually improve the overall performance of your company and its revenue.
Compliance Resolution
When you’re dealing with a large number of agreements, complaints about the existing terms are inevitable. Quality is far simpler to calculate when it comes to a manufacturing-related contract. This measure becomes harder to define with a service contract. An ideal approach that you can employ is calculating the percentage of valid complaints resolved and the time taken for final resolution. Use the knowledge gained from this KPI to avoid these potential incidents in future. An ideal solution would be to track the number of complaints received that were resolved without impacting the business negatively. You should be able to analyze how they were resolved, and whenever possible, incorporate those resolutions in future. This can effectively reduce the risk of similar challenges arising again.
Trust Exdion for Effective Contract Compliance
You need an effective compliance management platform that focuses completely on certificates and related insurance policy documents to ensure effective contract compliance management. Exdion’s Certificate Compliance Platform has a proven track record of effectively analyzing and managing contractual relationships with your insurance agency vendors.
Our platform helps you
- Enhance automated compliance to verify vendor certificates
- Use visual indicators to highlight compliant and non-compliant items
- Use email alerts and tasks to track compliance and expirations
Streamline the communication and tracking between your client, agency and vendors, while ensuring complete compliance with the latest regulatory standards. Get in touch with us and optimize contract compliance management for your agency.