#financedepartment

Contract records can range from simple to complex, depending upon your type of business. The smallest mistake can result in big trouble, especially when it comes to large government contracts. Protecting your company's reputation and your relationship with a federal agency is imperative for your success. While human error happens, the right contract software management can help identify and solve even the most basic errors. We also recommend our read our comprehensive guide to creating internal audit projects so you can correct contract record errors faster. There are three common contract record errors that are often easy for your team to identify and solve:

1. Contract Record Errors Involving Invoicing

As busy people, we all make mistakes occasionally, and that's true for even your most trusted team member. Contract invoices can include such errors as: Wrong invoice numbersIncorrect dateIncorrect or incomplete codingBilling costs in excess of the funded amount of the contract Relying on the human eye to catch these errors is risky. The fine print and details of contracts can blend together after a full day of staring at a computer screen. Contract management software can alert you to needed changes or required signatures. This type of cloud-based software is the extra set of eyes that keep your contracts accurate and up-to-date. It also serves as a valuable source for financial checks and balances, ensuring key elements of the audit are completed. 

2. Inadequate Team Training

A contract audit requires a full team approach. When one team member fails at their assigned task, it can affect the entire project. Identifying why that team member dropped the ball can help you to determine how to improve their performance. For example, the team member may not understand where to find their part of the project on a software system that is outdated and complicated to use. By providing your team with the right tools, they can better collaborate on important contracts and subsequent audits.  By not providing the tools your team needs to perform the best job possible, they may interpret that the job simply isn't that important. The term discretionary effort means doing what you have to in order to get by versus doing your best. Life both inside the office and away from it is often hard enough. Make it easier and instill confidence in your team—and the project—by providing tools like ContraxAware.

3. Contracts That Are Here, There, and Everywhere

The individual roles of team members may have important contracts and related documents scattered throughout the office. A centralized system can better streamline the contracts into one source, making it easier for all team members to access. ContraxAware does this and more when it comes to contract management.  Not only is ContraxAware easy to use, but we also provide walk-through training that takes uses through the process step-by-step. The learn at your own pace option makes training easy and keeps it in-house. Eight hours of one-on-one training is also available for some higher-level subscription plans. Without a centralized location for your contract files, there is more opportunity for errors. ContraxAware has a built-in feature that allows you to see who updated what and when they did it. This form of management can save your company time and money in addition to protecting your client relationships. The time saved by streamlining your contract management process is better spent building your business. 

About ContraxAware

When companies think about contract management, especially in terms of considering contract management software, they often think of their procurement department, legal department, and their sales team. But there are several contract management software benefits for finance departments, too. (What is contract management software? Find out with our in-depth exploration article.) Ultimately, contract management software makes jobs and tasks easier for all departments. Some ways finance departments can use their company's contract management software to streamline their processes are provided below.  

1. Automated Approval Trees

In some companies, finance teams need to approve the financial arrangements on each contract. Contract management software allows qualified users in the finance department to create automatic approval trees. An automatic approval tree is an organized tier of approvals. Once a member of the sales team submits a contract for approval, the system automatically sends the contract to the right approval parties in the right order.  For example, the contract system can automatically approve a standard contract with no changes to the terms. The finance department can set parameters that trigger alerts when terms of the contract change. This can include setting alerts for non-standard discounts, non-standard timelines for payment, or any other non-standard terms that involve the finances.  One of the biggest contract management software benefits for finance departments is the flexibility it gives your team to determine your own rules. When users create parameters for these alerts, they also designate who gets notified when an alert gets triggered. This ensures a request for approval goes to the right person. A 10% discount may only need to be approved by the sales manager. But a 30% discount may need to be approved by the manager, the billing representative, and their manager.

2. Tracking High-Revenue Deals

High-value deals are what keep the lights on at your organization. It’s essential that each individual and team involved in the life cycle of a high-revenue contract, including the finance department, have contract tracking power. Finance teams can benefit from a number of contract management system features to track high-revenue deals.  For example, users can group contracts by revenue account, assign specific approvers or users to high-value contracts, and set alerts for important due dates related to the deal. Users can also set alerts for things such as contract expiration and contract renewal dates, making it easy to movie high-value customers to the top of the list.  

3. Ensuring Payment from Customers

Accounts receivable are among the most important functions of a finance department. Automating accounts receivable with a contract management system streamlines payments, making it easier to keep track of whether or not customers are paying in accordance with the terms of their contract with your organization.  Traditional accounts receivable methods involve manually entering payments into a bookkeeping system or spreadsheet, and manually check if customers are following terms. Contract management system users can create: Payment due date alertsGrace period alertsTriggers for an alert when the payment amount differs from what is stated in the contract.  Not all accounts receivable errors stem from customers who don't pay their bills. By ensuring payments are in line with the terms of the contract, the finance department can catch any errors which can impact the company and the customer. This preserves a healthy business relationship.

4. Monitoring Vendor Costs and Payment

Finance teams can get frustrated when departments spend too much on vendors. They need to ensure the company meets its financial obligations with its vendors. Much like accounts receivable, automating accounts payable can prevent errors that can damage a relationship with a vendor. Maybe even more importantly, the finance department can reduce company costs related to vendors. Some contract management software benefits for finance departments that can help with accounts payable include: Creating documents for relevant users that outline approved vendors.Creating approved pricing guidelines and/or spending limits.Setting reminders and alerts for payments to avoid paying a vendor late.  Finance teams ensure compliance with company purchasing limits. They can also save money in late fees or lost discounts because of late payments. 

5. Keeping Detailed Records of Slow Pay/No Pay Clients

Finance departments need to know which customers are paying on time. Contract management software benefits for finance departments should help measure cash flow, not just revenue. Finance departments can integrate their accounts receivable with other contract data to make notes about clients who don't pay on time. Additionally, they can automate a number of different processes, such as: Sending a client to collections after they have reached a certain threshold of late or outstanding payments.Putting a stop on automatic contract renewal when clients aren't paying.Communicating information about non-renewals or cancellations to other departments. These alerts can help save your organization money. Also, they can automatically stop services to clients who aren't paying in accordance with their contract.

Why Are These Contract Management Software Benefits for Finance Departments So Important?