Key performance indicators are an essential part of the contract management process. Without them, it is impossible to spot bottlenecks and identify missed milestones.
According to the National Contract Management Association, contract management is a vital element of many areas in an organisation. If you get contract management correct, it will have a positive effect on your budget and customer service.
Here are five more KPIs that will assist with your contract management.
1. Obligation Performance
Your systems for contract management should help you to maximize your revenue by keeping disputes to a minimum. Chargebacks and refunds are costly in terms of money and reputation.
There can be severe fines for missing milestones. Also, if you fail to fulfil other contract obligations, you may incur penalties and may not attract repeat business.
2. Trend Analysis
You can use a historical trend analysis to look at tracking results after the contract has been executed. This will reveal if they meet the expected goals. It’s also possible to highlight areas that need improvement.
You will be able to identify those contracts which have worked well and look for their outstanding features. This will enable you to identity the best contracts to select in the future.
3. Monitoring of Contract Deviations
Perhaps your organisation manages thousands of contracts involving multiple suppliers and locations? You may even use supplier management software such as that provided by contractswise.com/ to keep a close eye on it all.
It is essential that all parties comply with all the terms and clauses in the contracts. You need a system that alerts you when contract deviations occur. However, you also need to be alerted if changes are made to the standard contract clauses.
4. Auto-Renewal Monitoring
When the term of a contract expires, it could be continued or it could be terminated. Auto-renewals can be a problem because once the contract is activated it is legally binding.
An effective monitoring system should alert executives when they need to step in and negotiate terms or amendments.
5. Security Breaches
The final KPI refers to security breaches resulting in rogue contracts which can be a huge headache for businesses.
Putting adequate authorization procedures in place is vital for you to maintain compliance and ensure that no single manager can exceed their authority.