Best Practices to Ensure Contract Compliance – Part 4: Define Contract Performance Benchmarks
26th December 2017
by Stuti Mehrotra
Well-defined performance benchmarks are key to demonstrating contract compliance.
Quantifiable performance measurement across the organization is pivotal to establish transparency in the system and define targets. This also helps enforce entitlements and identify processes or business units which are underperforming.
The challenge is to establish acceptable parameters for measuring contract performance across business. Define Key Performance Indicators (KPIs) such that they are relevant to the success of a contract and can be easily measured and tracked periodically (preferably in real-time)—for example, milestones of payment, delivery, and quality of goods. Having measurable KPIs simplifies and quantifies the innately complex nature of measuring contractual performance, and thereby contractual compliance.
In most organizations, contract performance data is entered manually and involves a large number of man-hours. Modern Contract Lifecycle Management Solutions efficiently address this challenge by integrating seamlessly with enterprise systems such as ERP, CRM, HRMS, FMIS, and other BI tools. This ensures data is fetched in real-time and is readily available in the form of granular reports and dashboards. It helps mitigate legal and financial risks associated with erroneous contract terms, non-enforcement of clauses, and missed deadlines for contractual obligations.
Quick Tips to Ensure Contract Compliance:
- Define measurable Key Performance Indicators
- Define transactional data sources to support the performance metrics
- Prioritize objective over subjective measurements
As the year 2017 draws to a close, this is a good time to consider deploying an automated contract management solution in your organization. To learn about the business benefits of a cutting-edge CLM solution and estimate its ROI for your company, click here.
Contact us at firstname.lastname@example.org to have all your contract management concerns addressed.
- Best practices to ensure contract compliance – part 1
- Best practices to ensure contract compliance – part 2
- Best practices to ensure contract compliance – part 3