We often get asked what the return on investment or ROI of contract management is. It makes sense. Those who are considering a contract management solution want to understand how quickly they can recoup their initial investment. However, while ROI can be a very valuable way to measure the success of one-time capital expenditures, contract management doesn't fall into that category. Contract management is the gift that keeps on giving. In fact, we like to redirect that type of question and ask a much more meaningful one: "How much is bad contract management costing you right now?" The truth is that the cost of bad contract management is quite high and rising all the time. You will probably be surprised by just how much poor contracting practices can erode your company's financial health. We put together this helpful infographic (click the infographic to download and enlarge) with metrics from around the industry that identifies three of the most critical ways bad contract management is bleeding you dry.
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The price of a contract
According to IACCM, the average cost of a low-risk contract from authoring to signature is $6,900 and that number has increased 38% over the past 6 years. The cost of a high risk contract comes in at a staggering $49,000 per contract.
Lost annual revenue
Poorly managed contracts are expensive, but they also erode annual income. An IACCM study indicates that an average of 9.2% of annual revenue is lost due to contracting pitfalls, like slow negotiations and missed milestones. The percentage is even higher, up to 15%, for larger organizations.
A whopping 71% of companies are unable to find 10% or more of their contracts as reported by the Journal of Contract Management. Lost contracts can be very costly due to penalties, missed renewals, and other revenue-impacting governance.
Poorly managed contract don't just lead to inefficiency and risk.. They are also costly in terms of time, revenue, and missed opportunities. Malbek Contrax™ helps to improve your contracting efficiency and save you time and money. All those benefits are combined with a consumer-style user experience requiring no technical expertise. That's contract management reimagined.