5 top tips to boost your contract compliance

5 top tips to boost your contract complianceGood contract compliance is about far more than just ensuring all the right boxes are filled in and names signed in the correct places. Increasingly, it is garnering attention at C-suite level, as executives realise they can flag up their contract compliance efforts to demonstrate their focus on meeting stakeholder objectives. 

Essentially, effective contract compliance can have a positive impact on a company’s bottom line. This guide offers five top tips on how to improve your own contract compliance programme.

Improve visibility

Any business will have areas in which compliance is not up to the desired standard, and the best way to identify these areas is through increasing visibility. Concerningly, an Aberdeen Group study revealed that 50 per cent of companies feel they have poor visibility regarding their supplier contracts.

Typically, compliance is lowest when it comes to relatively minor issues – like travel booking or stationery orders – as people tend to think they already know the best way to do it, without referring to the company’s guidance. 

Gaining visibility on compliance discrepancies such as these can be an arduous task, but it is worth the effort. Doing so can help bring an end to pricing variations across departments, and can even increase a company’s leverage over suppliers by guaranteeing clarity over how much money is being spent with them.

Implement regular contract audits

One way to ensure that visibility is as strong as possible is through conducting regular audits of the contracts your company has in place. This method can help to identify common errors, such as failure to keep track of volumes ordered or discounts negotiated as part of the contract. 

In particularly, it pays to focus on the following areas:

  • Buyer turnover
  • Clerical errors
  • Converting currency
  • Volume-related discounts
  • Spreading payments over multiple periods

Work on internal communication

Securing compliance on all contracts is impossible without clear communication. Unless all relevant parties within an organisation are familiar with contracts or spend management systems that are in place, there is no way of knowing that these agreements will be stuck to.

For companies with an internal communications team, compliance managers should work closely with them to ensure that everyone understands the processes they are expected to follow, and to explain the benefits of doing so – both to them and the business as a whole.

Keep all relevant parties involved

One part of improving communication inside a company is to make sure that all internal stakeholders play a part in any negotiation process – particularly those related to specific services, such as marketing or legal.

In a way, this is a softer means of improving compliance. Rather than forcing stakeholders to adhere to a contract that has already been negotiated, this method involves working with them to come up with a way to meet their requirements in a way that suits all parties involved.

Create a contract template

Drawing up all-new contracts for every agreement your company enters into is inefficient, can lead to lengthy delays in negotiations and increases the likelihood of mistakes being made. Aberdeen Group claims standardising contract language reduces contract creation time by between 15 and 20 per cent.

However, it is important to remember that standardisation should be an ongoing process. Companies should continuously strive to ensure that their contracts and clauses are in line with any changes in regulations, processes or industry standards.ADNFCR-1684-ID-801789092-ADNFCR