Companies with intensive CLM activity regularly oversee agreements between their organization and other parties. As such, they need to measure results on an ongoing basis. For this reason they depend on contract management KPIs to align goals, develop the right metrics, and watch the CLM closely. However, these indicators need to be smart and consistent to keep in check those that are relevant to your operations.
To improve your company’s profitability and performance, there are 5 KPIs to measure for a successful CLM
1. Duration of CIL (Contract Initiation Lifecycle)
The more it takes for your company to process an agreement, the worse it becomes for revenue. This is true for any business. That’s why your pre-signing process has to be quick, efficient, and error-free.
When you implement a CLM system, its advantages can shorten delivery times. Using e-signature, templates, and automated drafting speed the process along and eliminate manual errors. Along with proper monitoring, these features serve to speed up CIL and produce better outcomes.
2. Contracts obligation performance
To get the most out of each contract and agreement, you need to control any occurrence of missed milestones. If you can’t properly keep track of laid-out conditions, this could mean wasted effort and costly fines.
Additionally, noncompliance with contract obligations could damage relations and lead to overpayment of claims. To avoid these problems, you can rely on Trakti’s software to monitor any renewal, deadline, or commitment.
3. ACV (Annualized Contract Value)
This KPI in contract management evaluates agreement revenues and the need for renewals. It’s an indicator that sums up all profits contained in your present settlements.
If you compare this value against the company’s revenue information, you can see how renewals affect your income. Hence, you know how much money re-signing could bring concerning current agreements.
4. OVV (Order Value Variance)
This metric helps you keep in check the amount of loss that occurs as the result of managerial errors. If it’s above 5%, you have problems with drafting, goal assessment, or client communication. Consequently, OVV watch helps you prevent mistakes and prevent financial mishaps.
5. TRV (Terminated Contract Remaining Value)
This KPI indicator serves to analyze service contracts to find the possible covert potential loss of profit. In other words, it reveals unearned capital due to credit, outstanding bills, and unbilled accounts.
These 5 KPIs to measure for a successful CLM must be an integral part of your CLM system to boost company performance.
With Trakti, you obtain an automated contract management process and full visibility into all the metrics you need.
Discover Trakti, to find out more.