How CLM can solve Real Estate issues ?
Sept 07, 2019 By Prasad Varade
With increased globalisation in the real estate sector, an increasing number of foreign players are making or looking to make a foray into India. And with this increase globalization the need and risk of managing compliance and contracts in real estate sector is on high rise.
The key to successfully closing deals is to keep the contract process moving. The faster you can close a contract, the quicker you can move on to the next deal, which ultimately leads to more opportunities and revenue for the company. Manual contract processes often see negotiations get bogged down in approval cycles, and it is difficult to have full visibility into who a company is doing business with, and on what terms. Missed supply or regulatory obligations, unwanted expiries or renewals, and other contract oversights can damage important business relationships and create inefficiencies.
1. What is the current status of a contract -is it drafted, reviewed, approved, signed or If its stuck somewhere, If so then where and with whom ?
2. How many of our suppliers account for 80% of spend?
3. Which are our key contracts by value/business unit/geography ?
4. Whats our projected total spend for next year ?
5. Which contracts are expiring or renewing in the next week/month/quarter ?
6. Are we on track to realise all the agreed benefits from our contracts ?
7. Where is the contract I need, and is this the current version - and what terms we have negotiated in negotiation phase ?
8. Is the contract I am drafting using approved language and terms ?
9. What contracts have clauses and terms that pose a higher level of risk ?
10. Can I have all contracts of products/services we are purchasing, at particular location which are valued more than 20 Lakh and are going to be auto-renew in next quarter ?
Manual contract management opens the door to some serious financial loss and business risks like,
• Lack of compliance, which can lead to penalties.
• Missing expiration dates that result in auto- renewal.
• Loss of revenue due to poor contract governance and performance monitoring.
• Losing contracts or associated documents due to broken links, file renaming,
indiscriminate filing, or employees leaving.
• Delays associated with tracking down documents, verifying versions, and searches for
data within documents.
• Missed periodic review dates for performance and deliverables check, review of contract
relevance and regulatory environment changes.
Manual contract processes often see negotiations get bogged down in approval cycles, and it is difficult to have full visibility into who a company is doing business with, and on what terms. Missed supply or regulatory obligations, unwanted expiries or renewals, and other contract oversights can damage important business relationships and create inefficiencies.
Real estate industry largely dealing with high risk contracts like supplier and vendor contracts, lease and investor agreements, customer agreements etc. For real estate industry its time to consider a contract management solution which can automate the contracting life cycle and monitor contract compliance, key important dates, find cost saving opportunities and save organisation cost with reduced risk.
Automate Contract Life-Cycle:
CLM solution will automate different stages of contract life-cycle from drafting the contract to get it reviewed, approved and signed through the integrated electronic signature technology. CLM solution gives you the clear picture of contract current status and if it stuck somewhere then why and with whom. It reduce the contract lifecycle time by 80% and get the deal closed faster.
Centralised Contracts Repository:
Data is truly the bloodline of commercial real estate. Centralization is the backbone of your contract management process, supporting and enabling all the other areas of contract management. Without a centralized location for documents and data, important functions such as reporting and analysis become nearly impossible. CLM software enables you to establish a centralized electronic repository for all of your contracts, making them easy to manage and enable you to filter out the contracts the way you want.
Streamline Performance Monitoring:
Contracts are at the core of the real estate industry and often with multiple high-value contracts running simultaneously. Tracking the performance of these contracts to ensure maximum returns is crucial for all organizations. With CLM solution you can set performance monitoring task and milestones for contracts and receive notification when the event triggered and make sure the agreed deadlines are meets and terms and conditions are followed.
Ensure Periodic Contract Review:
This is another crucial, and often overlooked part of the contract management process, particularly if you dont have dedicated CLM staff to oversee the process. Dont wait until the contract nears its completion or renewal date to see whether its delivering the expected benefits. By then it might be too late. Reviews should be conducted regularly during a long-term contract, and as the contract approaches its expiry or renewal date. This review may make use of the findings from other periodic reviews of the contract that touch on matters useful for this review. By doing these reviews, you give the contract and your business the best chance of success. By having a CLM software you can streamline contract review process by setting a review dates to the contract and assign a responsible person for review.
Good Contract Development and Management could improve profitability by the equivalent of massive 9% of annual revenue
- International Association for Contract & Commercial Management (IACCM)