How to track contract performance

If your business is still relying on manual approaches for performance tracking, including spreadsheets and email, it will inevitably experience poor contract performance.  This can look like:

• Slow, manual internal processes increasing time-to-contract and exceeding SLAs
• Unexpected overheads occurring due to poor contract renewal tracking
• Poor performance going undetected until business operations are disrupted
• Non-compliance resulting in fines and reputational damage

According to World Commerce and Contracting, 9.2% of gross revenue is lost due to poor contract processes. 

What is contract performance?

Contract performance is achieved when the obligations of an agreement have been fulfilled as expected. Good contract performance can lead to mutual satisfaction, strengthened relationships and business continuity. This benefits your business and your customers.

Why your business should track how its contracts perform

Good performance isn’t a given. You might strike lucky with some vendors- but it’s more likely that you need to be in the driving seat of your contract outcomes.

To be successful, you need complete visibility of your contracts, their terms, key dates, obligations, and total contract value. This information needs to be easily accessible exactly when required.If you don’t have this clear line of sight because you’re using spreadsheets, calendar reminders and emails to track performance, your business could face:

1. Compliance Violations: Without proper tracking, your business may fail to adhere to regulatory requirements, leading to fines, penalties, or legal actions
2. Revenue Loss: Manual methods may result in missed contract renewal dates or payment deadlines, causing revenue leakage
3. Increased Risk of Disputes: Without clear documentation and tracking, disputes may arise regarding contract terms, obligations, or performance, leading to damaged relationships.
4. Audit failures: Poor tracking of all actions taken to mitigate risks, makes it difficult to conduct audits effectively, increasing the likelihood of non-compliance
5. Reputational Damage: Contract mismanagement can damage the company's reputation, leading to a loss of trust from stakeholders, clients, and regulatory bodies
6. Missed opportunities: Inefficient tracking may result in missed opportunities for contract optimisation, renegotiation, or strategic partnerships, impacting long-term growth and innovation

What are the benefits of contract performance monitoring?

By using vendor and contract lifecycle management (VCLM) software to track contract performance, your business can improve:

Visibility

• Enhanced Transparency: Tracking performance provides a clear view of how well each agreement is meeting expectations. You can see if deliverables are on track, identify potential issues early, and gain insights into overall project health.
• Data-Driven Decisions: Data from performance tracking allows for informed decision-making. You can identify trends, analyse strengths and weaknesses, and make adjustments to optimise future contracts.

Control

• Proactive Management: By monitoring performance, you can proactively address deviations from the agreed-upon terms. You can take corrective actions and prevent potential breaches or missed deadlines.
• Improved Accountability: Tracking holds all parties accountable for their obligations. It fosters a culture of performance by highlighting areas where improvement is needed, internally and with external partners.
  
  

Compliance

• Reduced Risk: Performance tracking helps ensure adherence to all contractual terms and regulations. By identifying potential compliance issues early, you can mitigate risks associated with fines, penalties, or legal disputes.
• Audit Readiness: Having a clear record of performance tracking simplifies audits and demonstrates a commitment to responsible contract management. This can save time and resources during compliance reviews.

How to track contract performance 

Tracking the performance of your contracts needs to be a proactive activity, but it doesn’t need to add to your workload. VCLM software automates a lot of the work for you, so you’re left with the right data at the right time to inform decision-making.

1. Prioritise contract centralisation
Instead of storing your contracts across fragmented sources, centralise your agreements and related documents in a contract repository.

Using AI-powered data extraction, you can automatically capture and store contract:

• Types and categories
• Owners and approvers
• Lifetime value
• Duration
• Milestones including renewals

This secure, easily accessible repository allows you to quickly locate agreements and search for critical details such as contract terms, deadlines, and obligations.

See everything you need in one place

2. Create automated reminders and trigger review workflows
There’s no need to trawl through calendars, filled with dread that you’ve missed a key date. With VCLM software from Gatekeeper, you can configure and set alerts based on specific triggers, such as contract renewal dates, payment deadlines, or performance review milestones.

You can focus on adding strategic value, confidently knowing you won’t miss a deadline that leads to business disruption or compliance failures.

These key dates can be used to trigger a workflow that prompts relevant stakeholders to conduct a comprehensive review of the vendor's performance. This workflow may include steps for collecting performance data, analysing KPIs, soliciting feedback from internal teams and documenting findings for review. A timely contract review can inform the decision to renegotiate, renew or consolidate.

3. See performance at a glance with contract management dashboards
Access a user-friendly dashboard that provides a visual representation of key performance indicators (KPIs) and metrics related to contract performance.

You no longer have to put data together from multiple sources in an attempt to build a picture of performance. Contract management dashboards offer an easy-to-understand overview of performance trends, strengths, and areas for improvement.

Easily analyse performance, make data-driven decisions, identify areas for improvement and optimise contract outcomes effectively.

4. Drive better outcomes via the Messaging Centre
Once you have analysed performance and identified gaps, you can easily communicate with relevant parties that need to address any gaps.

Engage vendors or suppliers directly within the platform to discuss contract-related matters, request updates, or address concerns. No more relying on emails that are difficult to trace.

By communicating via the messaging centre, you can ensure transparency and accountability between all parties. You can also maintain a comprehensive audit trail for compliance purposes, making it easier to provide evidence for internal and external assessments. 

Capture a complete and defensible audit of actions and communications

Wrap Up

By following these actionable steps and leveraging Gatekeeper's VCLM platform effectively, your business can enhance contract management practices, improve contract performance, and achieve greater efficiency and compliance in their operations.

If you're ready to know more, book your personalised demo with one of our experts today.