2021 Outlook: What You Need to Know to Prepare for Contract Audits
Contract Audit Process
Auditing your business’s contracts for compliance is essential to ensuring that your business captures the value that you’ve negotiated with your partners. In light of emergent data privacy regulations, it’s also crucial that your contracts provide the required protection to your customers.
Whether you’re identifying cost overruns on the part of your vendors or checking your own internal processes to make sure that you are billing your clients correctly for the work you do, a compliance audit is an important, regular step that every business should take.
Here are eight considerations that will help every business leader address potential obstacles to contract review and compliance as we prepare for contract audits in the coming year.
1. Secure, Central Location for All Contracts
Online connectivity was already important for businesses prior to 2020, but COVID-19 has accelerated the shift that many predicted toward remote work.
Pandemic-induced restrictions on travel and in-person meetings can make physical access to documents and people more difficult. Are all of your contracts easily accessible in a secure, online environment? A centralized contract management platform that’s been designed and tested to maximize security is essential in 2021.
Do the appropriate people and teams in your organization have access to the contracts they need to approve or reference?
In addition, do you have a way to ensure thatonly the authorized people in your organization can access specific contracts, or negotiate for and approve contract terms? Just having a web-based repository for your contracts is not enough.
In the coming year, it will be essential to maximize security and efficiency by using a platform that allows you to customize the level of access for each individual on your team.
3. Additional Documents
How do you find external documents that are relevant to each contract? It is important to have quick, secure access not only to your commercial agreements, but to the other files that you need to reference alongside them.
Do you have a contract management platform that makes it easy to search for and group related files based on their content, no matter where you store them?
4. Regulatory Compliance
As we covered in a previous post, the regulatory landscape is shifting in the worlds of data privacy, finance, and more. Are you on top of all of the clauses in your contracts that need to be updated to remain compliant with these new standards?
An AI-powered platform can quickly and accurately identify clauses that reference specific laws or standards, enabling you to efficiently review and update your entire portfolio of contracts.
Changing business conditions are just as important as evolving regulatory frameworks. Have any of your contracts or clauses become obsolete based on changes in the way you work? You don’t want to renew terms that no longer benefit your business.
Worse yet, if you’re a vendor, outdated clauses might tie your hands with restrictions with which you can no longer comply. Do you have an efficient way to review your contracts before it’s time to renegotiate them?
Do you have up-to-date templates for terms or contracts that you use with a variety of vendors or clients? This is an especially helpful question to ask if you’re conducting a compliance audit. An AI-powered contract workflow tool that helps you to create templates based on your business needs will be a huge asset as you negotiate new agreements in 2021 and beyond.
7. Modern Workflows
Discrepancies in workflows, templates, and legacy agreements can lead to Franken-contracts that have been cobbled together from disparate components.
It is crucial to be consistent and efficient in the contract drafting phase in order to ensure ease of compliance down the road. Do you have contract workflow and management tools that can help you avoid repeating any mistakes that you’ve uncovered with an audit?
8. Time Management
Even if you have all of the documents and personnel in place that you need in order to conduct a thorough audit of your contracts, do you have enough time?
An AI-powered contract management platform can drastically reduce the time it takes to identify and review relevant documents and clauses, especially if you need to review your entire portfolio. It can also help you efficiently create new templates that meet your business needs, reducing the time it takes to draft new contracts or replacement clauses.
Performing a contract audit is an essential part of good contract management and not just for law firms. Given the complexity of contracts the audit process can be prone to human error regardless of the contract type.
The ability to automate contract compliance audits to ensure that a given party is adequately honoring the terms of a contract drastically improves accuracy and efficiency. Furthermore, the automation process frees up your team and allows them to focus on contract negotiations or other high priority tasks.
Are you prepared to address these challenges to contract compliance and review in 2021? Evisort’s contract management platform can help you efficiently, securely identify all of the contracts that contain common language that needs updating in response to changes in regulations or your business. Evisort’s AI-powered contract workflow tools can also help you to draft consistent, compliant contracts going forward.
Finally, don’t forget the human element. Remember that this is an uncertain time for everyone. It’s important to show good faith in your business partners and customers, and approach contract audits as a collaboration that strengthens the business relationship. State-of-the-art tools can help you streamline the process of creating and reviewing your contracts so that you can continue to build business relationships in 2021 and beyond. Request a demo of Evisort’s contract management and contract workflow platforms today!
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