Advantages of Contract Management System for the Real Estate Industry

The Real Estate Industry may seem simple! Two parties come together, one is the seller and the other one is the buyer, and they agree on each other's terms and conditions, and then they are abided by the contract! The contract is made so that no change can be done until another party agrees. Contract management is critical for business. But manual contract management will be exhausting work; that is why real estate organizations need a contract management system. An organization has several contracts with several parties, including employees. However, if you are not sure what it means or how it works! Let us cover the basics first!

What Is Contract Management?

Contract management is the procedure of managing contracts. It includes the creation, execution, and termination of the contract. Major activities include analysis against the mentioned terms & conditions to boost operational and economic performance. Contract management incorporates negotiating the terms and conditions in contracts. Moreover, it also ensures compliance with the terms and conditions. Contract management can be categorized into three phases: pre-contract phase, execution of contract phase, and post-contract phase.

What Is the Objective of the Contract Management System?

The motivation behind contract management is to ensure that all parties to the contract fully meet their obligations as efficiently and effectively as possible, delivering the business and operational outputs required from the contract and offering some benefit for money. It also secures the rights of the parties and ensures required performance when conditions change. Contract management is similar to project management. Each contract is a small project. It has a unique goal, consumes resources, has a start and end date, and requires coordination and planning of significant activities, as well as documentation in a contract record throughout the cycle.

What Are the Advantages of a Contract Management System for the Real Estate Industry?

Below we have mentioned the advantages of a contract management system for the real estate industry:

1. Central Repository

‍A central contract provides more control and also assists in getting more value from data. The central repository is a collection of data that is stored in existing databases. These databases are combined into one database so that they can be analyzed and shared within an organization. When data is centralized, gathering information & organizing data becomes a simpler job. Furthermore, through data centralization, adding security is easier because it is a simpler task to add more security to a single robust database rather than working on ten databases. Moreover, the central repository enhances data quality, minimizes redundancy & inaccuracy, and maintains asset & contract history. Overall, it enables better decisions based on data analytics.

2. Compliance

‍Compliance is mainly related to legal implications specifically in the real estate industry. It is one of the main reasons for which the contract management system is used. Failure to comply with the terms and conditions will be a violation & breach of contract and, as a consequence, legal action can be taken by other parties. This can be a costly mistake. Maintaining compliance is one of the top priorities of a real estate-based organization. This is where a contract management system provides help. It alerts the responsible person about compliance, resulting in no violation or breach. It saves a lot of money for an organization.

3. Track Contract Lifecycle

‍There are hundreds of contracts in an organization. How will you know which contract is in which phase? It is impossible unless your organization is equipped with contract management. You can know all the details about each contract, including the contract lifecycle phase. With the assistance of a contract management system, the lifecycle of the contract is managed proactively and effectively. The contract management system can help in significant improvements & upgrades in cost investment funds and proficiency. An automated contract management system can restrict an association's risk chances by decreasing missed obligations. Some of the systems alert the responsible person and update them to manage renewals. It also alerts when a contract terminates and so on.

4. Create Value

‍The contract management system adds value to the organization by providing automated alerts. It also provides detailed reports that are effective in finding problems and potential areas of improvement and, most importantly, setting future goals and decision-making processes. Once, there was a time when employees needed to upload the same contract several times for different vendors. But with this software, the employee needs to do it only once. This system creates a platform where data is centralized and employees can access & upload information at their level. It saves employees from hard work and emphasizes smart work. Moreover, data duplicity is also reduced, providing deep visibility of data. A contract management system helps in assessing compliance. For example, suppose you are using software that is expiring today & you are unaware of it. And tomorrow an audit is occurring & during the audit it is found that you are using expired software. This is against government rules, and now you will have to pay a fine as per the law and order. However, this whole scenario will be changed with this software! As it will alert you about expired software and you will be able to renew it. So, this is how this software adds value to the organization.

Conclusion

An effective contract management system can assist you in maximizing value. For organizations that deal with contracts & agreements, asset management and tracking software is a must. Many businesses rely on a spreadsheet, which is not an effective tool for contract management. One can manage a few contracts on a small level, but when companies grow and you have contracts in abundance, it will be impossible to keep track. Overall, the contract management system adds value to the organization and saves you a lot of money.

Frequently Asked Questions (FAQs)

Does a contract count as an asset?

‍Yes, a contract is also a type of asset; for maintaining it, asset management software can be used.

What are the steps involved in contract lifecycle management?

‍Contract lifecycle management includes several stages such as:

1. Contract preparation

2. Authoring

3. Discussion about workflow

4. Negotiation

5. Approval

6. Execution

7. Repository compliance

8. Contract Renewal/Termination

What is the contract lifecycle?

‍According to Wikipedia, “Contract Lifecycle Management is the proactive, methodical management of a contract from initiation through award, compliance, and renewal. Implementing CLM can lead to significant improvements in cost savings and efficiency.”