Contracts: The foundation of business
Organizations manage many active contracts, with numerous clauses, terms, and amendments. All of these contracts accomplish one primary task. They define a business interaction, in so doing they can also:
- Forecast expected revenues
- Control procurement costs
- Manage suppliers and customers
- Establish service levels
- Protect intellectual property
- Mitigate risk
Left unmanaged or managed poorly, contracts virtually always under-perform their revenue potential on the sale side, raise costs on the buy side, and increase all manner of legal and compliance risk—regulatory, Operational, and suppliers.
Contract life-cycle management
From company to company and often from group to group within the same organization, there are variations in how the contract lifecycle is defined.
Nevertheless, the following life-cycle stages are available as standard pack in FLYKON ERP and will be customized based on Customer Requirements.
- Request ( BID / RFQ / RFP )
- Proposal Preparation / Authorizing
b.Job costing Packs (Multiple Packs can be attached to Request)
c.Job Costing pack consists of header with each stage
d.Linked to Services and Inventory masters
- Proposal Submission and Negotiation process
- Proposal Master and Proposal :Log of activities
- Final Negotiation
- Proposal Approval From Customer
- Convert Proposal to Contract
- Define Major Mile Stones
- Link Deliverables to Mile Stone
- Contract Management
- Resource Planning
- Resource Allocation
- Manage Costs and allocate costs to Contracts / Projects
- Manage Sublet / Sub Contracts and allocation to Contracts lines
- Revenue Postings
- Contract wise Profit And Loss
- Mile stones Tracking till final delivery and closure of the Contract
- Tracking timelines for each job / task
Contract life-cycle management (FLYKON ERP) is the process of controlling, coordinating, and streamlining all stages in the contract life-cycle. FLYKON ERP helps companies optimize contract performance, especially in procurement and sales. The tools of contract life-cycle management enable CFOs to reduce costs, more accurately forecast revenue, and improve statutory compliance.
With FLYKON ERP, contract terms and conditions can reflect the key metrics that measure supplier and customer performance.
As FLYKON ERP is fully integrated ERP that manages all Financial postings and revenue recognition automatically. Hence, Supplier, customer, and contract item information to be brought into accounts receivable and payable systems in a seamless, automated, and error-free fashion.
As important as FLYKON ERP is for enhancing contract performance, its greatest long-term value to the enterprise may be in enhanced risk management. Although FLYKON ERP is not a risk management system, it improves contract visibility, control, and reporting, which enables legal and regulatory affairs departments to diminish risk.
Unfortunately, many organizations manage their contracts via a series of inefficient, manual, and isolated processes. This approach lengthens the contract cycle, increases costly errors, and practically guarantees that milestones will pass with obligations unmet and renewal opportunities squandered.
FLYKON ERP solution should eliminate common bottlenecks across the contract lifecycle, while enabling organizations to:
- Generate more profitable agreements
- Capture savings and optimize renewals
- Reduce contract cycle time
- Accurately track buy and sell side obligations and milestones
- Gain a complete view of all contracts and the contract process
- Decrease risk exposure and maintain compliance
A functional model for a contract life-cycle management solution:
The contract life-cycle management solution model comprises four components, each of which supports the life-cycle in specific ways.
Central contract repository for organizations just coming to grips with the magnitude of their contract management needs, the first priority is often answering the question, “Where are our contracts?”
Without a FLYKON ERP solution, the answers are all too often “everywhere” and “who knows?”
That’s why the foundation of a contract life-cycle management solution is a single, unified repository, which provides a web-based document management environment enabling full-text and keyword search of contracts and attachments. The repository should be able to manage faxed and scanned documents as well as native files in virtually any format, including all versions of the .doc, .pdf, .ppt, and .xls file types, and all the common image formats.
Regarding contracts, most organizations have one foot in the digital world and one in the world of paper. A repository that incorporates physical and electronic records management can ensure that all contracts are Cataloged and controlled according to industry standard retention policies.
Moreover, lost revenue can often be “found” simply by examining agreement language and terms, which a centralized repository facilitates.
Process management provides a disciplined yet flexible means of control that orchestrates tasks, activities, and decisions across the contract life-cycle. It brings standards and best practices to bear contract approval, execution, tracking, enforcement, and performance management.
Automated workflow, one of the primary tools of process management, brings speed, discipline, and efficiency to the FLYKON ERP approval process.
For example, workflows that employ approvals engage multiple departments simultaneously, each working solely on its portion of a contract.
Approval workflow status will display where a contract is in the approval process, who still needs to approve it, and can even note the role and relevance of each approver.
In the area of contract administration, process management functionality helps administrators track and enforce obligations and monitor key milestones via automated alerts triggered by business rules.
These alerts reduce all manner of issues that contribute to revenue leakage and unrealized savings opportunities: missed payments, over and under payment, billing errors, and renegotiation windows that pass during the contract renewal period. For example, aggregation-based triggers can notify contract administrators when the total value of contracts with one customer or vendor exceeds a given threshold.
Many contracts, especially those of long standing, have numerous amendments, complicating the task of administration and making it difficult to understand the prevailing terms and conditions.
A FLYKON ERP solution’s process management interface should aggregate amendments into an effective, consolidated view that defines the business relationship, helping to ensure that obligations are met.
FLYKON ERP reporting provides visibility into all contractual relationships across business units, with a complete, field-level audit trail for every contract. Comprehensive reporting capabilities enable performance assessment and risk analysis while delivering role-based dashboard views tailored for contract administrators, line-of-businessmanagers, executives, and other stakeholders.
For example, via charts and summary tables, dashboards can highlight key performance indicators such as contract cycle time and revenue per contract or summarize compliance and execution milestones.
Reports and dashboards should offer click-through access to view supporting contracts or contract records. Besides its value to operational performance and compliance, reporting often reveals would-be problems in time to take remedial action and can significantly reduce the resources spent on audits.
The implementation approach of LEOS ERP functional consultants:
FLYKON ERP functional Consultants can add significant value to a FLYKON deployment in four areas.
- Analyzing needs and priorities
- Documenting requirements
- Leveraging best practices
- Designing, configuring, and customizing the solution
There are a variety of tasks that FLYKON ERP consultants can follow during the project, such as:
- Meet and discuss with key stakeholders
- Assessing current contracts processes and technical capabilities
- Identifying process gaps
- Addressing requirements for industry-specific processes
- Developing a roadmap for work streams, dependencies, timelines, and functions impacted by a FLYKON ERP deployment
- Creating competency-based training
This approach can speed deployment, reduce disruption to work routine, boost user adoption, and accelerate ROI.
The contract life-cycle management solution from FLYKON ERP, offer a comprehensive solution for managing the entire contract life-cycle. The solution combines a single, scalable, enterprise-wide contract repository with a flexible workflow engine that supports an organization’s unique contract processes.
Some of the benefits include:
- Stronger security and access control
- Comprehensive backup and restore capabilities
- Improved compliance and retention capabilities
- Easier integration with other systems