When contracts are scattered across emails, drives and local archives, no one has the full picture of the company’s obligations. This leaves the finance function in a reactive role where expenses only become visible when the invoice arrives in the ERP system.
With a central and consistent overview of contracts across companies, departments and locations, the management space changes significantly. All contracts are registered with fixed, financially relevant data points such as duration, commitments, price adjustments, discounts and notice periods. This creates a disciplined approach to contract management for those responsible and gives the CFO a management tool that makes recurring costs predictable, risk manageable and decisions data-driven.
In most companies, contract value is lost – not because of bad contracts – but because of a lack of attention. When expirations, price adjustments and renegotiations are only discovered after the invoice has landed, the finance management becomes reactive – and opportunities for optimization are lost. International research shows that on average, companies lose around 10 percent of contract value because managers fail to act in time.
With a system that identifies key decision points and notifies those responsible before something becomes critical, the situation is turned around. The organization gets ahead of deadlines, constraints and commercial opportunities so that renewals are not automatic, discounts are properly leveraged and renegotiations are planned while there is still negotiating power. The result is a more disciplined and financially responsible contract management that preserves – and in many cases increases – value.
The ERP system shows the impact of contracts – not the content. By placing a dedicated contract management layer in front of the ERP, the company creates the cutting edge that the finance function needs to be proactive.
All future recurring costs, adjustments and constraints are visible before they trigger a payment, and contract data can be used directly in controlling, budgeting, Power BI or other analysis tools. This provides a much stronger link between the contractual basis and financial reality, because management takes place when there is still time to act – not afterwards.
This way, the platform becomes the missing bridge between contracts and ERP, making the business less vulnerable and more manageable.
We have an overview via the Dashboard and can manage the entire contract process from start to finish
Morten Ingholt
CFO at Universal Music A/S
