Oracle NetSuite Contract Management: Why Does Finance Need It?

Content

• Why do finance teams require visibility into contracts?
• How does Oracle NetSuite Contract Management benefit finance teams?
• Contract Repository
• Approval Workflows'
• Reminders and Alerts
• Contract Performance Evaluation
• Reports and Analytics
• Conclusion

CFOs and finance teams across industries depend on Oracle NetSuite to manage transactions, budgeting, and forecasting for their evolving businesses. Organizations utilize the cloud-based ERP solution to store and track core financial data related to vendors and customers. 

Although the ERP system offers tools for monitoring payments, invoices, and cash flow, they need more visibility into the contract lifecycle. The finance department needs access to the contracting process for a successful and data-driven enterprise. Integrating contract management software with Oracle NetSuite provides visibility into contracts and related data from the ERP platform. As a result, the finance team can use the contracts to enhance financial management.

Why do finance teams require visibility into contracts?

The contract management procedure isn’t just another cost of doing business in the eyes of the finance department. They can use complete visibility into the contracting process to optimize financial management. The finance teams have high stakes in any business agreement a company churns out. Therefore, they must monitor the lifecycle to ensure that the contract stays true to its primary goal of generating revenue for the organization. Finance can effectively manage the contract value and spending if contract data is accurately captured and recorded. 

Cost savings

If finance teams have real-time access to renewals and expiry dates, they will have time to gauge the performance and value of individual contacts. They can accurately determine whether to cut the costs to continue with the business relationships. It aids businesses in purging their portfolio of contracts that result in revenue leaks.

With access to contracts, finance doesn’t have to resort to admin work to search and retrieve data related to customers and vendors. The visibility into financial terms and historical performance allows the finance managers to achieve more favorable terms for the companies in future negotiations. They can take a proactive approach to save money companies lose through inefficient contracting processes.

Minimize risks

Contracts often come with legal, operational, and financial risks for the company., For instance, non-compliance with contractual terms can lead to penalties, termination fees, or other financial obligations. Finance teams can identify and assess these risks to make informed decisions and take appropriate measures to mitigate them.

Many industries are subject to specific regulations and compliance standards. Contracts often contain terms related to these regulations, and finance teams must ensure that contracts adhere to these requirements to avoid legal and financial penalties.

Forecast revenue

Contractual agreements dictate the revenue and spending of your company. By having real-time access to contract data, obligations, and value, the financial department can accurately forecast income and expenses for the foreseeable future. It enables businesses to efficiently allocate and manage their resources to streamline every aspect of operations. 

Contractual agreements mean long-term financial commitments with suppliers or customers. Finance teams need visibility into these obligations and terms to manage cash flow, liquidity, and debt servicing. Access to contract details and associated financial data helps ensure transparency and accuracy during audits, resource allocation, and revenue recognition. 

How does Oracle NetSuite Contract Management benefit finance teams?

Businesses must put the needs of individual teams first when deciding on platforms for daily operations. For instance, finance teams prefer to work within the ERP solutions to manage expenses, invoices, and revenue. And the contract management systems enable the legal team to automate the contract lifecycle. Depending on different systems results in the finance and contracting process existing as information silos. Moreover, the organization won’t benefit from shared information and features.

Integrating ERP system with contract management software allows businesses to consolidate financial management with contract data from vendor and sales agreements. The finance team can benefit from the comprehensive view of the contract performance down to individual contract value accessible from a single, real-time source.  Here are some other benefits of Oracle NetSuite contract management for the financial team:

• Contract Repository

Integrating contract management software with Oracle NetSuite provides a centralized repository for storing all contracts and related documents. The single source of truth accessible within the ERP platform makes it easier for finance teams to utilize contract-related information. It eliminates the need to search multiple files and emails, saving time and improving efficiency. 

The integrated system enables users to share data in both directions, and the finance team can import any data from contractual agreements without switching platforms. Finance teams can gain real-time visibility into contract details, terms, and financial obligations. The contracting process transparency enables better tracking of revenue, expenses, and other financial aspects associated with contracts.

• Approval Workflows

Finance teams must stay on top of business agreements throughout their lifecycle, from generation to execution and post-contract management. Contracts with clients, vendors, or partners contain terms and obligations dictating the financial transaction. Finance must ensure all contractual clauses stay true to the organization's business objectives. One way to do that is by encouraging the finance department to draft and compile contract clauses and templates that support their goals. It eliminates the risk of procurement and sales team self-serving revenue-draining agreements.

Additionally, the finance teams must review and approve high-value or high-risk contracts to ensure that they do not deviate from accepted practices. Integrating Oracle NetSuite's contract management software allows the finance department to collaborate on the contracting process through automated workflows. It also facilitates communication among various stakeholders involved in contract creation, negotiation, and approval. 
As a result, it guarantees that the appropriate parties have reviewed and approved all financial aspects. 

• Reminders and Alerts

Tracking the contract milestones and deadlines is an integral task for the finance department. But when the contract lifecycle exists cut off from the rest of the organization, key dates are bound to fall through the cracks. The finance team can participate in contracting much more actively by integrating Oracle NetSuite and contract management software. They can keep track of important dates without leaving the ERP platform.

Contract management software often includes automated reminders and alerts for critical contract milestones, such as renewal dates, payment deadlines, and compliance milestones. It helps finance teams stay on top of their obligations and avoid penalties or missed opportunities.

• Contract Performance Evaluation

Maintaining an organization's financial performance requires routinely assessing contract performance. Contract management software enables users to identify and record key performance indicators (KPIs) related to revenue generated, costs incurred, and other financial aspects impacted by the contract. 

Easy access to these data enables the finance department to calculate the variances between the actual performance and the contract's financial targets. They can thus determine whether these variances are favorable or unfavorable and their impact on the company's financial position. It helps to establish whether external factors, internal operations, or unforeseen circumstances contributed to the deviations from the contract's financial projections. For unfavorable situations, the finance department could involve renegotiating pricing, adjusting payment schedules, or revisiting performance expectations.

• Reports and Analytics

Contract Management software offers custom reports to record and analyze data on contract value, costs, and duration. It enables finance teams to analyze contract performance, revenue streams, and other financial metrics from the Oracle NetSuite platform. Moreover, they can track and manage expenses related to contract management, such as recurring payments, services, and other financial obligations. Custom contract reports and analytics can be very helpful in preserving a company's financial stability.

Contract terms define the pricing, payment schedules, and invoicing details for products and services. The integrated system enables finance teams to rely on contract data to generate accurate invoices, track payment collections, and manage accounts receivable. 

Conclusion

Business agreements hold a wealth of information on financial terms and obligations that impact a company's revenue, expenses, and overall financial health. Finance teams need access to this data to accurately report on the financial status of the company, track revenue recognition, and analyze the commercial impact of various contracts. Integrating contract management software with Oracle NetSuite enables the finance department to access contract data from the ERP platform. And they can incorporate future contract-related obligations and revenues into their budgeting and forecasting processes. It helps in creating accurate financial projections and making informed decisions.

Businesses can continuously enhance contract management and financial processes by utilizing the insights gained from shared systems and two-way data sync. Schedule a live demo today to explore how our contract management solution can benefit your company.