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The Risks and Consequences of Poor Contract Management [Infographic]


Allison Caggia

February 18, 2020

We often get asked what the return on investment or ROI of contract management is. It makes sense. Those who are considering a contract management solution want to understand how quickly they can recoup their initial investment. However, while ROI can be a very valuable way to measure the success of one-time capital expenditures, contract management doesn't fall into that category. Contract management is the gift that keeps on giving. In fact, we like to redirect that type of question and ask a much more meaningful one: "How much is bad contract management costing you right now?" The truth is that the consequences of poor contract management are quite high and rising all the time. You will probably be surprised by just how much poor contracting practices can erode your company's financial health. We put together this helpful infographic (click the infographic to download and enlarge) with metrics from around the industry that identify three of the biggest risks of poor contract management that will bleed you dry.

Infographic - Malbek Cost Poor Management - 2023


The price of a contract

According to IACCM, the average cost of a low-risk contract from authoring to signature is $6,900 and that number has increased 38% over the past 6 years. The cost of a high risk contract comes in at a staggering $49,000 per contract.

Lost annual revenue

Poorly managed contracts are expensive, but they also erode annual income. An WCC study indicates that an average of 9.2% of annual revenue is lost due to contracting pitfalls, like slow negotiations and missed milestones. The percentage is even higher, up to 15%, for larger organizations.

Missing contracts

A whopping 71% of companies are unable to find 10% or more of their contracts as reported by the Journal of Contract Management. Lost contracts can be very costly due to penalties, missed renewals, and other revenue-impacting governance.

Poorly managed contracts don't just lead to inefficiency and risk. They are also costly in terms of time, revenue, and missed opportunities. Malbek Contrax™ helps to improve your contracting efficiency and save you time and money. All those benefits are combined with a consumer-style user experience requiring no technical expertise. 

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The Risks and Consequences of Poor Contract Management [Infographic]