Written by: David Hewitt, SVP of Sales
Think about it… your organization does business with thousands of vendors. Most of these relationships are governed by one or more contracts. It is unlikely that your in-house team has the time or the specialized expertise to make sure the deals you have negotiated are the deals you are consistently receiving. It may be time for a contract compliance audit.
And… the potential risk is probably a lot more than you think. According to the International Association of Contract and Commercial Management, nearly 40% of commercial contracts fail to deliver their full expected financial benefits. Non-compliance can potentially cost companies between 0.5% and 5% of their annual spend.
Despite your best efforts, your healthcare system continues to suffer from contract non-compliance issues.
Key reasons for this are:
- Invoices submitted by suppliers do not always align with the contracts.
- You likely have multiple contracts in place with thousands of vendors.
- M&A activity is common in healthcare and impacts contracts in many ways.
- Common and unavoidable errors arise from change, turnover, training inconsistencies, complex processes, and much more.
Leveraging an end-to-end contract compliance solution will help you to ensure contracts are thorough and effective while making certain that your critical third-party business partners are performing and invoicing in compliance with their negotiated agreements.
Having a successful contract compliance program is a valuable component of a complete governance strategy because it will identify and mitigate contract risks, improve contract management, and it will also lead to the identification and recovery of otherwise lost profits.
Other benefits of a contract compliance audit include:
- Identify and recover overbillings
- Gain root-cause analysis on errors
- Strengthen contract language
- Improve financial terms
- Enhance internal controls
- Verify data reported by suppliers