Contract Management Statistics 2024 — 55 Key Figures

55 Key Figures in Contract Management

Here are some key figures for contract management that show just how crucial it is and how organizations would do well to understand this.

1. An average of 9.2% of annual revenue is lost due to contract mismanagement 

Mismanagement of contracts can lead to big financial losses. According to a WCC study, an average of 9.2% of annual revenue is lost due to contract mismanagement.

Things like slow negotiations cause a lot of damage. It’s even worse for larger companies which have a higher percentage of losing out to contract mismanagement at 15%.

2. Organizations can save 2% of annual costs because of contract management

According to Weshare, organizations can save up to 2% of their annual costs simply by utilizing contract management. Contract mismanagement can be expensive, especially with organizations that handle bug money, and saving 2% versus losing out on 9.2%-15% is a no-brainer.

3. The average cost of a low-risk contract from authoring to signature has increased 38% in the past 6 years

A few years before the price for an average low-risk contract was $6,900 but within the past 6 years, the average cost of a low-risk contract from authoring to signature has increased by 38%, according to IACCM.

And the cost of a high-risk contract is even more astounding as it stands at $49,000 per contract.

4. 71% of companies cannot find 10% or more of their contracts

The Journal of Contract Management reports that an astounding number of 71% of companies cannot find 10% or more of their contracts. Lost contracts can cost a lot of money since it can lead to penalties, missed renewals, and other revenue-impacting governance.

5. Automation of contract management processes accelerates negotiation cycles by 50%

According to Weshare, the automation of contract management processes accelerates negotiation cycles by half the time that it usually takes (50%). Aside from that it also reduces inaccurate payments by 75% to 90% which keeps finances away from more risk.

6. the whole contract process consumes 18% of the selling cycle

The entirety of the contract process consumes 18% of the selling cycle, according to Weshare. This is a large amount of time for businesses to be focused on doing something else. Good contract management can make sure that this time is lessened.

7. By 2024, 50% of manual efforts for reviewing and drafting contracts will be reduced 

According to Weshare the year 2024 will see the reduction of manual efforts for reviewing and drafting contracts by 50%. This is largely due to emerging technologies that can help speed up the processes that take up so much time when done manually.

8. Contract management software market expected to be worth $12 billion by 2025

By 2025 the contract management software market is expected to be worth $12 billion, according to Weshare. This goes to show how businesses are tuning into how they can keep themselves efficient on all fronts, especially in something as tedious as contract management.

9. Businesses with 1000 employees spend around $2.5-$3.5 million on searching or recreating lost documents

Mismanagement of contracts is no joke as any business that has at least a thousand employees spends around $2.5-$3.5 million on searching or recreating lost documents. On top of that, there’s time, effort, and a little bit of sanity that organizations have to pay for.

10. Contracts govern around 70%-80% of businesses

Contracts play a critical role in businesses as around 70%-80 % of them are governed by contracts. Contracts are a significant part of business in one way or another, whether verbal or written, whether employer to employee or between two companies.

Understanding how vital contracts are to businesses necessitates understanding the importance of contract management.

11. An average of $1 million is spent on legal technology for mid-size companies with in-house engineering 

Weshare says that an average of $1 million is spent on legal technology for mid-size companies with in-house engineering.

This is indicative of companies now using contract management software which is a necessary tool in keeping with the times as currently things like automating the contract management process have been a priority in efficiency.

12. 1.2% of administrative personnel participate in contract management 

According to Weshare, within the process of contract management, 1.2% of administrative personnel are bound to participate. This means that since this is a job full of legal jargon those administrative personnel who do participate in it should be well trained so that they know what to do.

13. The automation of contract management has saved lawyers 82% of their time

Contract management is a tedious job but having new technologies often helps in speeding things along. A good example of this is that the automation of contract management has saved lawyers 82% of their time, as reported by Weshare.

14. The average time it takes to get a contract approved is 3.4 weeks

According to Weshare the average time it takes to get a contract approved is 3.4 weeks. This is just the approval stage so imagine the amount of time the entire process takes. This is why automation and contract management tools have become quite popular as it considerably lessens time and hassle.

15. Fortune 2000 companies maintain as much as 40,000 active contracts 

According to ContractSafe Fortune 2000 companies maintain as much as 20,000 to 40,000 active contracts at any given time. Seeing this number will no doubt wipe the doubt in your mind as to why contract managers are needed.

16. 70% of contracts from companies may not be followed

ContractSafe states that 70% of contracts are not adhered to by business units. This is a problem as many legal and overall risks can come of this and most may be due only to ignorance.

Companies would bode well to educate their employees on such matters and to further invest in contract management.

17. Only 22% of companies are confident in the tracking and managing of their contracts

The dire situation businesses face is that only 22% of them are confident in the tracking and managing of their contracts, says Weshare. We already know that losing contracts costs businesses significant amounts of money which is why a good contract management system should be of utmost priority.

18. On average, it takes 97 days for a company to renew a contract

According to Weshare, it takes an average of 97 days for a company to renew a contract. This is almost 3 times the amount of days to approve a contract. This is why contract management is crucial to businesses.

Because of its tediousness and long and drawn out process it can take up a considerable amount of effort and attention which companies can put elsewhere.

19. A company takes an average of 20 to 30 days to create, negotiate, and finalize a contract

Speaking of tedious and drawn-out these numbers will further highlight the point. A company takes an average of 20 to 30 days to create, negotiate, and finalize a contract, as reported by Weshare. The more numbers come up about contract management the more that its importance is highlighted.

20. Contacts require a close contract governance or else they lose their value by 40%

Imagine signing on a $10,000 deal just to find out by the end of it that it was worth only $6,000. Anyone would feel dismayed at this but imagine if it was a million dollars or a billion or a trillion?

Companies lose out on millions and billions on these big numbers and it’s all because they don’t have a proper contract management system in place. Weshare states that contacts require a close contract governance or else it loses its value by 40%.

21. Almost 1/3rd of the workforce is involved in contract management

Contract management isn’t limited to customers and partners and a good contract manager knows this.

Contract management involves anyone and everyone that your organization interacts with from your partners to your employees. ContractSafe states that almost 1/3rd of the entire workforce is involved in contract management.

22. 40% of organizations can’t keep track of who’s in charge of which contract responsibility

Efficiency and organization are crucial parts of handling a business but organizations who don’t invest in contract management lose this advantage. According to ContractSafe, 40% of organizations can’t keep track of who’s in charge of which contract responsibility.

23.  Every year an economic value of $270 billion is destroyed due to ineffective contract management

A tale as old as time at this point in the article is that lack of contract management investment leads to big losses. Weshare states that every year an economic value of $270 billion is destroyed due to ineffective contract management.

24. $140 billion is wasted every year due to lack of collaboration between commercial and legal teams

Another indication of how contract management investment saves companies billions. The lack of collaboration between commercial and legal teams leads to a yearly loss of $140 billion according to Weshare. This loss could have been prevented and could still be prevented if contract management is given priority.

25. 95% of organizations don’t have full visibility of contractual obligations

According to Weshare, about 95% of organizations don’t have full visibility of contractual obligations. And what would this mean for those organizations? As seen in previous statistics above it leads to massive financial loss for these organizations.

26. An average of 62 days is needed to resolve a contract dispute

As with all things related to contracts it takes a good amount of time to resolve a contract dispute and ruining this long time the parties involved bleed money. Weshare reports that an average of 62 days is needed to resolve a contract dispute.

27. $12,000 on legal fees are spent by companies to resolve a $100,000 contract

Like what’s been said earlier, contracts take a long time, and even more time if it needs fixing. All the while, during this time companies bleed money. How much money to be exact? An estimated $12,000 in legal fees to resolve a $100,000 contract, according to Weshare.

Keep in mind the numbers. A $100,000 contract that needs to be resolved loses $12,000 which means a contract of higher value will cost even higher to fix should the need arise.

28. 89% of organizations feel that their contract process is not that effective

Organizations know in some way that contract management is important or else they wouldn’t be thinking about the lack of effectiveness in their contract processes. ContractSafe states that 89% of organizations feel their contract process is ineffective.

29. 90% of professionals find contracts difficult to understand if not impossible

Contracts are not the easiest things to understand, especially contracts involved in business. ContractSafe reports that 90% of professionals find contracts either difficult to understand or they can’t understand them at all.

This continues to highlight that contract management is important and contract professionals should be prioritized.

30. 84% of contracting professionals face pressure to simplify their agreements

Because contracts are so hard to understand and filled with legal jargon, contracting professionals are the ones who are pressured in this regard. 84% of them face pressure to simplify their agreements, according to ContractSafe.

This is a difficult thing to do and adds more work to their plate, which means investment in contract management should be prioritized.

31. It takes an average of 92 minutes for a human contract review 

The reason why things such as automation are quite popular in business and have various versions like warehouse automation, etc. is because it cuts down a lot of time. This is no different for contract management.

According to ContractSafe, it takes an average of 92 minutes for a human contract review and this is only reviewing.

32. Almost 50% of businesses admit they’re clueless when it comes to a defined process for storing contracts post-execution

Most businesses are in the dark about contract management which is a big disadvantage to them. ContractSafe reports that almost 50% of businesses admit they’re clueless when it comes to a defined process for storing contracts post-execution.

33. 90% of contracting professionals feel that it’s a challenge to find specific documents

Organizations are in dire need of contract management investments as ContractSafe reports that 90% of contracting professionals feel that it’s a challenge to find specific documents.

This is a waste of time, energy, and resources which otherwise could have been avoided with proper contract management.

34. Up to 2 hours are spent by contract professionals just to find specific language in a document

According to ContractSafe, up to 2 hours can be spent by contract professionals just to find specific language in a document. Yet another thing involving contracts that take time but we shouldn’t be surprised.

Contract management is no joke and it takes a lot of time and effort to make sure resources and finances are secured.

35. A contract’s erosion value is estimated to be at 8.6%

Contracts need upkeep too and according to ContractSafe, a contract’s erosion value is estimated to be at 8.6%. Erosion is an unavoidable decline that comes with age and new economic environments so having a good contract management process could help in minimizing these erosions.

36. Poor management causes 40% of contract leakage

Contract leakage is the gap between the expected value of a contract and the real value of the contract created in production. According to ContractSafe Poor management causes 40% of contract leakage. This is a big number which can cost a lot of money.

Prevention is better than cure and it’s best to ensure a proper contract management process than to leave it to fate and feel the brunt of it in your finances.

37. 67% of respondents have evaluated the role of automation and advanced technology in improving their professional quality of life

67% of respondents from a survey done by FTI Consulting have evaluated the role of automation and advanced technology in improving their professional quality of life and they are open to it.

They have acknowledged that automation and new technology can be a big help and will be crucial in moving towards the future.

38. 17% of organizations have banned generative AI tools

17% of organizations have banned generative AI Tools like ChatGPT says ContractSafe. 31% of organizations have set guidelines and 38% are still unfamiliar with this technology.

AI tools have been causing quite a ruckus in multiple industries because it has a wonderful amount of potential but of course, these powers come with great responsibility. AI is still a tool and it should be handled with careful thought.

39. 55% to 70% of organizations lack effective contract management systems

WebinarCare suggests that between 55% to 70% of organizations lack effective contract management systems. This is a significant issue, as inefficient contract management can lead to various challenges, such as loss of revenue, difficulty in locating and accessing contracts, and errors in agreements. 

By investing in contract management tools and adopting digital contract management solutions, businesses can improve their contract processes and avoid these challenges. 

40. 46% of contract management experts struggle with working together on contracts due to longer-than-expected negotiation times

According to a Gartner study, 46% of contract management professionals find it challenging to collaborate on contracts due to delays and inefficiencies in the negotiation process.

Additionally, the average time to negotiate a first contract with a union has increased to 465 days, well over a year, leading to difficulties in the negotiation process. This prolonged negotiation is attributed to the complexity of contracts and the time-consuming nature of locating and analyzing contract obligations

41. Companies could potentially cut down 2% of their total annual expenses.

Using automated contract management solutions can increase contract accuracy and compliance as well as prevent errors, potentially saving businesses 2% of their overall yearly expenditures per the analysts of PricewaterhouseCoopers. This highlights the significant potential of technology-driven contract management to streamline processes, reduce costs, and enhance revenue

42. 15% of larger companies lose out to contract mismanagement

The statistic “15% of larger companies lose out to contract mismanagement” highlights the impact of inefficiencies in contract management based on the WCC study. 

This can lead to missed opportunities, legal difficulties, and financial losses. Implementing centralized contract repositories, standardizing procedures, and increasing visibility are crucial steps to mitigate the risks associated with contract mismanagement

43. The overall cost of contracting can fall in the range of 2%-11% of the contract’s total revenue

The overall cost of contracting can range from 2% to 11% of the contract’s total revenue, depending on factors such as the complexity of the contract, the need for legal intervention, and the level of contract management required according to the World Commerce study.

This indicates that contract management costs can significantly impact a company’s bottom line, and it is essential for businesses to closely monitor and manage these costs to maintain profitability and efficiency. Investing in robust contract management systems and practices can help control costs, reduce risks, and optimize revenue.

44. Contracts cost an average of $7000 to $50000 to create depending on their complexity

The cost of creating contracts varies based on their complexity. On average, basic contracts can cost $6,900, while more complex contracts can range from $14,000 to over $100,000 per Contract Safe. Factors such as drafting, negotiation, and review contribute to the overall cost, and the use of AI solutions and contract “playbooks” can help reduce these expenses.

Additionally, the average cost of a project involving a legal contract, based on marketplace data, is $603. 

45. Reviewing and processing a low-complexity agreement can cost as much as $6,900.

According to Gatekeeper, reviewing and processing a low-complexity agreement can cost as much as $6,900. This highlights the substantial cost involved in handling low-complexity agreements, emphasizing the financial impact of the contract review process.

46. 89% of businesses struggle with managing a high volume of simple contracts

Managing a high volume of simple contracts can be a challenge for businesses, with 89% of organizations struggling with this issue as stated in ContractSafe. This statistic highlights the importance of efficient contract management in today’s complex business environment.

In a data-driven decision-making environment with stricter legal regulations, efficient contract management ensures transparency, compliance, and strategic advantage. Companies that use modern practices can minimize legal and financial risks, optimize their procurement processes, and increase overall efficiency, resulting in better outcomes

47. 75% of in-house counsel are dissatisfied with their current contract workflow technology

According to a survey conducted by ALM and Bloomberg Law, 75% of in-house counsel are dissatisfied with their current contract workflow technology. This highlights the need for improved and more tailored contract management solutions for in-house counsel, as the current products on the market do not meet their needs.

48. Annual Spending on Dispute Resolution by Businesses Reaches $870 Billion

Businesses are spending $870 billion on dispute resolution annually, according to a report on International Comparisons of Litigation Costs published by the US Chamber. The report estimates that liability costs, the direct costs of commercial claims resolved through litigation, account for approximately $870 billion globally.

This highlights the significant financial impact of disputes on businesses and underscores the need for effective contract management solutions to minimize the risk of disputes.

49. 13% of companies believe the virtual setting impairs effective negotiations and agreement finalization

According to a survey conducted by WCC, 13% of businesses feel that the virtual environment has hampered their ability to negotiate and finalize agreements effectively. This highlights the challenges posed by remote contract negotiations and the need for improved tools and strategies to facilitate efficient and successful negotiations in a digital world.

Contract management software can help streamline the contract negotiation and finalization process, reducing the time and costs associated with manual methods. However, businesses must overcome concerns such as time and budget constraints when adopting new contract management technologies.

50. 55% increase in compliance with contract digitization

Contract digitization has been shown to increase compliance by 55% according to Forrester and Aberdeen. This means that businesses can significantly improve their adherence to compliance regulations by leveraging digital contract management solutions, ultimately reducing the risk of financial losses associated with non-compliance. 

Additionally, the use of contract management software can lead to a 25%-30% reduction in administrative costs and an 80% faster average cycle time, further enhancing the efficiency and effectiveness of contract management processes

51. Organizations using contract management software report an 80% faster average cycle time from bid to signed agreement

Organizations using contract management software report an 80% faster average cycle time from bid to signed agreement based on the LLC Buddy. This significant improvement in efficiency allows for quicker deal closures and can lead to enhanced overall productivity and performance.

52. 55% of businesses have fully embraced cloud-only solutions for their contract management needs

According to Contract Safe, over half of businesses have fully embraced cloud-only solutions for their contract management needs. Cloud-based contract management uses intuitive and dedicated SaaS solutions to manage the lifecycle of contracts, rather than using a combination of disparate spreadsheets and offline methods.

This shift to cloud-based contract management is driven by the need for digital transformation, as manual and fragmented contract management processes are no longer fit for purpose. The use of cloud contract management can help businesses unlock greater value, improve accessibility of data, and centralize contract information, ultimately leading to more efficient and collaborative contract management.

53. 67% of legal teams are investing in contract management tools

67% of legal teams are putting their money where their mouth is, allocating budgets specifically for contract management tools based on the joint white paper from FTI Consulting, Inc. and Relativity. This allocation underscores the growing recognition of the importance of dedicated resources for effective contract management, reflecting a shift towards prioritizing streamlined and efficient contract processes.

Two Examples of Contract Mismanagement

Let’s look at two real-life consequences of contract mismanagement. These big companies are examples of how contract management is essential to smooth and minimal-risk business.

54. Google fined €50 million for contract violations

One of the largest companies in the world, Google, was fined €50 million for a contract violation, according to Weshare. Said violation was a lack of transparency and inadequate information.

Big businesses raking in big money means a big loss if things go south and in this case it did. One wonders if a good and efficient contract management approach would have saved Google’s blunder.

55. Amazon fined €746 million for breaching contract regulations

Google wasn’t the only giant corporation that mucked up with contracts as Amazon was fined €746 million for breaching contract regulations, as reported by Weshare.

Companies, especially big ones, can get quite complacent and perhaps this was why mistakes like these happened. However, it still stands that if proper contract management was in place this may have all been avoided.

What exactly is Contract Management?

Here we are having just gone through 40 significant numbers in contract management yet we have not properly defined it. So, let me go ahead and break the ice!

Contract management is, simply put, a management process of contract creation, execution, and analysis. However, this job is more suited to lawyers than it is to entrepreneurs.

This is where contract managers come in. The goal for contract managers is to maximize operational and financial performance while minimizing risk to an organization.

Businesses and corporations face a lot of pressure to keep up with their efficiency while maintaining cost reduction. Contract managers save the day by handling the legal battlefield of contracts so that entrepreneurs can continue to do their business endeavors unhindered.

Why is Contract Management important?

Contract management is an important thing for any organization because the mismanagement of contracts can easily lead to all kinds of trouble which may end up having to be hashed out in court.

Efficient contract management minimizes risk, protects the interests of both parties, is a good resource for decision-making, and can even resolve disputes should they arise.

Having quickly executed and well-managed contracts reduces costs and streamlines the contract process while developing good relations between your organization and the other party.

If done right, contract management ensures that a business stays efficient and can give businesses a clear picture of what’s to come. Your organization won’t have to fear contract auditing since contract management guarantees compliance with regulations which also maintains control of relationships with third parties.

Conclusion

Contract management is essential in keeping a business away from risks and keeping every employee, partner, higher-up, and anyone involved accountable.

Contracts take a lot of time and effort but not having a good contract management process on your side means you’ll end up losing far more in the long run.

But it has to be emphasized that contracts are hard to understand and many organizations are in the dark about what the contents of their contracts are. This is why those involved who do not understand it should have proper briefings from contract experts who know what they’re doing.

Contract management should be prioritized by companies because it’s always better to know more about what you have and how it can benefit you. It may take lots of time and effort but at the end of the day, just like a lot of good things, it will be worth it.