{"id":24213,"date":"2019-10-01T07:31:21","date_gmt":"2019-10-01T11:31:21","guid":{"rendered":"https:\/\/intelligencecommunitynews.com\/?p=24213"},"modified":"2019-10-01T09:12:31","modified_gmt":"2019-10-01T13:12:31","slug":"govcon-cfos-must-know-4-things-about-contract-management","status":"publish","type":"post","link":"https:\/\/intelligencecommunitynews.com\/govcon-cfos-must-know-4-things-about-contract-management\/","title":{"rendered":"GovCon CFOs Must Know 4 Things About Contract Management"},"content":{"rendered":"\n

Sponsored content from IC Insider <\/em>Unison Inc.<\/em><\/a><\/p>\n\n\n\n

Contracts are an integral part of financial, compliance, and business development processes. Effective contract management mitigates material enterprise risk, improves cash collections, and reduces wrap rates.<\/p>\n\n\n\n

Based on interviews with over 70 GovCon Finance and Contracts leaders, below are four crucial revelations CFOs must know:<\/p>\n\n\n\n

1<\/strong>. Most CFOs Are Making Decisions Based on Inaccurate Information.<\/strong><\/p>\n\n\n\n

CFOs, BD, Compliance and other executives are often making vital decisions based on inaccurate reports from their well-intentioned Contracts teams.  Most executives making data calls to the Contracts department are \u201cclueless\u201d about the great magnitude of the manual effort required to answer relatively basic questions (e.g., \u201cwhich contracts have that new cybersecurity clause?\u201d).  Given the limitations of manual processing, even if two experienced Contracts professionals responded to a typical data call, they would likely deliver different answers.  CFOs are making critical financial and risk management decisions based on manual processes that often result in inaccurate data and reports.<\/p>\n\n\n\n

2.<\/strong> Auditors Are Documenting Contract Management Deficiencies.<\/strong><\/p>\n\n\n\n

A large GovCon firm recently went through an audit\nthat yielded the auditor\u2019s finding, \u201cYour contracts information -if printed- would fill many\nthousands of pages.  Due to the\nlimitations of the current contract management processes, several data elements\nare stored in multiple places resulting in an unacceptable lack of data\nintegrity.\u201d<\/p>\n\n\n\n

The pace of audits will increase.  GAO recently quantified how far behind DoD is on reviews of contractors\u2019 business systems.  The DCAA now has an ambitious plan to catch up on the backlog and encourages contractors to take the time and make investments to improve the veracity of their contract management system.  <\/p>\n\n\n\n

3.<\/strong> DSO Is Too High.<\/strong><\/p>\n\n\n\n

When a client invoice doesn\u2019t accurately match the underlying contract, the invoice is rejected, and payment delayed, driving up DSO.  It then takes hours from multiple departments to manually locate the contract data needed to correct the discrepancy and resubmit the invoice.  This needlessly drives up DSO and required working capital.   Modernizing contract management includes integrating and synchronizing the data in the contract lifecycle management (CLM) system with the financial system.   Doing so increases fidelity of the financial data and eliminates disconnects between the document of record (i.e., the contract) and the financial system of record to increase the velocity and accuracy of invoicing.<\/p>\n\n\n\n

4<\/strong>. Risks of Disallowed Revenue Are Lurking.<\/strong><\/p>\n\n\n\n

In addition to the risk of having payment\ndelayed because the invoice fails to match the underlying contract, contracting\nofficers may disallow all or part of claimed costs that are inadequately\nsupported.  Many firms\u2019 contract\nmanagement processes make it difficult or impossible to maintain adequate records\nand supporting documentation proving that costs have been incurred, are\nallocable to the contract, and comply with applicable cost principles.  Modern CLM systems provide the system of\nrecord for all contractual and deliverable documentation necessary to support\naccurate and complete invoices.<\/p>\n\n\n\n

Modernizing Contracting Processes and Systems<\/strong><\/p>\n\n\n\n

To resolve the issues\noutlined above, as well as streamline and standardize contract management\nprocesses and reduce costs, leaders are modernizing Contracting systems.  Almost all GovCon organizations invested in\nFinancial, Human Resources, and CRM systems during the last three decades.  Given the integral nature of Contracts to\nfederal business and availability of affordable COTS software systems, Contract\nsystem modernization is in full swing.<\/p>\n\n\n\n

When choosing any\nsoftware system, cost, cybersecurity, and user-friendliness are fundamental\ncriteria.  When choosing a GovCon contract\nmanagement system, there are a few particularly important criteria, including:<\/p>\n\n\n\n