Key Contract Management Challenges Facing Saudi Companies

Saudi Arabia’s rapid economic growth and infrastructure development in recent years have highlighted the increasing need for effective and efficient contract Lifecycle management systems.

As part of Saudi Arabia’s Vision 2030, significant reforms are being implemented, particularly in the area of contracting.

These reforms aim to enhance the effectiveness, reliability, and transparency of the contracting process, creating a more favorable environment for investment and economic expansion.

Contract management solutions provide comprehensive management, monitoring, and tracking of contracts throughout their lifecycle. With the goals of Saudi Vision 2030, all industries must ensure their contracts comply with Saudi legal regulations.

Contract management is essential for every company, regardless of size. Negotiating and managing contracts with multiple stakeholders comes with its own set of challenges, which can hinder business efficiency.

These challenges, such as organization issues, lack of system integration, isolated systems, absence of proper handover processes, and insufficient digital data, can be addressed with the help of effective Contract Lifecycle Management (CLM) software.

Let’s take a closer look at the top challenges Saudi companies face in contract management.

Top Contract Lifecycle Management Challenges Companies Face in Saudi Arabia

1.Lack of Digitization

One of the key challenges faced by Saudi companies in contract management is the lack of digitization. Many businesses still rely on traditional, paper-based processes, which can lead to inefficiencies, errors, and delays.

In an era where digital transformation is at the heart of Saudi Arabia’s Vision 2030, the failure to adopt digital contract management systems can significantly hinder a company’s growth and operational efficiency.

The absence of digitized data makes it difficult to track contract progress, collaborate with stakeholders, and ensure compliance with evolving regulations.

Additionally, managing paper-based contracts requires more manual work, increasing the risk of mismanagement and errors. Saudi companies that do not prioritize digitization may struggle to maintain the level of transparency and efficiency needed to stay competitive in the fast-evolving market.

2.Contract Visibility

Contract visibility refers to the ability to easily track, review, monitor, and retrieve critical data from contracts. Legal departments, in particular, need to manage a high volume of contracts efficiently.

It’s important for all stakeholders working with contracts to have clear visibility in order to stay updated on terms, regulations, and compliance requirements.

Visibility is essential throughout the entire contract lifecycle, from tracking commitments and deadlines to understanding the exact stage of the contract. For example, identifying a point of

friction in an agreement, such as an amendment made by a counterparty that hasn’t been addressed, may highlight the need to clarify or revise a particular clause.

This challenge can be addressed with contract management software (CMS), which consolidates all contracts into a single platform. This ensures that contracts can be accessed and reviewed from anywhere at any time, improving overall visibility.

When it comes to contract versioning, visibility becomes even more critical. Contracts must be easy to locate and should include an electronic audit trail to prevent errors and ensure that all parties are reviewing, negotiating, and signing the correct and most up-to-date version.

3.Drafting Contracts

To prevent conflict in your CLM procedure, the contract drafting process must be standardized throughout the company. Some of the common challenges being faced by Saudi companies are

• Drafts with inconsistent phrases and languages, cause an issue due to the language barrier.
• Documents are often lost or outdated versions of contracts are being signed. 
• Multiple tools drafting results in data loss between systems, and a subpar contract drafting process generally prolongs the contract lifespan. 

All of these issues can be addressed and solved with the help of contract lifecycle management software. By deploying CLM software for your business, these manual tasks can be easily automated.

The automated tools enable people to draft their contracts on a self-serve basis,only altering a few crucial fields each time.

These functionalities and templates allow business professionals to save time while not compromising on the quality of the business.

This will also ensure that the time and resources are being used for more important tasks rather than drafting and editing contracts on behalf of others.

Drafting will be significantly easier if a centralized procedure is established. It is simpler to follow if contract review, negotiations, and management are carried out on the same platform.

From contract negotiation to signature, a fully digital solution will enable secure internal and external collaboration on contracts within a single system.

4.Legal Compliance

Every business is legally required to adhere to specific rules and regulations. The processes businesses use to ensure they comply with these rules are known as contract compliance.

As an essential part of a larger contract management strategy, compliance ensures that contracts are executed accurately, both before and after they are signed.

For companies that manage a high volume of contracts or handle high-risk agreements (or both), ensuring compliance can be particularly challenging.

Common issues linked to contract compliance include:

• Consuming excessive legal time
• Lack of oversight and ineffective version control
• Frequent changes to the regulatory environment

Failure to meet compliance standards can negatively impact a company’s reputation and its relationships with current clients. Regulations exist to protect both parties and build trust, so non-compliance can have severe consequences.

Templates serve as a valuable tool in mitigating compliance risks. By using pre-approved templates, businesses can reduce the chances of non-compliance and minimize human error during the contracting process.

Establishing a template bank ensures consistency and eliminates confusion. A comprehensive Contract Lifecycle Management (CLM) tool can centralize this process.

With the ongoing digital reforms in Saudi Arabia, implementing a CLM system will streamline the contract signing process while improving efficiency.

It also ensures that all stakeholders remain updated on legal rules and compliance requirements, aligning with the Kingdom’s Vision 2030 for a more digitally advanced and transparent business environment.

6.Inefficient Tracking

As the name suggests, contract tracking is just that. It implies that important parties, particularly legal, may understand precisely where a contract is in its lifetime without having to look into it across several platforms. 

Inadequate contract tracking can have multiple adverse impacts on a company. Because the parties cannot see the contract’s status, or because team members cannot know what contributes to a delay, it may lead to friction when finalizing a deal.

On the other hand, inadequate tracking increases the danger. The risk to the firm is increased if participants are unable to monitor contracts or agreements since this leaves room for language or non-standard terms to seep in.

An all-in-one contract automation tool is the answer to all the business needs that need to track and manage the contract system. This tool will even help with integrations of other key business systems. 

7.Delayed Approvals and Signatures

Without an efficient workflow system, delays in contract approvals and signatures can significantly impact business operations in Saudi Arabia.

As the country moves towards greater digitalization under Vision 2030, such delays not only result in missed business opportunities but also create unnecessary administrative burdens, slowing down the pace of business growth and innovation.

8.Lack of Analytics and Reporting

A significant challenge many Saudi companies face in contract management is the lack of robust analytics and reporting capabilities.

In today’s fast-paced and competitive business environment, having real-time insights into contract performance is crucial for effective decision-making. However, many businesses still rely on manual tracking systems or outdated tools that don’t offer the deep analytics needed to drive informed decisions.

Moving Forward: Overcoming Contract Management Challenges

If your business is dealing with any of the challenges mentioned, it might be time to look into a good Contract Lifecycle Management (CLM) solution.

With digitalization taking off in Saudi Arabia, it’s important for businesses to keep up with global best practices and automate their contract processes.

Using an all-in-one CLM platform can save you money and make contract management a lot easier. From tracking and monitoring to signing, renewing, and staying compliant, an automated CLM system helps streamline everything, making things more accurate and efficient.