The Hidden Transaction Tax

In this post, we'll discuss a hidden tax that most organizations unknowingly pay.   

All organizations engage in transactions. From sales to purchase contracts, nondisclosure to teaming agreements and letters of intent to offers, these contracts and other transactions authorize and enable day-to-day commerce and other relationships vital to business.   

To make and comply with these transactions, team members must engage, draft, negotiate, execute and manage many documents through entire lifecycles. All this effort requires a lot of energy, time, and hidden costs. 

Unfortunately, most organizations don’t recognize these costs, especially if staff prefer to do business the old way.


The Hidden Transaction Tax defined:  

We define the transaction tax as excessive personnel costs attributable to manual actions taken throughout the lifecycle of a proposal, contract or other transaction that can otherwise be eliminated.   


Don't ask your accounting department. 

Finance won't be able to tell you how much you're spending on this.  The cost of this tax is not measured or accounted for by most.  Instead, this cost is buried in salaries and wages from all cost centers on the p&l.  It's not measureable because it's inefficient to keep track of the amount of time you're spending on contract management overhead vs selling and other mission critical activities.   As a result, it just gets buried in normal salaries and wages and the representative cost-center and project.  However, it adds up! 


What are these manual tasks?   

Contract management overhead includes manual tasks that drag down productivity, such as the following: 

  • Uploading & Downloading files to and from one location to another

  • Attaching & Detaching files in emails

  • Filing

  • Check in / Check out (if you have a document managementsystem) 

  • Searching email threads to find the transaction of interest

  • Version Tracking

  • Managing a naming convention for your files

  • Material Terms Tracking

  • Status Tracking

  • Email delays when someone is out of the office.


Why are these manual tasks necessary? 

The reason is simple. Most organizations use a variety of disparate tools to manage a contract.  Different storage devices in the cloud and local, document editors, email clients, CRMs and e-Signature tools all require manual shepherding of the most current version of a contract from one tool to another.  


How you can eliminate the tax: 

The tax is easily eliminated by centralizing and automating your contract environment. See more here.  In addition, contract automation solutions provide additional benefits:

  • Closing deals faster

  • Improving Internal Transparency

  • Reducing Errors

  • Improving Internal Controls

  • Reducing Contract Turn-around Time

  • Improving Consistent Messaging, Drafting and Negotiation

  • Establish Continuity of Contracting Operations