A new global study from World Commerce & Contracting (WorldCC) has found that poor contract management is eroding corporate profits on a massive scale, with the average business losing almost 9% of its annual revenue to inefficiencies, disputes, and missed opportunities. In industries with more complex supply chains or compliance demands, that figure can exceed 15%. For a billion-dollar business, that translates into more than $90 million disappearing from the bottom line each year.

The findings, published in “Contract Management: An Overlooked Driver of Business Agility and Financial Performance”, reveal that despite governing every dollar of revenue and cost, contracts are rarely treated as the strategic financial instruments they are. Instead, they are often siloed in legal departments, locked into rigid formats, and scattered across an average of 24 different systems. This fragmentation creates costly blind spots. The report found that 90% of business users find contracts difficult or impossible to understand, and 83% of executives say their contracts are too rigid to adapt to change. The result is a steady pattern of value erosion: cost overruns, invoicing errors, delayed deliveries, missed entitlements, and avoidable disputes. All of which directly impact cash flow, margin, and working capital.

“For too long, contracts have been viewed as legalistic barriers, built to repel risk rather than fuel growth,” said Tim Cummins, Executive Director of the Commerce & Contract Management Institute. “The core purpose of contracting is economic. The way we form and manage contracts has become a hidden constraint on our most strategic relationships. A strategic approach can unlock significant value and turn that constraint into a competitive advantage.”

The report lays out a maturity pathway that charts the journey from reactive, siloed processes towards what WorldCC calls Adaptive Contracting. This model moves organizations through four stages: from manual, compliance-driven management, to standardization and visibility, to cross-functional integration, and ultimately to predictive, analytics-driven contracting. In the final stage, contracts become dynamic business tools, capable of adapting to market changes in real time. They enable proactive risk management, accelerate time-to-revenue, strengthen trading relationships, and improve financial predictability.

For CFOs, the implications are clear. Contract management is not just an operational concern — it is a financial performance lever. Embedding contract intelligence into financial planning and controls offers the potential to reduce revenue leakage, improve margin resilience, and release trapped working capital. As organizations face inflationary pressures, supply chain instability, and increased regulatory demands, this kind of agility is becoming a determinant of competitive survival.

“The message could not be stronger: the cost of inaction is too great for any organization to bear,” said Sally Guyer, Global CEO of WorldCC. “CFOs are uniquely positioned to lead this change. By rethinking the role of contracts, they can transform a traditional back-office function into a strategic engine for growth, agility, and competitive advantage.”

The report includes practical guidance for finance leaders on building the business case for Adaptive Contracting, measuring its financial impact, and prioritizing investments in people, processes, and technology. 

The full report, Contract Management: An Overlooked Driver of Business Agility and Financial Performance, is available here: https://info.worldcc.com/contract-management-aug-2025