2021 is just around the corner. Now is the time to start looking at your company's processes and looking for ways to improve them. One process that many businesses find rough is contract management. Trying to track and manage contracts throughout their life cycle can be a struggle. That's why you should consider adopting contract management software in 2021.
What is Contract Management?
Contract management is the process of tracking and managing contracts throughout their life spans. It includes all of the activities involved in this including negotiation, administration, monitoring, and compliance. Another term for this is contract life cycle management. All contracts go through the same steps:
This first step in the process is template authoring. This is when you design the templates for contracts that your company will use.
With contract templates and a comprehensive library of preapproved clauses, you reduce turnaround times as well as store commonly used contract templates and clauses in a single location. Additionally, these features create standardization and reduce contractual risk. A contract template is particularly helpful because users can insert specific metadata into the contracts easily through auto population. In a manual contract management system, building out contracts by scratch is extraordinarily time-consuming. So, contract management software makes this step simple, effective, and secure.
The name of this step tells you everything about it. This step is when you build the contract that you'll be using from your template. This can be a time consuming process.
As we had previously mentioned auto population, this modern feature is implemented during contract creation as fields within templates are filled with saved information that allows for an incredibly speed contract creation step.
This is the step of the life cycle where the contracts you've created are reviewed. Any changes that need to be made will be corrected at this step.
Contract management software allows for collaborative and thorough contract reviews, resulting in increased compliance end improved communication for the remainder of the contract's lifecycle.
This is when both parties involved in the contract decide whether it works for them. Generally this is just signing off on the negotiated items and getting final signatures.
Automated contract workflows notify specific contributors when their approval is needed, allowing for a faster approvals stage. The automated workflow will make appropriate adjustments to the pathway according to negotiations and updates to the contract draft. In this way, contract managers and business owners can be put at ease knowing that contracts are properly overseen during the approvals stage.
This is is the step of the contract life cycle where you implement the contract terms. The contract execution step is usually the longest step.
With electronic signature integrations, executing a contract today is easier than ever. At Dock, our Contract Management System is integrated with the Sertifi eSignature solution, allowing individuals to sign and send contracts at any time, any place, on any digital device. Once a signature is uploaded to a document, an automated workflow will update the data within your centralized contract repository post-execution.
This is the step of the contract life cycle where both parties review the performance of the contract. This is a very important step for figuring out what to do with future contracts.
Effectively overseeing the performance of a given contract is important, and regularly monitoring actions taken on a contract according to a contract's terms is a necessary concept to take into account. Our software solution allows contract managers to track and review the progress of contracts by having all contract data available in instantly accessible reports so you can analyze contracts easily.
The last step of the contract life cycle. This is the stage where you close out a contract and figure out if you want to renew it or end it.
What is Contract Management Software?
Simply put, contract management software is any platform that assists you in moving contracts through their life cycle. Depending on the software you choose, you can use it to manage the creation, negotiation, signature, renewal, and analysis of your company's contracts. Contract management software makes it easy for your legal team to deal with each step of the process as a unified group. Many contract management systems allow you to streamline contract administration tasks, reduce business overheads, and provide a singular, focused view of each contract.
Contract lifecycle management processes have dramatically changed due to numerous global technological advancements and the introduction of revolutionary digital contract management software systems. To modernize your business and to develop a business strategy that caters to today’s digitally-based workplace and business environments, it’s necessary to understand the finite details behind digital contract management software and what significant features that these systems have to offer.
Why Companies Choose Contract Management Software
There are several reasons why your company should strongly consider adopting a contract management software system.
Here are just a few reasons to consider:
High Contract Volume
Companies that deal with a lot of contracts have a lot on their plates. Having more contracts increases the likelihood of them getting lost of mismanaged. Contract management software can help keep these organized and ensure that nothing gets lost. With a centralized, cloud-base repository, you can be confident knowing that all contract data is stored in one secure location at all times.
Contract management can be a long and arduous process. Part of what causes that is a lot of smaller, more menial administrative tasks littered throughout. Contract management software can automate a lot of these so you can spend more time on what matters. By automating many regular processes and tasks, you can allocate more manual labor and brain power to strategic initiatives that will increase your return on investment.
Something that often tends to cause problems in the project management process is slow turnaround time due to signatures not coming in on time. Contract management software keeps track of this and can send out reminders to people if they still need to review and sign off on a contract. Additionally, you can monitor the overall performance of your contract management system will an intelligent and comprehensive dashboard so you can identify roadblocks and institute immediate solutions.
You company's contracts contain sensitive information about your business and should remain confidential. Contract management software comes with plenty of security features so you can store your contracts without having to worry about unauthorized third parties. Here at Dock, cloud storage, audit trails, permissions-based access, and SharePoint Backup are key components to keeping your data safe.
You can't make effective business decisions without having all of the data. Not using a centralized contract storage platform can cause inaccuracies in reporting on your contract activities. Contract management software automatically keeps track of all of that allowing you to build a complete audit trail and maintain compliance.
The 6 Most Common Consequences of Poor Contract Management
If you're still not sure whether or not you should adopt contract management software, you should know that poor contract management can cause huge problems for your business.
Consequence #1: Lost Revenue - Companies that exhibit poor contract management risk losing out on up to 9.2% of their revenue each year.
Consequence #2: Fewer Conversions - Companies that exhibit poor contract management can have up to a 20% lower conversion rate on sales.
Consequence #3: Increased Costs - Companies that either use a manual or outdate contract management process can see between 25-30% higher administrative costs.
Consequence #4: Human Error - A survey from DocuSign found that 40% of those questioned claimed that human error has a large negative impact on the contract management process.
Consequence #5: Lost Contracts - The Journal of Contract Management found that 71% of businesses polled could not locate 10% of their contracts.
Consequence #6: Wasted Time - A recent survey found that 65% of legal professionals polled identified wasted time as the biggest pain point in contract management.
The Top 5 Benefits of Adopting Contract Management Software
The truth is, your company has way too much to gain from adopting contract management software to not consider it. If you're still not sure whether you need contract management software, here are some benefits to mull over:
#1 Less Risk and More Control - Contract management software makes it easy for you to track contract data, maintain histories/audit trails, and control the distribution of legal content in your company.
#2 Automation - Contract management software with automated workflows allow you to automate many steps of the contract management process. This lets your company eliminate unnecessary tasks and reduce human error.
#3 Direct Content Access - The best part about contract management software is that it stores all of your contracts in one place. This allows you to quickly find and access contracts without having to waste time.
#4 Ensured Continuity - With contract management software you can prevent any handoff drops so your company can cut down on processing and response times. This can help you reduce any contract management gaps you may have.
#5 Improved Compliance - Contract management software makes it easy for your company to maintain compliance. By tracking all of your activities you'll have access to a full audit trail you can use to ensure you avoid any contract breaches or face any legislative fines.
Contract management software offers your company too many benefits to not adopt it. It can help cut down on a lot of the more annoying parts of the process and move your contracts through their life cycle faster. If you're still not sure about adopting contract management software, refer to the article above and think it over.
If you have more questions about contract management or contract management software, fill out the form to the right to sign up for a free, 30-minute demo. By signing up for this quick, no-obligation meeting our team will answer any questions you may have and show you our premiere SharePoint contract management system. We look forward to hearing from you.
Written by Quentin Russell
Quentin Russell is a Content Specialist with knowledge of Content Marketing and Social Media Marketing.