What is Contract Automation?

Topics: Automated Workflows, Workflow Automation, Contract Automation

Written by Lindsey Paulk

Contract automation provides numerous benefits to contract management. But you might be wondering, what exactly is contract automation and why would my business benefit from it? We’ll explain this along with how it works in this blog.

How businesses Can Empower Contract Management in 2021 - e-BOOK

Contract Automation Defined

Contract automation is a feature provided by contract management software that allows legal and non-legal departments the ability to individually work on contracts and legal agreements on a broad organizational scale without requiring the assistance of legal counsel with every document. With automated contract workflows, you leverage the ability to control, standardize, systematize, and essentially direct entire contract lifecycles on autopilot rather than manually work on individual contracts (typically done by the in-house contract manager). In this manner, your company can build, manage, and execute contracts with speed and efficiency with the help of contract automation. Negotiations, approvals, data collection, and communication are optimized and streamlined, increasing the value of your overall contract management processes.

Why Your Business Should Automate Contracts

Does your business consistently work with a large volume of highly complex contracts? If so, contract automation is certainly a solution to add to your contract management system. During contract management, several departments are impacted, including sales, human resources, finance, procurement, legal, etc. Different members within these departments are engaged in contract management lifecycles in different ways at various points throughout lifecycles.

With contracts being sent out to several different parties requiring several different actions, it can be hard to keep up with the status and exact location of contracts at any point in time. Contract automation eases the tension here, where every document is sent through a very systematic sequence of events that tracks who made changes to a document and when the changes were applied. For example, when a contract is sent off for an electronic signature, it’s imperative that the document is sent to the correct individual, whether that is internally or externally. Keeping tabs on every detail is the best way to effectively manage contracts and ensure that risk is mitigated.

How Does Contract Automation Differ From Manual Contract Management?

In a manual contract process, a contract manager or employee might use a contract template, complete the different fields within the template, then send the completed document via email to their legal department for review. After these steps, the document might be sent off to the counterparty engaged in the contract. The counterparty might make changes to the document and then email it back to the legal department, who then emails it back to the contract manager or employee.

This is a recipe for miscommunication and disjointed collaboration. With repeated emailing amongst several people, small details are likely to be missed or improperly relayed. This increases the likelihood for an inefficient negotiations step and lack of visibility.

Then as this manual contracting process continues, once both sides come to an agreement and are ready for signature, the document is signed either physically with a wet signature or electronically with an eSignature solution. Following signature, the document is sent via email to any engaged stakeholders (i.e., human resources, legal, etc.) and then saved to a shared drive within the organization. For the majority of the time, a contract will be stored as several different iterations/versions within the organization on several shared drives across different departments. The contract might also be saved to personal computers or stored as physical, printed documents in a file – all of which increase risk tremendously.

Why a Manual Contract Management Process is Suboptimal

Manual contract management is incredibly time-inefficient and can increase potential risk.

Here are additional reasons why manual contract management is not the way to go:

Low quality communication: employees are unable to locate specific documents and have to find certain people to locate what they need, creating inconvenient bottlenecks.

Misplacement or duplication of data: documents and other data are not centralized, meaning working efforts can easily be lost, misplaced, and duplicated unintentionally.

Time-inefficient: Manual contract management processes require an exorbitant amount of time to get physical documents from one step of a contract lifecycle to the next, meaning closing on deals and engaging in potential business opportunities is halted unnecessarily.

Dissatisfied clients: There is nothing worse than an unhappy client due to an outdated process that is fixable.

Increased risk: Tracking current versions of documents is difficult and disjointed without a centralized and digital contract management system.

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How Does Contract Automation Work?

With contract management software, you can automate contract workflows so that your employees can build contracts without needing to engage with the legal department every time a contract is created. In contract automation, you build contract templates, enable the automated contract lifecycle workflow, and then send the completed contract off for electronic signature.

When creating a contract template, your legal department will most likely take ownership of designing how the contract template is structured to ensure that proper legal language and key terms are included based on the type of contract. As the contract template is created, insights from communications and marketing departments will be used to determine how to portray the messaging and goals of templates – as they will be used very, very consistently. With effective branding, accuracy, and professional style, you can positively impact your business relationships from the second your business partners set their eyes on the document.

As you continue working on the contract, you can enable an automated contract lifecycle workflow to continue effective task management for the contract at hand. In this way, you might not need to depend on legal for approvals each time a document is created and sent. With these workflows, you can dramatically improve the speed of your contract management process. Once a contract is ready to be sent for an electronic signature, you can easily apply an eSignature flow to ensure the correct parties are involved in the signature step of the contract’s lifecycle.

Standout Features of Contract Management Software

It’s best to utilize a contract management software solution that is equipped with these features:

  • flexible automated workflows (with automated handoffs),
  • automated notifications and reminders,
  • a centralized contract repository,
  • contract templates,
  • obligation tracking tools,
  • a pre-approved clause library,
  • a vendor portal,
  • integrated eSignature solutions,
  • collaboration tools,
  • a customizable contract intake system,
  • and secure cloud storage.


Contract management software equipped with contract automation capabilities can open up opportunities to save time and improve the quality of contract lifecycles with a user-friendly, collaborative software interface.

Improve business dealings, increase contract compliance, reduce bottlenecks and turnaround times, enhance risk mitigation efforts, and completely overhaul contract management team productivity for the better with automated contract workflows. Take your contract management process to the next level by automating workflows so that every step of the contract lifecycle is as efficient, productive, and as collaboration friendly as possible. Ready to get started today? Reach out to us to learn more about our  Dock 365 Contract Management System.

For a free demo, click here.


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