Contracts are an increasingly important aspect of business, from your local mom-and-pop storefront to the largest enterprise organization. But without a plan in place, contract management can become overwhelming for employees and full of risky manual errors. In order to avoid these issues, reduce risk, and achieve compliance in contract lifecycle management (CLM), more and more organizations are turning to automation. In fact, implementing contract management software is becoming an essential aspect of any organization’s digital transformation program.
Contract management software is changing the face of contracts and agreements, and a tool many are adopting as part of their digital transformation. In order to understand the full benefits of automating CLM, it’s important to consider the part the software plays in each stage of contract management.
1. Data & process
Like studying for a test or packing for a trip, preparation is hugely important to the success of each individual contract. In CLM, it’s important to identify the reasons why the company creates contracts, including needs, expectations, and goals. It’s also important to define the risks contract management departments face, such as slow turnaround, bad compliance, and lack of standardization.
Contract management software can help in the preparation stage of contracting by sifting through previous contracts to find standard language that can be reused in an automated fashion. CLM software can also help identify necessary resources for contracting, including team members, as well as problems that have arisen in the past. The right contract management software can help devise a streamlined process that will aid in speeding up contract preparation
2. Compose & propose
Once preparation is complete, it’s time to start building the contract. This is often where the benefits of contract management software start to shine most brightly. By implementing a thoroughly vetted contract management software solution, the organization can create reusable templates that can be populated with up-to-date information, as well as checklists regarding required clauses or terms that must be included. If the contract management system integrates properly with other systems, such as ERP, CRM, and CPQ systems, the information will be easy to populate, and employees will save time and effort creating accurate contracts.
3. Negotiate & sign
In the contracting process, negotiation can be the stage where the most risk comes into play. Tracking and version control needs to be automated to reduce human error and save time. CLM software can keep track of redlines and versions throughout the negotiation process, ensuring all stakeholders approve each version. The software can also deliver electronic signatures at the click of a button, providing all parties with fully executed copies for their reference.
4. Store & analyze
Proper contract management can make or break relationships between organizations. Contracts are subject to audits years after they’ve been executed, and bringing up renewals in a timely manner makes clients or customers feel important. Being able to find and access the documents quickly will be important long after the digital ink has dried. Contract management software can take the long-term management one step further by automatically reminding contract management team members when deadlines and renewals are up. Some contract management software also leverages AI functionality to automatically check for compliance to ensure executed contracts are properly stored.
5. Extend, amend, or end
Over time, contracts may need to be amended or revised, updating timelines, scope, or payment terms. As in the negotiation process, tracking redlines and changes can be difficult and open the process up to risk. CLM software once again comes to the rescue, offering version tracking, approvals, and electronic signatures. The platform should also be able to determine if new amendments or editions are in compliance with legal ramifications and company standards.
The stages of contract management may look straightforward on paper, but without a good process in place, contracting can easily get out of compliance. The best solution is automated contract management software, which can take the risk out of the contract lifecycle and free employees to work on less tedious tasks. Learn how to put your negotiations on the fast track with an intelligent contracts solution.