Benefits of Automating the Contract Management Process
Contract management software can greatly benefit enterprises that routinely have to coordinate a large amount of contracts.
For example, consider a company that has a bevy of contracts with multiple sales channel partners but has not yet automated its contract management. If it’s at all typical of enterprises that still use manual, paper-based contract management, its vital contracting process is marked by costly confusion, inefficiency, and mistakes.
Revisions are not controlled, outdated templates are sometimes used, contract routing is haphazard, contracts languish on people’s desks, and critical milestone dates go by without alerts. As quarters and fiscal years end, the company scrambles to close contracts to claim the revenue, and sometimes it doesn’t even know where they are – in the literal physical sense as well as how close they are to completion and what needs to happen for it to occur.
Such a company is exactly the type of enterprise that desperately needs contract management software. By employing this software solution, the company can achieve considerable cost reductions while also increasing revenue.
Automating the Process
Through all stages of the contract cycle- creation, negotiation, completion, and compliance monitoring- contract management software tracks a contract and prompts necessary action at just the right time. Automation counters human forgetfulness, miscommunication, and susceptibility to error.
During the creation stage, contract management software provides easily customizable contract templates and preapproved clauses that are always up-to-date, thus eliminating the problem of using improper or outdated contract language. Considering the enormous financial implications of making mistakes in legal phrasing, this safeguard is crucial.
When a contract is initiated, contract management software centralizes the documents and associated data, guides approval routing, monitors progress, sends email status alerts, and allows for quick searching of contracts. The software also automatically flags and alerts the necessary people about important dates related to negotiation (e.g., when a revision is due) and completion (e.g., when a contract needs to be closed in order to allow another contract to close, or when a contract must be completed to record revenue in a certain period). Losing track of a contract is no longer a problem.
In the negotiation stage, contract documents and data can be easily accessed, while the software’s change management features enable quick modifications while ensuring that everyone is working with the latest revisions.
Once a contract is completed, contract management software begins monitoring contract compliance to help enterprises ensure all parties meet contract terms and to maximize allowed revenue (e.g., alerting when penalties are due). Contract reporting capabilities – which can be customized for each unique business situation – give enterprises the ability to measure how beneficial (or detrimental) a contract proves to be, thereby aiding in the evaluation of possible future contracts and the development of strategy.
An important consideration when selecting a contract management software solution is how well it integrates with existing hardware and software. End users’ lives should be made easier, not more difficult. There should be no need for switching between systems or for duplicate data entry. Fortunately, quality software management software can be seamlessly integrated with most systems, even customized ones.
For the contract-inundated company mired in manual, paper-based contract management that often is more chaotic than productive, contract management software will be a godsend. Gaining control of the contracting process with contract management software will result in greater control of the bottom line.
With the increased affordability of contract management software – including the emergence of relatively low-cost SaaS providers – there’s no sense in continuing with archaic, manual contract management and its limited management capability.