Checklist for Evaluating Contract Management Software
In an interview with the Center for Association Leadership, Joanne Duncan, CPA, CAE, and current CFO of the Credit Union National Association (CUNA) and Jeffrey S. Tenenbaum, Esq., a partner in Venable LLP’s association practice group provide a useful checklist of best practices in contract management.
Their list stands the test of time and is applicable to the process of evaluating options for a contract management software. Before ever beginning discussions with potential vendors, determine exactly what you expect from the software because this will allow you to be clear about what is necessary to fulfill those expectations.
Here is what we can learn from these two business professionals when selecting a contract management system.
Importance of Contract Templates
Time is money. Contract templates allow you to save lots of time. Especially if they allow you to work quickly and accurately using Microsoft Word within a contract management system. “For example, with one client we set up a short-form independent contractor agreement and a long-form agreement for the client to use depending on the complexity of the service being provided”, says Tenenbaum.
Not only will templates save you time but also they will cut down both on the expense of legal review and on the risk of entering into agreements unfavorable to the organization. Look for a software that has a robust content creation module providing you a contract clause library allowing central storage and ability to set authorized use of approved legal language. This clause library needs to flexible enough to set alternative language clauses and enforce all updates across all templates using those updated clauses.
Additionally, look for a software whose contract template library facilitates document creation through drag and drop of approved clauses into templates.
Management of Contract Renewal Dates
Nothing makes or break a fiscal year than foregoing a revenue opportunity. As your team is juggling several contracts at the same time, it is normal that staff just gets too busy to pay attention to every single date relating to the contract. However, a renewal date is not one that you want to miss.
Furthermore, missing renewal dates undermine the level of trust that your clients have in you. Billing and invoicing are areas that are key to excel at in order to maintain a harmonious client relationship. Consider the reliability and efficiency of an automated, digitized contract management system compared to a system that still depends largely on paper. With contract management software, contracts are never stuffed into file cabinets and forgotten. They are active in the system throughout their lifecycle, including post-sale.
Look for a system that allows you to set email alerts for any of your contract milestone dates. These alarms need to be configurable through default or custom (e.g. days in advance, recurrence, etc.) settings. It is also useful to have a library of pre-approved email templates for both clients and staff members.
Ability for Electronic Signatures
Provide your customers and stakeholders with an easier and more convenient way to sign and execute agreements. Look for an enterprise contract management system that helps you eliminate the time-consuming print, ship, sign, copy, return, scan cycle and reduce contract execution from days to minutes.
Another advantage of electronic signatures is that — especially with digital encryption — there-s less worry about security than with paper, which can easily be tampered with. Contract management software with electronic signing capability can automatically detect even minor altering, and it can record more data points than paper. Also, the automated processes of electronic signing can also reduce the financial impact of human error, which can cause costly problems if initially undetected. For example, Duncan describes a situation in which she discovered a poorly written contract signed by someone who was no longer with the organization. While the contract tied her organization to a low dollar amount, it did so in perpetuity. There was no clause to end the contract. A proper contract management software with e-signature would have detected the lack of a clause to end the contract.
Contract management software is more affordable than ever and make your contract processes faster and more cost-efficient. When evaluating a system make sure to check its ability to create and manage contract clauses and contract templates, manage reminders about key contract dates, and handle e-signatures. If you’re not yet taking advantage of digital contract management, you’re missing a golden opportunity to improve productivity and lower cost.