Contract Templates: 5 Advantages They Provide
Time is money. This is particularly true when it comes to negotiating and executing a business contract. Across a variety of industries, individuals responsible for the creation, editing, and/or management of contracts indicate that scattered contracts pose a challenge. As a matter of fact, in a 2017 survey of 550 of such individuals in the manufacturing industry, 63.6% of them report that dealing with scattered contracts is one of their most pressing issues.
Once you’ve taken the first step toward efficient contract management by centralizing your agreements, you can begin creating libraries of pre-approved contract clauses and contract templates. This will enable you to further take control of your processes and streamline your contract lifecycle.
To learn more, download our whitepaper on the top 10 contract management best practices.
Let’s look at 5 advantages of using a centralized library of pre-approved contract language, and contract formats:
- Reduce Time to Draft Contracts
By centralizing the storage of contract templates, your enterprise secures its contract documents and makes them more accessible to its team of attorneys, paralegals, and other contracting professionals. Unlike a paper-based contract management system, finding the right contract template doesn’t require contract professionals to physically walk to an office or wait for somebody to print out a copy. You can electronically access necessary templates immediately and start utilizing them right away.
- Increase Enforcement of Business Rules
In another survey, this time of 264 U.S. individuals responsible for contract management processes in the business service industry, 64.1% of respondents report that lack of business rules to be a challenge. Even more troubling is that more than 70% of those individuals were in legal roles at their organizations.
When your team members don’t have access to a centralized library of contract clauses, they’re not able to identify business rules, keep track of those rules, and follow those rules. CLM software allows your enterprise to overcome those challenges by making sure that staff has access to the latest versions of pre-approved templates and pre-approved language.
- Facilitate Faster Contract Revision
Of course, standard contract language isn’t applicable in all instances. For example, the geographic location of a particular company’s client requires their contract manager to produce a contract. Some courts in the State of New York have determined that “best efforts” and “reasonable efforts” are interchangeable terms. On the other hand, nearby courts in the State of Delaware set a higher standard for “best efforts” than for “reasonable efforts” clauses.
In this example, it’s key that contract managers still work within a range of pre-approved contract language. A CLM solution will provide a contract clause library that the contract manager can use to localize a document, including setting parameters for timely performance, completion of services, terms and conditions, etc. To learn more, review 5 Best Practices to Localize Your Contracts.
- Improve Tracking of Deviations from Approved Contract Language
If every single contract in your enterprise were different, tracking deviations from approved contract language would be nearly impossible. By leveraging pre-defined information and software, your enterprise can effectively reduce the time to spot differences. A contract management solution provides you prescriptive analytics that helps guide your evaluation of contracts. The solution can compares a drafted contract against a previously executed contract or pre-approved template and determines differences between the two.
However, CLM software can go a step further. You can configure the software to send automated alerts when a contract saved in the library has language that deviates from a pre-approved range. This is a proactive step in ensuring the compliance of contracts, and making sure employees not authorized to take those sort of liberties don’t do so.
- Work with Microsoft Word
While it’s a fact that a large enterprise needs to go beyond MS Word to take contract management to the next level, it’s also true that you can’t just do away with the world’s de facto standard on word processing. A contract manager believing that she will have to learn a new software to edit contract templates will be very reluctant to try out – let alone adopt – the newly implemented contract management software. A contract management solution should utilize the features of the world’s most popular word processing software.
To find out how your peers are establishing key performance indicators around the use of standard versus non-standard contract language – where contract template and clause libraries can be an invaluable asset – download our white paper entitled Contract Management KPIs: Ammunition for Optimization.
Check out how our Premium contract management software empowers contracting professionals with the ability to create their own contract templates and template libraries.