Benefits of Automating the Contract Management Process
Contract management software can greatly benefit organizations that routinely create, negotiate, and execute contracts, especially those using manual processes.
Editor’s Note: To learn more, download our Introduction to Contract Management Software whitepaper.
For example, consider a company that has a bevy of contracts with multiple sales channel partners but has not yet automated its approach to contract management. If the organization is still using manual, paper-based methods, then its vital contracting process is marked by costly confusion, inefficiency, and mistakes.
Revisions are not controlled, outdated templates and language are sometimes used, contract routing is haphazard, contracts languish on people’s desks, and critical milestone dates go by without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 revenue using a manual process that handicaps them by sometimes not knowing whose desk the contract is on, the stage it’s in, and what tasks remain to get it signed.
Such a company is exactly the type of organization that desperately needs contract management software. By employing a software solution the company can achieve considerable improvements over their processes, reduce costs, and increase revenue.
Automating the Process
Through all stages of the contract lifecycle — creation, negotiation, execution, and compliance monitoring — contract management software tracks 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 to eliminate the use of improper contract formats or nonstandard 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 executed, 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 organizations 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 simple it is to implement and use. 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 contract management software can be quickly and easily implemented and configured to align with your specific processes, contract types, and workflows.
For the contract-inundated company mired in manual, paper-based contract management that often is more chaotic than productive, contract management software will deliver significant improvements and control over productivity and processes. Gaining control of the contracting process with contract management software will result in greater control of the bottom line.
With a flexible and cost-effective SaaS-based contract management solution there’s no excuse for continuing with archaic, manual contract management and its limited management capability.
Anyone who manages contracts on a regular basis, especially those using manual processes, can benefit greatly from contract management software. It helps organizations of varying sizes and industries automate their processes, restore order to their workflows, and gain control productivity.