How Centralizing Your Contracts Makes Contract Management Processes More Efficient
It happens more often than you think. A salesperson is traveling to take part in a conference or do some client visits and a business development opportunity presents itself. Things are going well and the salesperson needs a specific contract template to start formalizing the new business opportunity.
The salesperson usually receives a copy of the latest contract agreement by emailing procurement, but that staff member is out of the office for the next week. The salesperson finds an email with a contract template that procurement sent him two weeks ago for another client. Since the salesperson needs the document for a meeting taking place tomorrow, he decides to use that version. Let’s review what challenges are created by this decision and the benefits provided by centralizing your agreements.
- Uninterrupted Access to Latest Contract Templates
When the person responsible for procurement goes on vacation, it shouldn’t mean that the person figuratively packs the access to the latest pre-approved contract templates in her bags! In the salesperson example, he may be using a contract template that may be no longer valid or that may include clauses that are only applicable to another client.
A CLM solution solves this problem by housing all of your contracts, associated documents, and data in a secure centralized repository, which is always available to team members 24/7 with an Internet connection.
- Change and Update Transparency
If the salesperson were to use the contract from the old email as is, your enterprise could have a better idea of the potential implications of that contractual relationship. However, the salesperson may have implemented some changes to the document and those changes may not be uncovered until several weeks or months later.
With CLM software that centralizes access to contract data, the activity of the salesperson and all staff is tracked, providing visibility into the full scope of your contract processes. Visibility allows you to answer the who/what/when questions for each contract process.
- Audit Trail
In addition to transparency, CLM software helps with compliance processes as it creates an audit trail that lets you determine the status of any contract. CLM software goes the extra mile by automating certain processes for meeting compliance rules. One of the major challenges of keeping a full audit trail is that the process is too tedious or requires repetitive, manual tasks. By automating those tedious tasks, you save valuable time for your staff and allow them to focus on activities that create value for your enterprise.
Another example of how CLM software creates an audit trail is that the system can create automated alerts when a contract loaded into the system deviates from pre-approved ranges of contract language. With such alerts, the compliance team can better prioritize tasks and address potential issues right away.
- Facilitation of Contract Creation
In the salesperson example, the old contract file may be in .PDF format or another format that makes editing more complicated. While there is software that allows editing of .PDF files, the salesperson may not have access to them while on the road or may lack the technical skills to use that software. In the event that the contract file needs a lot of changes, it would be more efficient to work with a file in Word format.
Compatibility with MS Word is a key feature of robust contract management software. Contract Logix’ contract management software fully utilizes any edition of MS Word and all of its word processing features (except save). By leveraging a widely used word-editing tool, Contract Logix enables users with all levels of proficiency to create contracts more efficiently.
- Improvement of Contract Localization Practices
The salesperson in our example may be in a city or state that requires the addition, elimination, or modification of certain clauses. In the rush to prepare for the meeting with the client, the salesperson may not be fully aware of those requirements and work with a contract version that is not properly localized.
With CLM software, you can create a library of both contract templates and clauses. The contracts and clauses can be categorized by geography and other criteria so that those responsible for creating contracts have access to the appropriate contract data. A centralized library of clauses would enable the salesperson to make appropriate changes, all of which would be tracked by the CLM system. Contract Logix software works directly with Word and allows users to drag-and-drop clauses directly into a working document.
The Bottom Line
A study from the Aberdeen Group indicates that best-in-class enterprises are able to cut contract creation and approval cycle times by 15% to 20% through the use of several initiatives, including the use of CLM software to centralize contract data. Centralizing your contracts provides several benefits to your enterprise, including uninterrupted access to contract data, transparency of contract changes and updates, maintenance of an audit trail, facilitation of contract creation, and improvement of contract localization practices.
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