10 Key Features a Contract Administration System Should Have
For the effective control and oversight of the contract lifecycle management (CLM) process, organizations of every size need to consider adopting a modern and digital solution to assist legal, procurement, finance and other resources. A contract administration system, also referred to as contract management software or contract lifecycle management software, is the best way to streamline all CLM processes, from contract requests and intake to final contract closeout while retaining the complete change history for future reference.
10 Features to Look for in Your Contract Administration System
As part of your broader CLM model, contract administration software comes with specialized features that go beyond simple document management. Small, medium, and large businesses across all industries need CLM platforms to assist with creating, negotiating, executing, and managing legal agreements in today’s complex business environment.
From large enterprises to startups, CLM solutions help clarify all responsibilities clearly and set up the terms for a successful business relationship. If you’re currently looking for a contract management and administration solution, here are ten key features to consider before you sign on the dotted line.
1. Collaboration Capabilities
With manual processes, reminding other resources and stakeholders about reviews, comments, and approvals will increase your administrative overheads. Contract managers also have to keep the supplier or buyer informed about developments with specific, legally sanctioned documents during every step of the process.
As workloads increase, errors are bound to creep in. To help ease the burden on your legal and contract management staff, find a contract administration system that includes real-time collaboration capabilities. You can create collaboration rooms that streamline all reviews and updates (or redlines) to the agreement during the negotiation stages, all without ever having to leave the system. Support for electronic signatures will help speed up the process and allow for faster execution of contracting tasks.
2. Dashboards and Customized Reports
The effective management and administration of contracts depend on many specialized resources who each provide input and updates to the document. Although the contract manager or another appropriate in-house legal team member remains responsible, keeping everyone on top of the latest developments is difficult when using manual approaches to contract management.
Customized reports and dashboards provide everyone with visibility into the entire CLM process. Consider the CLM’s reporting and dashboard capabilities and if it provides organizations with self-service access to necessary information without adding additional burdens to the contract manager or legally responsible person.
3. Access from Anywhere
The ability to work from any location is no longer just a buzzword that tech companies use to attract new talent. Today, your company will eventually again have to depend on resources having access to your contract management system under Work from Home (WFH) or Work from Anywhere (WFA) situations in the future.
Enabling teams to securely and appropriately access, update, revise, execute, and distribute contracts from any device will help increase efficiencies, but also make your company more resilient to any unforeseen disruptions. To make sure you can respond to any sudden changes in work arrangements, find a CLM platform with mobile, tablet, and web access included.
4. Centralized and Data-Centric Storage for Contracts
When contract managers, sales people, or buyers are spending time looking for the latest version of a document, the efficiency of the entire process will suffer. This is made especially difficult when organizations use shared drives or hard drives with contracts scattered across the organization.
Instead of expecting your resources to keep track of document statuses and searching for the latest draft of a contract in emails, a centralized repository with version control will improve the entire process’s efficiency. You should also be able to search for a document quickly, track all the change history, and always know you are working on the latest version of the document in your CLM system. It’s important that the repository use a data-centric and not document-centric approach to organizing all of the information. This way you can search, filter, and analyze your contracts and supporting materials by any relationship such as contract type, organization/vendor/supplier, contact, etc. — without ever needing to do keyword tagging.
5. Tasks and Alerts
Even the most diligent resource is at risk of missing the deadline on a task when dealing with an excessive workload. In contract management, a missed deadline can incur penalties or compensation events for the company, eating up revenues. Just imagine a contract you wanted to cancel but couldn’t because you missed the auto renewal date.
Transferring risk remains the primary goal of contract management, which means legal, procurement, finance and sales teams need early warnings and alerts about specific dates that influence the conditions of the contract. With proactive notifications about the key dates in the agreement, resources will always know when a contractual letter, release, or scheduled task is due well in advance. Moreover, the best part is the CLM system handles all of this automatically. You no longer need to rely on manual calendar entries or other old-fashioned reminders and notifications.
6. Template and Clause Libraries
Drafting or generating a new agreement shouldn’t require hours of referencing and researching the language to use in clauses. Predefined templates for specific types of agreements help, but usually, it comes down to the language used in every clause that can trip you up when preparing the final document.
With a CLM platform, the legal team can focus on specifying individual clauses that buyers and contract administrators can reuse as required. In addition, they can apply specific business rules so that the right clauses are always used in the right circumstances.
These reusable objects may include:
- Clause types – A definition that describes the clause and its intended use within an agreement
- Clause bundles – A grouping of clauses that include all the requirements for different types of agreements
- Alternative clauses – Pre-approved alternatives for unique situations where a specific clause doesn’t cover the exact requirements (could include waivers, deviations, and exceptions)
- Sub-clauses – Related objects that apply to a main clause but allow you to manage these items individually as required per contract or fiscal period
7. Automated Workflows with Complete Audit Trails
For historic reviews about performance and the accurate and efficient routing of tasks, a customizable and automated workflow engine with complete auditable history is essential. Audit trails paired with the context of a workflow provides you with the how, when, and why contract managers made decisions during key events in the process.
These features allow you to tie your compliance requirements, business process reviews, and performance evaluations to historic workflows. You can generate reports that help understand the issues your resources faced and make the required changes to improve your CLM processes. Automated workflows are an excellent solution for ensuring your contract management process moves quickly and effectively without sacrificing any compliance to your business rules.
8. Enhanced Security and Role-Based Access Control
As most contracts contain confidential information that needs to remain secure to both external parties and internal resources, you’ll need to ensure your solution comes with secure access control. The system will need to use all the latest cybersecurity tools such as encryption at rest and in transit, SSO, MFA, etc. while also limiting access to certain documents based on the role’s company designation or disclosure classification. It’s also critical for your CLM platform to have the right level of security certifications including SOC 2 Type II, HIPAA, and FISMA.
9. Integrates with Other Line of Business Applications
Connecting your CLM system with other line-of-business (LOB) applications would be the ideal solution to streamline all key business processes. With an integrated CLM, sales teams can request contracts from the CRM and procurement managers are able to auto-populate vendor information directly into your ERP.
An integrated CLM provides additional business intelligence when connected to your BI system, giving all your business units accurate information into the contracting process. Different teams can track progress and ensure they are prepared for any tasks or projects coming their way.
10. Managing Request and Intake Processes
Secure and efficient request and intake features saves you time, effort, and increases accuracy. Your CLM should have easy-to-use customizable forms that can be used to submit documents, reducing the need for duplicate data capture and eliminating the need for chasing down requests, approvals, or rejection information.
You can make the request and intake process available to your entire organization, empowering your business units to speed up the contracting process. For any one of your contracting intake and request tasks, you should be able to design an appropriate form and assign a workflow to help overcome one of the most common bottlenecks in the CLM process.
Improve Your CLM and Contract Administration with Contract Logix
With Contract Logix, you can establish an effective CLM platform that ensures effective contract administration during every step of the process. With all the latest features and collaboration tools available, your team will always work on the latest document version and be able to generate accurate contracts quickly and manage compliance with all your internal policies and any external regulations.
If you need a contract administration system with modern capabilities that can support the entire CLM model in your organization, schedule a demo with Contract Logix today.