Why Contract Management Benefits from Automation

Poor contract management leads to loss of revenue. Some have estimated this loss to be anywhere from 5% to 9%.

This is why contract management offices strive to improve their processes. However, there are several skeptics that may argue that automation may be an extreme course of action. The critics of contract management automation often argue that the “human factor” is necessary at all times.

Here are four reasons why contract management requires a certain level of automation for optimal performance.

1. Coordination of Approved Clauses

Creating new contracts shouldn’t be an exercise in reinventing the wheel every single time. Having a clause library that allows central storage and access to authorized personnel empowers team to draft contracts faster. Some contract management systems go the extra mile by allowing drag-and-drop creation of contract templates using approved clauses.

A major challenge for large enterprises is to ensure compliance across all departments. The automation of a contract clause library ensures that only approved legal language is used by making the entire process more user-friendly.

2. Access to Latest Contract Templates

The automation of the contract drafting process shouldn’t stop at clauses. It should also include the creation and storage of contract templates. Even though your employees may have the right set of clauses, there is still a margin of error for misplacing clauses or leaving out clauses unintentionally.

By establishing a set of contract templates, you’re leaving the guesswork out of the process. This is especially important when onboarding new employees. Consider this frightening statistic: from a pool of 20,000 of new hires, 46% of them failed within 18 months. Since there are several possible reasons for people leaving a position, it is up to you to avoid making “frustration with the process” or “lack of process structure” one of them.

3. Proactive Alerts About Upcoming Events

If you are working exclusively with paper contracts, it’s more likely that you will miss key events, such as renewals and reviews. Clients have hundreds of action items every day and thinking about a contract renewal date is often at the bottom of their list.

Furthermore, your clients are counting on you to give them proper notice when it is time to renew. The easiest way to lose hard earned goodwill with a client is to assume that they want an automatic renewal by sending over an invoice and neglecting to ask questions. Even if your client had been willing to renew, he or she may be hesitant to continue doing business with you simply because you’re not even asking if other services are needed, if they are satisfied with current ones, or if they have any feedback at all.

This can easily be fixed by setting automatic email alerts tied to the milestones of the contract lifecycle for each of your clients.

4. Execution of Contracts with e-Signature

In the 90’s, we became able to buy things with the click of a button through several dot coms. In 2007, the iPhone empowered us to do the same now on-the-go. If other industries have come so far to provide immediate results, why is it that contract management is lagging behind in automating logistics?

Fortunately, more and more companies in North America are becoming increasing comfortable with e-signature capabilities. This feature not only saves money in terms of shipping and printing costs, but also in terms of faster contract execution times. On top of that, by eliminating the need for shipping, your company’ carbon footprint is much smaller.


By automating these four processes, you are a step closer to minimizing the reported 5% to 9% revenue leakage due to poor contract management practices. The areas to look into automating are central storage of a clauses library, access to latest contract templates, setup of automated contract alerts, and execution of contracts with e-signature.