Contract management is one of the most crucial processes in an enterprise organization. Every year companies spend thousands of dollars trying to make the process more efficient. Because the process is so intricate, one slip-up could set off a chain of other issues that would inevitably result in legal troubles. So, it is important that the contract lifecycle management is smoothly handled for enterprise companies.
What role does contract management have in accelerating the business or growth of a company? In today’s competing business environment, it’s important that companies have a good understanding of contract management. All the processes included in contract management needs to be transparent and accessible by both parties. It is important that they are satisfied with the process. If the customer or client feels the contract management process is not transparent enough or if some bottleneck situations happen that slows down the process for an indefinite time you risk losing them.
The ongoing pandemic hasn’t made contract management easier. Having to negotiate and manage contracts remotely has been difficult. However, that’s where automated contract management tools comes into play. With an automated solution, teams can collaborate and work together on documents at the same time.
It is important in the contract management process to keep track of the audit trail. This way you can ensure that everything is done properly and can account for any issues that come up. With a contract management tool, you can keep a clear track of who worked on which document at all times. There are many other solutions that an automated system could offer for the contract management process.
All that makes it absolutely important for the organizations to have hands-on knowledge in the contract management system. So that they could provide a streamlined service for their clients. Like we discussed before if the client in some way feels that the process is somehow lagging or is not transparent enough you will lose business with them. Even with an automated contract management system, if the users do not understand the solution properly there are still chances for error to occur and overturn the whole contract management process. In this blog, we discuss the contract management system, what it is? How does it work? How does it help in the growth of the organization?
So, what is contract management? To understand that let us take a closer look at the processes involved in a contract lifecycle. In the United States, a standard 8 step process is included in the contract management process is:
Imagine managing all this manually. Even with a large team, things can go wrong. Because humans tend to make mistakes, it’s important to remove as much of the human element as possible. That is how an automated contract management system becomes an important investment.
A contract management system brings all of the contract documents under one centralized storage space and makes it easier for you to manage them. This includes everything from negotiations to governance. The system will provide intelligent assistance to ensure smooth running.
One major fallback of the conventional method of contract management is that all the documents are hard copy and are stored in a physical location. This makes it very hard to locate something, and the chances of them getting lost are high. Using a contract management system brings all your contract documents under one storage space.
Now, let us take a look at processes in contract management and how with an automated solution it becomes better and error-free.
As we said before there are multiple steps involved in contract lifecycle management. From creation to governance, each process has its own importance and intricacy.
In the conventional method, contract creation would involve someone typing up a draft for the contract. A company might have similar contracts with multiple clients or vendors. In most cases these contracts will be reused or copy-pasted. In a contract management solution, there are pre-defined templates for creating contracts. This would ensure that no data is duplicated and makes it easier to validate the data. Further, using a template for creating a contract you can speed up that process and save time.
A contract might need to be worked on by multiple users in a team. Contract management enables that by allowing users to access the documents simultaneously and collaborate on them. Approvals are also simplified by this method; the workflows allow users to mention who needs to approve the document before it can be used. These workflows are also enabled with automatic notification capabilities so that no document gets lost in the approval process.
With the conventional methods files might end up lying on the approvers' table for a long time waiting for them to be signed. In the automated solutions, they are integrated with E-signature capabilities, so that approvers can easily sign off on documents using their electronic signature. Like we said before, we can also avoid the document getting lost under the pile waiting for approval because the workflows send timely notifications to all approvers, so that they do not miss it.
During the lifecycle of a contract, multiple people might access it and several changes might have been made to it. With the manual way of contract management, it would become increasingly hard to track these changes and access logs as the company grows and contracts quadruple. With the organized and structured methodology of a contract management system, you can easily track the changes and audit trials associated with a document. And this would not take half the time it took for in the conventional method.
The contract management process does not end at the signing of contracts, rather it is the beginning of a long process. The contracts need to be renewed at certain time intervals and it is important to remember those dates. With the automated notifications in contract management solutions, you can easily work on renewals before the deadlines. Renewals might also mean certain changes in the contract document, say a clause needs to be edited or a new clause needs to be appended, with the automated system you can easily make those changes and renew the contracts smoothly.
With the right contract management system and a proper understanding of the system, enterprise organizations can really fast track their businesses and grow them at the same time. If you are a company that signs more than 20 contracts a month it is only the right decision to ditch the idea to manage them manually and invest in an efficient contract management tool.
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