Where do you keep your contracts? Do they languish in file cabinets or folders, forgotten, until it is time for a termination or renewal? That shouldn’t be the case for enterprises depending on contractual agreements to govern their business relationships. Contracts must be dynamic, accessible, and continuously provide insights for the organization. That is why companies must prioritize capturing contract data throughout the lifecycle.
The legal and business teams can use structured data about the specifics of contracts to find rights and obligations and use their intuition to proactively manage vendor, employee, partner, and customer relationships. They can identify trends, negotiate wisely, make informed decisions, and assess and improve performance. Here’s all you need to know about capturing contract data, its benefits, and more.
Contract data is all the information in a contractual agreement and its supporting documentation. They specify how the company does business with its partners, suppliers, clients, and staff. Parties must rely on contracts in disagreements and court cases to obtain pertinent information. Therefore, contract data must be valid and accessible across the board.
Since each contract your company deals with is unique, you need a way to compile and arrange the information found in each contract. It forms the basis for identifying and mitigating contract risks, establishing compliance, and guaranteeing performance at every phase of the contract lifecycle. Following is the relevant contract data you must be aware of:
Parties: Name and details of the individuals or entities entering the contract.
Contract terms and conditions: Outline the rights, responsibilities, obligations, and benefits of each party involved in the contractual agreement.
Contract duration: Specify the period for which the contract is valid or the specific start and end dates.
Payment terms: Details about the financial aspects of the contract, including payment schedules, amounts, and methods.
Deliverables or services: A description of the goods, services, or deliverables one party must provide to the other.
Performance metrics: Criteria or standards to measure the performance of the contract.
Clauses: Relevant terms and conditions for termination, confidentiality, and non-disclosure.
Insurance requirements: If applicable, details about any insurance coverage required by the contract.
Amendments: Any data related to changes and modifications made to the contract over its lifetime.
Paper contracts and conventional contract management techniques lead to fragmented systems, which don’t support effective data capture. Once all the parties sign the agreement, there’s no easy way to know who made what changes and when. Digitizing contractual agreements can help organizations overcome these challenges. It enables legal and business teams to stay on top of contract data throughout negotiations, redlining, execution, and amendments. Electronic contracts also improve accessibility, searchability, storage, and organization. Some other techniques to easily capture contract data include:
The storage of contractual agreements in disparate systems, formats, files, and folders can complicate data organization and retrieval. The first step towards capturing contract data is to ensure all the contract-related documents are available in a single place. Standardizing and centralizing contracts can make it easy to track relevant information. Using digital repositories to store, filter, and retrieve contracts is one way to achieve that.
Digital repositories allow for the inclusion of metadata and tags associated with each contract. Metadata provides additional information about the contract, such as dates, parties involved, and contract type. This metadata enhances the searchability and categorization of contracts. It enables businesses to locate specific contractual agreements or terms using keywords, dates, or other criteria.
All parties involved in a contractual relationship must uphold their end of the bargain regarding responsibilities, conditions, and obligations. It can be challenging for businesses managing hundreds of active contracts to stay on top of all the relevant rights and duties. Fortunately, automated clause extraction is available in every contract management product on the market, including Dock 365. It involves identifying and extracting specific clauses or sections from contractual agreements.
Dock utilizes AI to manually and automatically extract relevant clauses from umpteen legal documents. Clause extraction is incredibly helpful for organizations when dealing with papers that belong to third parties. It allows companies to capture pertinent data without going through each contract manually. Dock also empowers users to create obligation tracking for extracted clauses. They can assign the legal responsibilities of fulfilling the obligation to involved parties with due dates.
To efficiently capture contract data, all contract-related documents must be accessible and searchable. That is why more organizations than ever are moving valuable content from legacy contracts to the cloud to improve storage and retrieval. The limitations of legacy infrastructure are particularly challenging because they can result in poor content management, misplaced documents, and diminishing productivity. Businesses can overcome these challenges by digitizing legacy contracts and migrating them to a centralized location.
For instance, Dock enables organizations to extract relevant contract data during migration. The users can identify key data points within each contract that need to be captured (e.g., parties involved, key dates, financial details, obligations). They can develop a data mapping plan to ensure a smooth transition of information from the legacy contracts to the new system.
A company must capture contract data effectively to ensure all pertinent information is available and usable. It’s the easiest way to guarantee that nothing critical within a contractual agreement slips between the cracks. Some of the major benefits of capturing contract data include:
Capturing contract data ensures that all relevant information is documented and easily accessible. This improved visibility into contractual details is crucial for stakeholders across different departments, including legal teams, procurement, and management. With centralized and organized contract data, authorized personnel can quickly retrieve and review contract terms, obligations, and deadlines. This accessibility streamlines communication and collaboration among team members, reducing the risk of misunderstandings and disputes.
Analyzing and capturing contract data facilitates effective risk management. Organizations can identify and mitigate risks associated with contractual agreements by closely monitoring compliance with terms and conditions, managing contractual obligations, and addressing potential issues promptly. This proactive approach to risk mitigation helps prevent disputes, financial losses, and damage to the organization's reputation. Additionally, having a comprehensive view of contract data allows businesses to assess the risk exposure associated with different contracts and vendors, enabling informed decision-making.
Access to comprehensive contract data supports informed decision-making and strategic planning. Analyzing contract data enables organizations to identify patterns, trends, and opportunities that inform strategic initiatives. This insight can influence negotiations, supplier relationships, and business planning. Whether assessing the performance of existing contracts, evaluating the impact of contractual terms on various departments, or identifying areas for improvement, a data-driven approach to decision-making enhances the organization's ability to adapt to market changes and capitalize on strategic opportunities.
Capturing contract data involves documenting all terms and conditions agreed upon by the parties involved. It serves as a reference point for ensuring that all parties adhere to their respective obligations, minimizing the risk of unintentional non-compliance. It includes deadlines, performance milestones, payment schedules, and other critical details. This visibility enables proactive management to ensure that obligations are met on time, reducing the likelihood of compliance issues.
Contract data is a critical asset for organizations. It’s the foundation for effective contract management, compliance, and risk mitigation. The most recent advancements in AI and OCR technologies offer a variety of methods and instruments for automatic contract data retrieval. Organizations can employ clause extraction, data migration, KPIs, custom reports, and digital repositories to capture contract data effectively. Businesses can gain much from having access to contract data, including improved decision-making and visibility.
But merely capturing relevant information doesn’t offer insights. The data must be accessible and comprehensible to relevant stakeholders. Customizable dashboards and user-based permissions can help organizations break down the data and ensure it gets to the right person at the right time. Schedule a live demo today to learn more about capturing contract data and optimizing your business operations.
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