Digitalizing contracts provide businesses and organization with plenty of advantages. Moreover, it is a necessity in modern business conditions. We are giving you a complete guide to digital contracts through this post.
Content Guide-
What are digital contracts?
A digital contract is an electronic agreement created to outline a business transaction between two or more parties. According to a report by the Global Contract Management Association (IACCM), a whopping 80% of business activities will include contracts in some manner. However, around 20% of contracts (globally) are permanently lost. However, digital contract software provides organized, secure contract storage and efficient contract retrieval.
Take a look at the figures below for some quantitative data points regarding digital contract software for businesses based on recent research by World Commerce & Contracting.
Digital contract software helps companies swiftly respond to organizational shifts and proactively prepare for product launches with on-demand reporting and the ability to customize specified recovery requirements.
The Competitive Business Advantage of Contract Digitization
Contract digitization supports risk mitigation and management with secure contract storage, sharing, and signing. In light of the recent pandemic, new risks have been presented in modern contract management. However, with the support of a digitized contracting approach, contract managers can easily flag and address contract risks. Contract digitization revolutionizes contract management, allowing businesses and organizations of all sizes (from small businesses to enterprise-level organizations) to confidently manage complex contract portfolios and address contract-related demands. Digital contract management is perfectly suited for companies with a remote workforce.
In addition, contract digitization is often paired with artificial intelligence (AI). AI in contract management is used to improve contract search, retrieval, data analysis, and more. One of the most advantageous capabilities of AI in the contract management space is how it can identify specific contracts that increase risk exposure and vulnerability. AI can also flag documents containing risky provisions and support your team through making appropriate changes.
6 Keys to Digital Contract Implementation
#1: Know The Ins and Outs of Your Contract Management System
To properly implement your new contract management system so you can successfully monitor and analyze your contract metadata, take time to learn all of the features included in your solution and ensure your whole team knows how to properly use the system. It’s essential to understand your system’s strengths and weaknesses, as this can support you in developing appropriate KPIs.
#2: Create a Contract Management Software Implementation Team
We recommend that you assign reliable team members to be responsible for overseeing the implementation phase of your new software solution. Administrators and contract managers can lead the implementation, monitoring an efficient and streamlined system implementation. We suggest assign two to three individuals as administrators over the implementation.
#3: Support Your Team with Sufficient Training
Without question, providing your team with appropriate training on your new automated contract solution is one of the most essential components to a successful implementation phase. This ensures that productivity is maintained once the system is in place and that company protocols and compliance standards are adhered to appropriately.
#4: Schedule Audits and Standardize Security
Schedule routine audits to ensure your contract management procedures maintain compliance to various policies and regulations. Conducting audits regularly can support your team in flagging risks and taking preventative action before they become large-scale issues. We suggest standardizing security rules via permissions-based access controls to ensure that only authorize employees have access to sensitive contract data.
#5: Monitor Performance
Transitioning from traditional paper-based contract management to a digital approach will result in significant performance improvements in workplace productivity, efficiency, and ROI. Proactive, intuitive contract data dashboards provide users with on demand insights of contract performance and their status within the lifecycle.
#6: Consider Your Company’s Unique Needs and Goals
Digital contract software is built to increase efficiency in the modern contract lifecycle. In addition, these software solutions can often be customized to your unique branding and business objectives. It’s necessary to adopt a solution that is able to adapt and grow with your organization’s needs and the changing demands placed upon it.
12 Reasons Why You Should Transition to Digital Contract Software
1. Saves Money
The time spent drafting, printing, and sending physical contracts to stakeholders and clients causes unnecessary delays. Remember, time is money! The elimination of paper from your contract management process is also cost-effective. Remove paper-based contract processes and the costs that come along with them. Now, you won’t have to spend money on paper, printing ink, shipping costs, scanners, printers, printer maintenance, and other things. For more on cutting costs, click here.
2. Remote Accessibility
With remote access to your contracts and associated data in a cloud-secure contract repository, your authorized employees and stakeholders can easily obtain exactly what they need, self-service on contracts, and keep the workflow propelling in forward motion no matter where they are located geographically.
3. Automation
Flexible, customizable contract workflows increase the standardization and reliability of your contract management procedures. With automation, you eliminate risks, cut turnaround times, and improve compliance management.
To add, the many advantages of digital contract software far outweigh any of the positives of a manual, paper-based contract approach. The graphic below expresses exactly why.
4. Improve Adherence to Compliance Regulations
Digital contract software can support you in maintaining adherence to industry standards, contract laws, and various compliance requirements. You’ll confidently conduct contract management processes with a secure solution that protects client information while allowing contractual parties to efficiently sign and execute legally binding agreements. These solutions are incredible because they make it remarkably easy to track risky terms and risky activities (i.e., questionable procurement procedures, etc.).
Maintaining compliance supports your organization by allowing only authorized users to access and edit contracts – providing you with complete contract control. This can result in the following:
5. Optimized Customer Experience
Digital contract software offers customers, stakeholders, and vendors the ability to securely sign contracts in seconds on their digital device (typically with auto population of fields) without the need to wait for a physical copy. Customers often prefer digital contracts due to their speed, security, and efficiency. Digital signatures are repeatable, so in many instances, users simply click a button to populate the signing field with their saved signature.
6. Streamlined Performance Analysis
Digital contract software makes it easy to assess vendor performance with performance scorecards and data readily available at all times so you can create and share custom reports. With your performance evaluations, your system rewards your top suppliers which directly improves your business partnership for the long-term.
7. Improved Collaboration
With centralization of contract data and the efficiency of the contract intake and request phase, you’ll receive all relevant client or vendor information at the very beginning of the contract lifecycle. This means that later in the contract lifecycle during approvals, reviews, and negotiations that communication is streamlined with in-document commenting, “@” mentioning, automation, and email integrations. All of these factors combined allow for productive, collaboration, and secure contract lifecycle management.
8. Optimized Performance Monitoring
Take your contract monitoring to the next level with intuitive digital contract software. Dashboards allow you to easily oversee the status and performance of your contracts in all phases of the contract lifecycle.
9. Use Preapproved Contract Templates
Build accurate contracts in minutes with compliant contract templates that are preapproved by your legal department. This means you can reuse your standardized templates for common contract types and leverage electronic signatures for rapid signing and execution for high volumes of contracts. When consistently editing your agreements, you can simply change the one field in your template as needed. Digital contract software autosaves your templates for you to work on them at later times.
10. Save Time
Reduce bottlenecks and delays by digitizing your contracts. Manual contract management takes more time for clients to receive, consider, and physically sign contracts. Businesses with higher volumes of contracts and more employees may have longer turnaround times, which can potentially harm the ability to seize contract opportunities as they come. Instead of having deals stall out because of avoidable delays, you can allow your potential clients and vendors to retrieve, read, and sign contracts on their own devices within seconds due to the support of a digital, cloud-based contract system. You’ll also save time during contract drafting thanks to contract templates and auto population of metadata, meaning you can immediately update files and send them off to prospective clients without spending time scheduling a meeting.
11. Integrate, Integrate, Integrate
With electronic signatures, CRM, and other digital business solutions, you can integrate your contract management system for robust, collaborative contract management. Some of our personal favorites include the Microsoft Office Suite, SharePoint, DocuSign, Adobe Sign, and Sertifi eSignature.
12. Effective Risk Management
Digital contract software improves risk management strategies by decreasing human errors and the likelihood of tampering. Discrepancies in data entry, failure to review contract content, and noncompliance all result in avoidable and expensive repercussions. By standardizing your contract management procedures with digital contract software, you will ensure that reviews are thoroughly completed and that contracts aren’t approved with inaccuracies and improper terms.
In traditional, paper-based contract management, contracts are unfortunately commonly manipulated post-signature. Digitizing your contracts can serve as a preventative measure against this phenomenon, reducing potential for legal disputes.
Digital contracts typically result in significantly less errors than that of the paper-based, traditional alternative. This is because digital contracts provide contract authors with complete control over the history of the contract, as well as the ability for the contract author and the recipient to read and change terms before signing. Digitized contracts are created for effective collaboration, meaning each party can communicate and determine fair and mutually beneficial terms.
A Note on Automation
Today, large organizations use digital contract software to automate their internal data, communication, and collaboration for streamlined contract management and increased opportunities to close deals. Automation is a phenomenal risk-prevention tool. Automating your contract management can help protect your brand reputation and safeguard against contract breaches.
3 Best Practices For Using Digital Contract Software
1. Prioritize Contract Accessibility
Give your team the best chance for success by making contract access pain-free. How? By storing your contracts in a secure, cloud-based digital repository. Configure role and permissions-based access controls to ensure that your contracts only land in the right hands.
2. Conduct Regular Performance Analysis
Retrieve exact documents for analysis in seconds with advanced keyword-based searches and by using customizable, savable filters. With trained AI built into your contract management system, the AI can analyze document content and provide search results according to select clauses, key dates, and other pieces of metadata. From here, you can generate custom reports based on selected contract metadata.
3. Automate Contract Renewals
At the point of contract expiry, you might be required to renegotiation contract provisions. To efficiently manage all of the key dates and contract renewals in your portfolio, we suggest automating your contract renewals and employing e-signatures to streamline this phase of the contract lifecycle.
10 Key Features of the Best Digital Contract Software
1. A Cloud-Secure Digital Contract Repository
This feature offers centralized, secure contract storage, search, and ongoing management of all of your organization’s contracts. Rather than rely on outdated, manual contract methods and physical storage in filing cabinets, shared drives, desktops, and other disjointed methods that are highly susceptible to risk exposure and tampering, you can confidently keep your contracts within reach of all of your authorized employees in your repository. A SharePoint-based contract repository provides visibility and transparency over all of your contract activities.
2. Automated Reminders for Contract Expiries and Auto Renewals
Automated reminders increase awareness within your organization of key dates, deadlines, and time-sensitive contract management responsibilities. This means that you can configure custom reminders to be triggered and sent to select stakeholders and employees regarding critical actions and tasks to maintain a proactive approach towards your contracts and the deadlines associated with them. In this manner, you ensure that nothing slips through the cracks – whether it’s an unwanted autorenewal, expiring contract, milestone, obligation, etc.
Creating custom reminder flows is simple with your digital contract software, and these flows keep the right people in the loop. With a simple notification, you’ll safeguard your organization from preventative financial and reputational consequences resulting from missed deadlines, milestones, and obligations. Task management becomes far more efficient, and managing your key dates becomes streamlined and centralized, meaning you’ll never need to use a sticky note or Gmail to keep tabs on your due dates.
3. Contract Templates and Clause Libraries
Legally compliant and preapproved contract templates and clauses help to prevent risk, increase compliance, and improve the speed of your contract drafting and negotiation phases. You’ll create accurate, professional agreements and establish consistency in your contractual language.
For the most contract security and risk prevention possible, a contract template library and a clause library are perfect – especially when compliance is concerned. Template libraries include preapproved templates based on the type of contract, while clause libraries based on clause types (all preapproved by your legal department) are searchable and easy to insert into fields within your contracts.
4. Version Control
Digital contract software includes version control capabilities to ensure that your teams only work on the most recently updated contract drafts. With version control, you gain insights on the exact dates and times that changes were made to each document, as well as learn who made what changes. Version control supports your risk mitigation efforts by offering the ability to monitor all contract activities with recorded times, which can help prevent against accidental duplication or deletion of contract data. Redlining, approvals, and contract reviews become far more efficient, cohesive, and accurate with the assistance of version control.
5. Flexible, Customizable Workflow Automation
Build automated contract workflows to standardize each phase of the contract lifecycle, predetermining the exact route that your contract will travel. Automated workflows allow users to build-out a series of steps for each contract, notifying the correct stakeholders along the way of which actions to take on the contract before it is sent off to the next person for the following step. Workflows can be bulk applied to groups of contracts, groups of clauses, or to single documents. For optimized speed and collaboration, leverage automation to streamline reviews, drafting, signing, negotiations, and much more.
6. Electronic Signature Integrations
Electronic signatures are used in nearly every organization today due to their security and speed. Digital signatures improve the client and vendor experience with a smooth and efficient signing and approval process, where signers can sign contracts on their digital devices at any time, any place – no need for paper contracts and snail-mailing. Here at Dock, our solution is integrated with Sertifi, DocuSign, and Adobe Sign.
7. Advanced Security Settings
Contract managers and administrators can configure their systems with permissions-based and role-based accessibility features to ensure that only authorized users have access to sensitive contract data. However, there are several security settings and features to keep your eyes out for when purchasing a contract solution. The top security and compliance features to look for include the following:
- Permissions and Role-based Access Controls
- Audit Trails
- Single Sign-On (SSO)
- Multi-Factor Authentication
- Passwords
- Licenses
- Electronic Signatures
- Vulnerability Testing
- Cloud Security
8. Proactive Data Dashboards
Analyze current contract data, then build and share custom reports with stakeholders and upper management within minutes. Staying in the loop of every contract detail is made possible with insightful dashboards displaying on demand contract metadata and performance markers. This means you can measure the progress and performance of each contract and gain understanding on how productive each lifecycle is. Dashboards are a great resource for learning where you can optimize your current contracting strategies and where risk is present so you can take proactive measures to mitigate risks.
9. Efficient Contract Intake Phase
The contract intake and request phase largely determines the remainder of the contract lifecycle. Digital contract software offers the ability to create standard, customized intake forms to streamline client information collection at the beginning. With these forms, you can set-off automated workflows to start your contracts off on the right foot. In addition, these forms help mitigate bottlenecks and discrepancies in manual data entry.
10. Audit Trails
Analyze data to assess compliance and to increase organizational awareness of compliance regulations, allowing you to make data-driven and compliance-oriented business decisions. To add, audit trails boost transparency of your contract management procedures, where you can easily review the history of each contract.
What is a Contract Repository?
Outdated Manual Contract Storage vs. Contract Repositories
Outdated manual contract storage by way of shared drives, filing cabinets, desktops, and other disjointed storage methods only increases risk, potential for tampering, and the likelihood of contracts gone rogue. In addition, it can take up to weeks (or even months) to find a missing contract. So why use an outdated storage method when there’s an easier way with filters and advanced, text-based search features? Digital repositories allow you to find exact documents in seconds at the times you need them most – such as negotiations.
Contract Repositories Defined
Digital contract repositories (often referred to as “centralized repositories” or “contract repositories”) are electronic storage systems built for the simplified management, organization, rapid retrieval, and secure storage of your company’s contracts. Within your repository, authorized users can easily sort, retrieve, archive, tag, and store contracts and other relevant files in a cloud secure, centralized location. In your repository, you can use custom, savable filters and text-based searches to find exact contracts, clauses, and metadata.
If you currently experience difficulty in managing your contract portfolio and they key dates associated with each agreement, then adopting contract management software with an intuitive digital contract repository is a great place to start. This is especially pertinent for organizations with contract portfolios growing in both complexity and volume. A digital repository supports you in keeping up with the growing demands placed on your business.
6 Reasons To Say Goodbye to Manual Contract Storage
Kiss disorganization goodbye and make manual, paper-based contract storage a thing of the past. Here’s six reasons to introduce a digital repository and let go of outdated storage.
1. Decreased Accessibility of Contract Data
Email chains and filing cabinets are no place to store sensitive information – especially the information contained in legally binding agreements like business or employment contracts. By storing your contracts in risky, inaccessible places, you drive up bottlenecks and make it harder to find your contracts – causing completely preventable delays.
2. Poor Security
Keep contracts completely secure in your digital repository. Manual, physical contract storage is susceptible to data breaches and leaks. Outdated storage methods also do not offer the ability to encrypt your contract data at rest and in transit, or to configure user permissions-based access features, which a digital repository can provide.
3. Easy to Forget Deadlines
Never miss a milestone, auto renewal, contract expiry, or other time-sensitive contract activity ever again with the support of customized, automated notifications to help remind your team of upcoming priorities.
4. Inability to Control Versions
Manual contract storage can increase confusion regarding which document draft is the most recently updated one. Eliminate confusion with version control provided by a digital solution. This means you won’t have to worry about document duplication or team members working on the wrong draft. Increase visibility and decreases confusion with advanced digital version controls.
5. Lacking KPI Tracking
Track your KPIs like a pro with digital contract software. Manual contract methods do not provide on demand access to data, so tracking performance KPIs becomes time-consuming.
6. Costly Compliance Results
Manual contract storage drives up costs due to the financial penalties that come with noncompliant contracts and failed adherence to compliance regulations.
7 Reasons to Say Hello to a Digital Contract Repository
1. Centralized Storage
Give your whole team a single source of truth when it comes to finding contracts and associated data. Now, your authorized users and stakeholders can retrieve contracts hassle-free, meaning they can find accurate data pertaining to their business partnerships. Furthermore, your contract management solution and repository are equipped to integrate with various other electronic business solutions (i.e., CRMs, e-signatures).
2. Increased Access
Contract repositories increase the speed of contract access thanks to custom filters and text-based searches. You can sort through thousands of documents and metadata in seconds, retrieving exact data on demand. Simplify contract searches, data analysis, and report generation with the help of an intelligent digital repository. Here, you can select exact data points to determine updated KPIs and monitor contract performance with your proactive contract data dashboard.
3. Cut Costs
You’ll save a significant amount of money by simply digitizing your contract storage. Due to the increased visibility, risk mitigation, speed and efficiency of data retrieval, standardization, and ability to track your contracts, you’ll reduce any of the costs associated with noncompliance, lacking risk management, and delays.
4. Boost Security
Maximize contract security with cloud security, permissions and role-based access controls, encryption, Single Sign-On (SSO), custom authentication configurations, and many other key security settings.
5. Use Audit Trails
Seamlessly gain insights on your contracting activities with audit trails, providing a full overview of the contract activities with time and date stamps. In this manner, contract histories are easily accessible.
6. Track KPIs
Achieve KPIs with the assistance of a contract repository. Custom reporting, instant data and contract access, and intuitive dashboards empower your to make data-based choices in your contract strategy.
7. Improve Collaboration
Contract management should be a collaborative process allowing for the seamless flow of communication and ideas between departments, business partners, and stakeholders. In this manner, a digital contract repository can simplify the contract lifecycle and ease the reviewing phase with in-document redlining, commenting, and e-signatures.
Learn more about our Dock 365 Contract Management System here.
Learn more about Contract Lifecyle Management (CLM) Software here.
