Businesses are gradually beginning to see the value of using technology to manage their legal agreements. According to the latest studies, the digital contract management market will reach an estimated USD 4.6 Billion by 2029. But adopting contract management software is not always enough to get desired outcomes. Each enterprise has its own unique set of requirements and obstacles.
The one-size-fits-all approach might not be appropriate for the company's legal needs. They need to tailor the off-the-shelf contract management solution to serve their purpose. Hence, businesses require a comprehensive contract management strategy to make the most of their legal agreements. The legal department can devise a course of action to increase efficiency, decrease risk and promote collaboration.
A contract management strategy is an intuitive approach to creating and maintaining legal agreements to maximize results. Using contract management software to carry out the entire contract lifecycle can help to automate the workflows.
A contract lifecycle involves the creation, negotiation, review, execution, and post-contract management. Organizations may ensure they get what they need from each phase by implementing a well-thought-out contract management strategy. It helps the contract managers to gain a deeper understanding of the contract portfolio to identify and mitigate potential risks. Moreover, contract strategies enable businesses to improve the contracting processes they already have in place.
When it comes to business, having a plan is always better than being ill-prepared. Contracts will always entail inherent risks, but companies can better manage them if they have a strategy. Additionally, they will not be caught off guard by unforeseen challenges throughout the contracting process.
If every step of the contract lifecycle management is meticulously planned out, organizations can reduce the liabilities that come with legal agreements. They can protect their sensitive contract data from breaches and leaks. Moreover, with a contract strategy, organizations can ensure that they create contractual agreements that meet all the necessary requisites. And the legal counsel can ascertain consistency and compliance in the contracting process.
Effective contract management strategies lay the path for long-lasting, productive business partnerships. Organizations with an effective contracting process are significantly more likely to maintain connections with clients, vendors, and staff. They can guarantee that their clients will not have to wait long to sign contracts. Some of the other benefits of contract management strategy are:
Below, we look at how businesses can achieve definite returns with a purposive contract management strategy.
Scaling businesses and legal departments are always juggling contracts. And contractual agreements are dynamic entities that need constant attention. They offer the possibility of new opportunities and identifying risks. Without proper contract management strategies, organizations are missing openings to increase the contract value and grow business. According to the risk and value associated with the contract portfolio, the contract managers can strategize an approach that works for their unique situation. Here is how you can utilize contract management software to devise effective contract management strategies.
Digitizing the contracting process must be the priority for any business with a heavy portfolio. Automating contract drafting, editing, reviewing, and signing can save a lot of time and effort for the legal department. Moreover, automated workflows make it easier to reduce errors and lags in the contracting process.
Even without constant human intervention, the legal agreement will successfully advance through the contract lifecycle. Accurate and timely contracts are much more likely to pass through the final stage. Delegating manual and repetitive tasks to automated workflows means the legal has more time to devise strategies for the company. Contract management software and automation also offer the legal department better control and visibility of the contract lifecycle.
Risks associated with contractual agreements are greatest when the contracting process lacks structure or logic. Contracts dictate the terms of a business relationship and hold a lot of sensitive information. Therefore, the competency and security of legal agreements are always a concern for organizations. Ineffective contracts or leakage can lead to financial, operational, and legal difficulties. Therefore, implementing a system that guarantees the appropriate information reaches the right person at the right time is one of the major goals of a contract management strategy.
Contract managers can utilize approval workflows and user permissions to curb the flow of information in the contracting process. Customizable workflows mean the contract efficiently proceeds from one authorizer to another. With version history, the relevant parties are always aware of all the amendments made to the legal document. Also, with appropriate planning and a customizable dashboard, organizations can ensure that only authorized personnel access sensitive contract information.
Depending upon the complexity of the legal document and the scale of the organization, the contract lifecycle can turn into a lengthy procedure. The organization needs to draft a contract, then there’s negotiation, review, and approval. Only after all these hurdles are passed do the contractual agreements get to the signing stage.
Hence, before initiating the contracting process, the contract managers must strategically devote time to each phase of the contract lifecycle. For instance, for contracts with multiple approvers, the review process might be long-lasting. Organizations must allocate time for these specifics to deliver the legal document on schedule. Budgeting time also helps to avoid delays and ensure that the contract lifecycle is always on track. Consequently, contract managers can identify time-draining tasks and devise a plan of action for them.
The future of a business relationship is heavily dependent on the success of a contract. There is no way an organization can retain a client, vendor, or employee without fully complying with the contractual agreement. When enterprises have thousands of contracts to worry about, it is hard to keep track of all the obligations and milestones. And missed deadlines and stipulations can lead to more trouble than just upset customers.
Therefore, organizations need a deliberate system in place so that all the terms and conditions outlined in the contractual agreement are fulfilled. Users can employ the obligation tracking function offered by contract lifecycle management software to set up notifications for specific stipulations. They can also utilize automated reminders to keep track of reviews, renewals, and expiration dates. Including obligations and milestones in the contract management strategy means they are never an afterthought for the organization.
Any contract management strategy is ineffective without contract analysis and reporting. Contract data and metadata are a means for organizations to optimize their contracting process. They can provide actionable insights to identify risks and opportunities. All contract-related information is essential to maintain customer and vendor relationships.
Businesses can make use of digital repositories provided by contract management software to aggregate all the active and inactive contracts in a centralized location. Moreover, the AI and OCR (Optical Character Recognition) functions enable users to search for any contract data within minutes. Easily accessible content saves time and improves accuracy in the contracting process. Organizations can also analyze collected data to determine opportunities for improvement.
Contract creation and management are tasks left solely to the legal department in most organizations. But there is a lot that other departments contribute to the contracting process to improve contract performance and value. For instance, there is no one else who knows clients better than the sales team. Including salespeople in contract lifecycle management can enable businesses to produce client-focused agreements and improve the chances of closing the deal.
That is why businesses require a contract management strategy that perpetuates successful collaboration across the organization to generate legal agreements. Contract lifecycle management software enables vendors, finance, and other teams to contribute to the contracting process with easy access to contracts and their workflows. Self-service contracts also help the legal to take a backseat for high-volume and low-risk contract generation.
Adopting software and not utilizing it to the fullest does not bode well for the growth of an organization. Hence, any contract management strategy must prioritize choosing technological adaptations that are useful and easy to adopt. In the case of enterprises dealing with sales agreements, it makes much more sense to integrate contract management software with CRM (Customer Relationship Management) platforms.
Organizations can utilize Microsoft Dynamics or Salesforce integration to increase the role of salespeople in the contracting process. Moreover, the legal team can auto-populate customer data to generate contracts. The right integration can go a long way to improve the efficiency and profitability of a contracting process. It is up to businesses to strategize and determine the best adaptations for their needs.
Every organization aims to improve the quality and outcome of its contractual agreements. But contract generation, review, approval, and execution are time-consuming processes. And contract managers often cannot find the time to realize the full potential of their legal documents. Devising a full-fledged contract management strategy equips the organization to deal with contractual risks and opportunities. They can optimize the contract lifecycle, increase efficiency, and much more. In the end, contract management strategies empower both parties to make the most of their contractual agreements.
Schedule a live demo of Dock 365's Contract Management Software instantly.