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- 1 Steps For Effective Contract Management
- 2 Benefits Of A Contract Lifecycle Management
When you are running a business, one of the most critical assets that you will have to manage are contracts. Left unchecked and mismanaged, contracts can cost up to 9% of a business’ annual revenue.
Contracts are essential for many reasons. For one, it is what protects companies from bad actors and unfair lawsuits. Before the prevalence of contracts, businesses just relied on good faith that their clients and vendors would not cheat them. Now, however, there are legal measures that ensure that all the terms of a contract are followed. By not following the terms and agreements stipulated in a legally-binding contract, you are opening yourself and your company to several legal actions.
Because it is still a relatively new discipline, many company owners and business managers are left scratching their head as to what is Contract Lifecycle Management Software and how it could be used to help boost their business. This article will discuss the steps for proper contract management, how a Contract Lifecycle Management Software streamlines this procedure and the key benefits of integrating Contract Lifecycle Management into your business procedures.
When you decide to have a Contract Lifecycle Management Software, the first step that you have to do is to encode all existing contract data so you can have a clear visual of ALL your contracts.
Now that you’ve encoded all of your contract data, the next step is to track any important data that you should know. Your contract metadata, like any upcoming deadlines and important dates that you have to know, should be given priority.
When you have experienced writing and drafting contracts, you will realize that many of the terms are similar to each other. This means that the ability to create Contract Templates will make the process considerably quicker. When you enter a new deal with either a client or a vendor, it will subsequently be much faster to draft a new contract.
The approval workflow process of contracts can take a long time, especially when it involves many departments. With a Contract Lifecycle Management Software, this procedure is made slicker as approval can be completed digitally on any device, from anywhere.
The process of negotiation will generally involve a lot of back-and-forth communication and different versions of documents. Using email and attachments for this process can quickly become unwieldy and confusing. Contract management software allows users to centralise the process and maintain tight version control and records of updates and changes carried out. Users can always be sure they’re working on the latest versions of the documents and can immediately notify other parties when their review is complete.
When you have the final draft of the contract, it is now time for the contract to be signed. A Contract Lifecycle Management Software with integrated electronic signatures will make it much more convenient for all parties. Instead of having to meet physically, contracts can be sent through email and then signed digitally for a much faster transaction. What’s more, the history of the document, its different versions and the names of the people that have worked on it will all be captured alongside the signature details in a single contract record.
This makes it considerably easier to audit the process at a later date when required.
The contracting process generates a massive amount of data. Not only is it helpful to understand the value of contracts that have been signed and their respective renewal dates, but it’s also beneficial to know how efficient your internal procedures are.
How long does it take to sign a contract on average? How many parties are involved? Which clauses are regularly disputed by counterparties? These are all critical questions to be able to answer as inefficient processes have a material cost to the business over time.
When it comes to a Contract Lifecycle Management Software, there are many benefits. The company can experience these through both tangible and intangible means. Here are some of the key benefits of having proper Contract Lifecycle Management.
A full visual of your contract data is vital so you can see all of your contract data. Managing a handful of contracts is simple and could quickly be done with a simple Excel spreadsheet. However, as the company grows, so does the number of contracts that a company has. Expecting a single employee to manage an entire portfolio of contracts would be inhumane.
This problem is best solved by having a specific software program to support your team instead of relying solely on your company’s human resources. A Contract Lifecycle Management Software will give you full visibility of your contract data, making it easier to remember deadlines while also seeing the agreed-upon terms so you can be sure that you are following them. Compliance is, after all, much easier and cheaper than a full-blown lawsuit.
Fully digitising your contracting process will make it efficient and considerably cheaper than manual alternatives. Removing the need for printing documents and in-person signatures saves a massive amount of cost.
Another way of minimizing costs is by protecting your company from the exorbitant legal fees that come with a lawsuit sent your way by clients or vendors who feel that you did not follow through with all the agreements.
Maintaining tight control over compliance, full audit histories and secure access to confidential documentation is an excellent way to reduce costs in the long-term.
The Contract Process is streamlined and made faster by a Contract Lifecycle Management Software. There are a lot of processes that are made more efficient by a software program.
Faster communication and the ability to share documents seamlessly will result in time-savings. Having easy access to digital versions of the files and being able to search quickly through metadata for the right documents is also far more preferable to searching through email accounts or even filing cabinets for hard copies.
Having integrated electronic signatures provides even more efficiency gains.
A business will always be facing some risk.
However, what is good with a Contract Lifecycle Management Software is that it will allow you to record and monitor risks against specific contracts and vendors over time.
You can build a risk profile and apply remedial measures were required to keep risks to a minimum. You can also report on them regularly to stakeholders to maintain visibility.