Contracts are the foundations of business relationships. Contracts also need to be managed throughout their whole lifecycle. It may be monitored for compliance, leverage negotiated clauses, and then reviewed for renewals and amendments.
However, it can also be time-consuming and costly. The process can also be manual and repetitive. It’s error-prone, which leads to more costs, missed deadlines, and compliance issues.
Not having the proper contract management can expose you to risks, financial penalties, and even contract compliance issues.
What is Contract Management, and Why Is It Important?
In a nutshell, contract management is the process of managing contract creation, analysis, and execution. It will maximize the organization’s operational and financial performance while decreasing financial risk.
More and more companies now face an ever-increasing pressure to decrease costs and enhance company performance. Contract management might be a time-consuming element for your business. There’s an ever-increasing need to have an automated and highly effective contract management system.
In this post, we’ll walk you through the essential things that you need to know about contract management tools for your business:
1. Document storage and organize
Contract management is beyond the contracts you’re working with. It is also related to the documents that surround the contracts you’ve been working on. It includes cost estimates, schedules, the scope of work (SOW), etc.
The essential thing is for you to find and work on them quickly. An excellent contract maintenance system allows you to sort and organize documents. Ideally, it would be best to look for one that will enable you to store documents under contract listing, not on the document library. By doing so, you can easily find essential contract documents without delay.
2. Standardize your contracts
With the right contract management software tool, you can easily choose from a library of clauses and templates. It allows you to have a steady contract text and clauses.
You don’t have NDAs spread across your company in different versions. You also don’t know how to worry about version control. Internal and external text changes can also be automatically redlined and quickly accepted or rejected.
3. Automated Workflows
One of the most significant issues in the contract management process is human error. That’s why you must always look for ways to streamline the entire process.
A contract management system that has an automated workflow is one of the best ways that you can do that. Rather than notifying employees manually when a contract gets signed, a CMS with workflows sends a notification without employees having to remember. This can help employees who may forget some aspects of the process.
By using the right contract management tools, your business can use the extra time and resources and even customize automated contract workflows. It lets you allocate these resources to other business initiatives.
4. Save time and money
As mentioned earlier, by automating processes, you’re not wasting time manually getting tasks done. You can improve the contract cycle time through automation.
However, it’s worth noting that not all contract management software is the same. Some will have AI embedded throughout to give off more automation and value.
5. Storing contracts in a single place
You no longer need to track down contracts. A contract lifecycle management tool with a contract repository is a great way to store contracts and related documents.
That way, it can be accessed by stakeholders easily and securely from any part of the globe.
6. Search functionalit
Depending on what your organization is doing, you might be dealing with between a dozen to a hundred contracts. You must sort through them and find the contacts you’re searching for.
A sound contract management system has full search functionality to help you. There’s no need to go through pages and pages of contracts.
Instead, a CMS with search capabilities lets you look for the contract you’re looking for, saving time. It is undoubtedly a must-have if you’re a company that wants to streamline the life cycle management of contracts.
Choosing the Right Contract Management Solution
Before you make significant investments for your future, ask yourself these questions before ultimately coming up with a solution:
- Can you easily integrate it with your systems?
- Is it flexible to meet your needs?
- Is it easy to learn and highly intuitive?
- Do you want access to a support team?
- Does it have powerful analytical capabilities?
- Is the platform secure?
It all starts with choosing a knowledgeable vendor to help support your needs and goals. Also, contract management isn’t something that you set up and forget about later.
You need to ask yourself how you can go and enhance your current process. You might also need to work with stakeholders to know their care from a contract management perspective. Hopefully, you have learned something, and you can apply it when choosing the right contract management tool. Good luck!