The fundamentals of contract management process
Contract lifecycle management: The 5 steps of CLM
A guide to contract management - what is it and what are its benefits?
Contracts are something that affect all businesses. Only on rare occasions will a business never have to use a contract - and the legal instances where that happens are hard to imagine. Yet, contracts are also something that very few businesses use effectively. Contracts can actually be used to help a company become more productive, strengthen business relationships and ultimately be more profitable. So how is that possible? Through successful contract management.
Contract management is key when it comes to harnessing the power of contracts. Or, rather, successful contract management is key to effective contracts. But what exactly is it? And what, therefore is contract management software? In this extensive guide to contract management, we answer those queries as well as identifying what all the benefits of successful contract management are. They make for compelling reading.
What is contract management?
Contract management is the process of overseeing the lifecycle of a contract from creation to completion and beyond. It is important to remember the beyond when it comes to contract management. Contract management does not stop when a contract has been signed. Instead, contract management will ensure that the contract is correctly stored, organized and accessible to those that will need to refer to it in the future. Additionally, it will also ensure that any actions that need to be taken in accordance with stipulations in a contract are followed and executed.
Contract management software
Contract management software is technology that simplifies and automates as much of the contract management process as possible. As a result, it leaves individuals with more time and energy to focus on other tasks at hand where they can add real value. Furthermore, with the right software at hand, you can also reduce the amount of errors in your contract management and thereby limit legal risks and potential liabilities for your company.
Different contract management software packages will work in different ways and have different functionality. However, it is important to ensure that any contract management software that you use not only meets your needs and requirements, but it also does so in an affordable way too. Contract management software does not have to be an expense that only large corporations can afford. Indeed, the very best packages will be accessible to SMBs so that those companies without a dedicated HR or Legal department can focus on the day to day operations of their firm. In doing so, they will improve productivity as well as having contracts in place that also maximize financial performance.
Why Contractbooks management software is market leading
Contractbook’s contract management software focuses on a contract's aforementioned lifecycle. The platform aims to materially reduce the time it takes for a contract to be completed while optimizing the finished product. The result is that contracts start to be the assets they should be seen as. In doing so, companies can then go on to leverage those contracts to generate even more value further down the road.
For that reason, we focus on five steps of the life of a contract. Those steps are all integrated into our software package already so that when it comes to using it, individuals will find the platform intuitive from the start. Contracts are optimized from the beginning therefore, resulting in the best contract possible.
To start with, Contractbook’s contract management software helps users create and write a draft contract. Doing so can be done using the software’s flexible editor or automated contract drafter. We also have a wealth of templates available in our library which make fantastic starting points for many different types of contract. Not only does using a template save you time, it also ensures that once completed, it is a legally reliable document too.
Secondly, Contractbook’s collaboration step is hugely important to the software’s overall success. That is because having to pull in many different individuals’ thoughts and opinions on a contract is laborious, time consuming and difficult. Ensuring that everyone who should have an input, has an input is taxing and a tricky juggling act. However, using Contractbook’s software, draft contracts are shared quickly and painlessly. It allows employees and outside parties to work on the draft without lengthy email chains or snail mail hard copy revisions. Importantly, it also reduces the risk of incorrect versions being worked upon. Finally, thanks to the ability to collaborate so easily through the platform, reviewing and negotiating contracts also becomes quick, and you increase mutual trust by having a version history of the document available.
Once the final draft has been agreed, Contractbook’s software allows all relevant parties to sign the contract with ease. Hard copies of contracts do not have to be printed and sent - adding days and weeks to the process. Instead, using digitized signatures the signing of a contract can take just a few hours. It is secure too as the software employs the use of two factor authentication. Technophobes may worry about this step and its ability to be legally binding. However, digitized signatures are legally binding in many countries - and arguably are better to use too. In the case of our software, we include time and location stamps with every signature. Such information can be very helpful in the case of legal disputes.
Once signed, Contractbook’s contract management software then helps companies organize their contracts too. The importance of this cannot be underestimated. With so many companies improperly storing their contracts, they are missing out on a lot of potential not to mention leaving themselves open to legal risk. By not being able to locate a contract due to ineffective filing, a company may not be able to find a contract they later rely on for any claims made against them or claims they want to make. Additionally, by storing contracts properly they can be continually updated helping to improve them and company efficiencies.
Contractbook’s software employs the use of cloud storage which makes companies more agile and dynamic too. Employees with the correct access can access the documents they need from anywhere. Plus, our storage makes issues such as GDPR compliance easier too. Finally, any data held within contracts can be quickly used for analysis which can help highlight any weaknesses or strengths that may help a company in future contract negotiations.
The final stage in Contractbook’s software is the execute step. The execute step is of paramount importance to ensure that any work completed as a result of the contract is done so in accordance with it. The software helps allocate tasks that stem from the contract and allows all individuals to see when all those tasks are being completed.
What is special about Contractbook is not every single feature. It’s the fact that we offer an end-to-end solution, so you can replace all your point solutions with a single streamlined workflow. That will not only save you money but also streamline your workflow and enable you to leverage the date in the contracts.
Throughout all of this, the platform will automate as much of the process as possible. People who need to collaborate are notified for example, negating another individual’s need to keep nudging a person who is slow to get involved.
The advantages of successful contract management
Successful contract management can make a huge difference to the productivity of a firm. By ensuring that each contract is completed in a timely and effective manner, contracts become those very assets that a company can use and leverage in the future. However, the success of contract management does not result in better productivity for just one reason alone. Instead, the huge number of advantages add up to that huge difference, which is why it is so crucial for companies to understand why successful contract management can be such a game a changer.
- Time saving
Perhaps the most important or obvious advantage to successful contract management is the sheer amount of time that is saved when it is done well. With competent and capable oversight of the process, a contract can be created and completed far more quickly than without it. Plus, the energy wasted and lethargy from relevant parties with respect to a contract is that much more diminished.
The element of time saving, importantly, can be even further benefited from when using highly capable software. Through automation and the ability to share documents with collaborators easily, time is saved and errors reduced - thus saving even more time again. Then, of course, when a person’s time is freed up to concentrate elsewhere, or work that stems from a completed contract can begin, the time saved through successful contract management cannot be underestimated in terms of its effect on a company’s bottom line. Resources, in short, are better utilized.
Even without an effective contract management software package, the successful completion of a contract will need effective collaboration and communication between relevant parties. By overseeing the process properly, the very best collaboration is achieved with individuals inputting their wants and needs in a timely fashion which can materially reduce the length of time it takes for a contract to be completed. Plus the content of that contract will be far superior too.
While effective collaboration does not necessarily mean that all parties have what they want captured in a contract, it does at least mean that their opinions are heard. The result is a far more efficient and productive collaborative effort that creates a contract of real value. A more powerful business relationship may be formed for example while the legal nuts and bolts are correct minimizing legal risk in the future.
The idea of a powerful business relationship is an interesting one that is not only fueled by better collaboration, but also from the appearance of having a competent contract management process in place. In the case of using specialized software, this is even more so the case.
How a company looks when overseeing a smooth contract completion process is perhaps an advantage that is easily overlooked however. Yet, it can do wonders for a company’s reputation when done well and therefore future business is more likely as a result.
If a company is organized, doing business with them is far more pleasurable as well as profitable. If entering into a contract with a company is hard work, a sour taste may be left in either party’s mouths and affect the working relationship as a consequence. It does not need to be that way. With effective contract management, getting a relationship off to a good start, right from the beginning, is far easier and will help strengthen the relationship instead.
- Maximize future productivity
When a contract is created successfully and managed effectively too, it materially improves the chances of the parties involved benefiting from it. Financial returns are often improved as the best terms were well negotiated in the contract - as well as being documented in a legally appropriate way.
A quality contract also ensures that both sides know where they stand in terms of what is required of them. It does not leave any room for doubt. As a result, tasks, activities and projects dictated in the contract are completed in a cooperative and efficient manner. The side result of when terms of a contract are upheld and stuck to, is that no disputes are raised as a consequence. That means all energies are channeled into productivity - as opposed to arguing about what should be done or what has not been done.
- Cuts costs
All of the above advantages help produce another benefit to successful contract management and that is the fact that it helps cut costs. From the time saved in completing a contract to the efficiencies gained from having a more effective contract, the impact on a company’s bottom line can be substantial. Employees can be better assigned to tasks that use their skills which can add value, as opposed to being held up by an incomplete contract that is taking far too much of a person’s bandwidth to complete. For companies without a dedicated HR or legal team, that can have big financial repercussions. It means a person’s expertise can be used as opposed to using them to complete a contract that does not draw on their knowledge base.
Plus using a contract management platform like ours can also provide a company with those aforementioned helpful templates. Templates are another way to cut costs as less is spent on legal fees as well as, again, the time it takes to write a contract from scratch.
- Reduces legal risks
Of course, the main reason we all need contracts in place is to ensure that we all know where we stand - and legally too. By having a binding contract, we protect either ourselves or our company's future needs. In knowing what is required of us as well as our company and the company we are doing business with, a contract ensures that we have reduced our legal risks - as long as we stick to the terms of the contract created.
That is why successful contract management is so crucial. By creating a high quality contract that involves all relevant parties, the amount of legal disputes that are encountered are reduced and both sides of the contract are happy with the ensuing results. Or if one party is not standing up to their side, you have the well produced contract to fall back on.
Contract management is something that not everyone is aware is needed. However, when contract management is done poorly, the subsequent effects can have some detrimental impacts on those involved. Not only is time wasted in completing a contract - time that could be better spent elsewhere - but money is too. Plus, it leaves both sides open to legal issues further down the line that may be tricky to resolve.
When faced with this, it makes sense that the correct effort and attention is given to contract management. Some companies may even take that into wider contract administration with a dedicated employee involved. However, not all companies can afford to do that. With the case of small to medium sizes businesses, resources are fewer and there is far less chance of their being a dedicated HR or legal team which can take care of the contractual side of things. As a result, negotiations can take up time and the resulting paperwork may not be legally watertight.
It is for that reason that successful contract management can be improved with the use of contract management software. Such software automates where it can, asks for collaboration when needed, and helps create contracts that become the very assets that a company needs to generate value. While buying such software can look like an extra expense in some individual business owner’s eyes, when linked with the benefits and cost savings that arise, it will be money well spent.