May 30, 2022
Contract Tracking Software Guide - Everything You Need to Know
When you're managing contracts, it is easy to get lost in the details. Contracts can be pretty long, and they are always subject to last-minute edits and additions. As someone responsible for managing your company's contracts, it's important to stay organized – and that includes setting up a contract tracking system for these documents.
You need to track your contracts so you can prepare for upcoming payments, figure out if there are changes in the contract, and stay informed about details in the contract.
What is contract tracking?
Contract tracking is the process of monitoring a contract to determine its position within the contract lifecycle. Generally, contracts pass through several stages to reduce businesses’ financial, legal, and procurement risks. These stages include:
- Request: A contract begins when one party initiates the idea for an agreement.
- Drafting: The agreement is written with all the necessary clauses, terms, and conditions.
- Review: A legal professional or in-house manager analyzes the content of the contract document to ensure accuracy and mitigate potential risks.
- Negotiation: Both parties deliberate on the terms of the agreement and make necessary adjustments for a fairer bargain.
- Approval: After negotiation, the legal team may decide to approve the agreement if they find it favorable and legally binding.
- Signing: A signature from both parties (pen-and-ink or e-signature) consolidates the deal.
- User activity/ Easy retrieval: The contract is appropriately indexed to facilitate users' access without having to investigate across multiple systems.
- Renewal: Contract may be renewed upon expiry either manually or automatically.
Good contract lifecycle management entails that members of a company can tell which level a contract is at the moment and who's responsible for making changes to the document. But why does this internal visibility matter?
Why is Contract Tracking Important?
Every business needs to implement an efficient contract tracking system because it helps:
- Facilitate collaboration
- Limit waste of time
- Save costs
When a business stores its contracts in a central repository, it enables teams, managers, and legal professionals within and outside the organization to access information easily from anywhere they are. It removes the need for hopping onto emails or calls to find out the status of a contract. With this, anyone can quickly log into the cloud-based storage to see whether a field has been updated, who made the update, and when the update was made.
Limit waste of time
Contract tracking eliminates the time wastage involved in searching through folders and managing long spreadsheets. Without an automated tool, businesses would have to rely on the manual process of making data entries and creating calendar reminders to keep track of milestones, approvals, expirations, or renewals.
Contract tracking offers cost-cutting opportunities for businesses by automating notifications for contract renewal. Towards the expiry of an agreement, organizations may analyze the contract to determine if the contract is worth renewal or if it has become irrelevant. Without expiry and renewal alerts, businesses will most likely renew a contract they don't need or lose a key supplier if the contract expires.
Contract tracking with software
Over the years, technology has influenced how businesses sign contracts and monitor them. And one of the biggest innovations in this field is contract management software. Using this tool to track contract performance maximizes a company’s benefits and improves its overall performance.
For example, Contractbook increases the efficiency of metadata capture through artificial intelligence, helping you digitize and store your contract in the central repository. It ensures transparency & compliance by storing the approval history of your digital contracts. So if you want to find out who adjusted a contract and when it's done you can easily log into the central repository to check.
What features should a contract tracking software have?
Contractbook has multiple smart features that make contract tracking as easy as possible. These features include:
Contract owners (usually legal teams) can find out the current status of a contract at a glance. Contractbook's workflow design allows you to see all your sent, received, and uploaded contracts alongside their present status e.g.: pending, signed, rejected, or changes requested.
Contracts often contain important identifying information, such as the person at your organization who sent the document, the date it was created, its expiration date, and so on. Thus, to help you find contracts more easily, your CLM software should allow you to search for any of these fields.
Contractbook's feature lets users find what they're looking for in seconds. Instead of going through the dozens or hundreds of contracts in the cloud-based storage, users can simply type whatever they are looking for in the field and find it immediately.
Team collaboration is a great feature for contract tracking - enables users to find out when a contract was viewed, edited, or approved and who was responsible for the changes.
In Contractbook, users can collaborate seamlessly by creating a central space. This functionality ensures that everyone works in the same updated documents. Thus it facilitates efficiency and transparency throughout the company.
A contract lifecycle includes many steps, but Contractbook lets you save a lot of time by automating those steps. Documenting the processes with the software replaces back-and-forth communication with a protocol for accepting and rejecting changes.
With this, you can accept and reject change requests, create subcontracts, issue payments, and generate invoices — all online!
Contract tracking may sound like an intimidating task at first but it doesn’t have to be. The key is to take one step at a time - first by signing into a contract automation software. If you are still unsure how to sign up to one, feel free to book a demo with Contractbook today. We’d be glad to guide you through every step of the way.
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