Optimising contract management workflows
Effective contract management, which refers to workflows a company employ to manage the creation, negotiation, execution, performance monitoring, and closure of contracts between various parties, is an integral function of any legal department.
Legal plays an important role in ensuring contracts enhance business results, protect the company from losses and deliver on expectations. To fulfil this mandate, it is vital that Legal has oversight over the entire contract lifecycle.
Unstructured contract management processes can result in losses due to risks including, but not limited to, delays in contract negotiations, disagreements over contract scope, inappropriate contract structures, performance failures, and/or missed renewal deadlines.
The good news is that Legal is in a perfect position to identify and mitigate these risks with more efficient and effective workflows. In fact, technology can help Legal minimise risk by structuring ad-hoc processes, automating contract creation, empowering colleagues with collaborative tools, and so much more.
A legal management tool to store, share, track, and report contracts
If your contracts are scattered in filing systems, stored on different computers or servers, or managed on various spreadsheets, it can be difficult to stay on top of critical details. When contractual benefits and/or obligations are “out of sight, out of mind”, it is impossible to have an accurate overview of your legal matters, compromising your ability to proactively manage risks, identify business opportunities and ensure compliance. What’s more, legal data can provide some of the most reliable information for forecasting and taking strategic decisions. If you take business decisions with wrong or incomplete data, the consequences can range from fines (in the case of audits) to a loss in reputation, market share, operating licenses or revenues.
Instead, when all your legal documents are easy to locate, you can keep track of obligations and benefits with dashboards and reporting. You can make summaries of contract information and share them with colleagues in other departments to ensure that they understand all the key terms and risks involved.
A central repository for your contract should allow Legal and other stakeholders across the business to extract crucial information such as:
- WHEN: The dates that the benefits or obligations need to be performed.
- WHO: The persons or the department responsible for performing contractual benefits or obligations and the parties they should be performed for.
- WHAT: A clear overview of the nature of the benefits or the obligations along with what the business is expected to do as per the contract terms.
- HOW: A precise explanation of the methodology to be applied when performing contractual benefits or obligations.
A legal management tool with an effective search function and customised dashboards will help you find all contractual information at the click of a button. What’s more, you can access your contracts updated with various amendments and set alerts for deadlines and key dates so that you never fail to fulfil an obligation or close/ review a contract in due time.
Legal management tools can also help you improve on contract reporting by accurately measuring and analysing contractual activities with customisable KPIs and graphics to then be shared with the Board and make informed decisions.
A contract automation tool to draft contracts
You can create and maintain a library of Word-based templates for contracts and colleagues in other departments can select a template for the type of contract they need to create. The template includes your approved standard language and clauses, and the department simply “fills in the blanks” using a simple, dialogue-driven questionnaire. You can eliminate repetitive tasks and deliver drafts quicker. Any deviations can be discussed and, if necessary, you can adjust the Word-based contract template or the underlying business logic for the future.
By standardising contract language, clauses and design in the templates that you approve for use, you ensure compliance across contracts used by the business. Any updates you make are automatically shared with users. As a result, new laws, policies or regulations are incorporated immediately, reducing your risk and avoid economic losses.
A collaboration tool to review contracts
With a contract collaboration tool, you can invite stakeholders to access a contract, make changes, add comments in the text and decide whether to accept or reject suggested edits from others and obtain a comparative summary of the versions.
By automatically saving all the information in a single place, you can be sure that you will see all the changes and comments made by each person with access to a particular file.
When stakeholders can make edits to a document at any time, even simultaneously, without documents having to be checked out or sent as email attachments, this minimises delays and saves you more time for the tasks that really matter. According to a global legal survey, 65% of legal professionals identify time lost on administrative tasks as their biggest pain point.
Document collaboration tools will indicate any new changes in contract versions before you continue working on them. Instead of creating a jumble of document versions and wasting countless hours manually checking and comparing changes, the tool saves each individual change in a central database, including suggested edits, notes and discussions This gives you a completely transparent view of the history of every edit and reduces the potential for mixing up different versions
An eSignature tool to approve contracts
If you are looking to digitise contract workflows, it is nearly impossible to keep e-signature tools out of the tech implementation plan. Businesses run on contracts and other agreements. The role of e-signature is to automate agreement workflows and streamline contract generation, review and approval. With an effective e-signature tool, you can ensure such documents are approved on time without causing delays.
With an e-signature tool, you can execute contracts quicker, and abolish the legal department bottleneck. You can collect signatures on contracts, agreements and legal documents quick and secure anywhere on any device while protecting confidential information. E-signatures eliminate the costs of printing, faxing, scanning, express delivery and the risks involved with “print-sign-scan” by always keeping your data secure and private at all times. What’s more? You can get instant status visibility and always know where your contracts are in the signing process and set automatic reminders and receive notifications at every step.
By taking stock of how your business manages contracts, you can identify where technology can help you drive structure workflows, increase efficiency and mitigate risks in due time. Not only can you ensure that contracts perform as intended, but you can also proactively protect the business and elevate the level of service Legal provides to the business.