What is a contract management workflow?
Contract management is the process under which contracts are created, reviewed, approved, executed, renewed, and amended. In other words, it is the process of getting a legal document through all the necessary stages. Contract management workflows refer to the strategic combination of people, processes, and technology to ensure that organisations get the most out of their contracts.
Here are just a few examples of what contract workflows refer to:
- Contract creation
This is the initiation stage of the contract management workflow. It is when companies request a new contract to be created or drafted, or to review an existing contract. By having an automated workflow process, your business can have a central place to review, manage, and process these requests.
- Internal collaboration
When contracts are being created, having an automated workflow also means you can provide your employees with a self-service capability that will help them to quickly create contracts since employees will be able to access information that they need.
- External negotiation and redlines
This stage is when the contract can be shared with the other party and the process of redlining or reviewing them can begin. With an automated workflow, any changes or document comparisons, as well as version controls, can be done efficiently and accurately.
Approvals in the contract management workflow ensure that all parties involved in the contract have reviewed the contract, and which have yet to approve them. Since this process involves many parties and multi-level approvals, it can get disorganised if an automated workflow isn't in place. This is an incredibly important step as it keeps the whole contract management workflow moving along.
- Electronic signature
An electronic signature is an acknowledgment provided in an electronic format that a business can use to demonstrate acceptance by a party. It can also be electronically used to authenticate the party involved. By implementing electronic signatures, companies can reduce send-to-sign times and reap the benefits of a faster turnaround.
- Post-signature focused contract reviews
This refers to the storing of contracts and the management of contract records. It also includes the search and retrieval of contracts, audits, and reporting, as well as renewals. By having an automated workflow, your business can gain better visibility into which contracts are about to expire which can help you prioritise time.
Now that we have gone through the most vital steps in the contract management workflow, let’s look at why creating contracts in today’s fast-moving market is crucial for the success of your business.
What are the benefits of having a codified contract management workflow?
Automating contract management workflows is possible with contract management software that provides many benefits such as centralised reviews and approvals, and automatic change tracking to better manage negotiations. With the growth of companies increasing exponentially every year, there is also an increasing need for businesses to have a smooth and organised way to manage contracts.
Whether you are creating simple contracts, non-disclosure agreements, or any other type of contract, a streamlined contract management workflow is essential in allowing your business to save time and money which will ultimately help your business focus on its growth and success.
Fortunately, having a codified or automated contract management workflow will help your business save time and provide many other great benefits to your organisation.
Here are a few examples of those benefits:
Traditional contract management is ridden with many risks that could lead to significant damage. It is also time-consuming as it takes a lot of manual work, which also means that it is susceptible to human error.
An automated contract management workflow means you can consolidate contracts into one organised and easily accessible database. By centralising your contracts, you will be able to have better transparency and access to relevant documents without compromising security.
Each party involved in a contract will be able to see where contract requests are anywhere in the process, and you will be able to flag any compliance issues from the get-go in addition to knowing where your organisational risks lie.
With features such as built-in redlining, editing, audit logging capabilities, and features like rooms in a contract management software, there is also improved collaboration and negotiation among parties involved in each contract.
Other than keeping everyone on the same page, you will also be able to accept or reject and mention colleagues in the contract editor to collaborate and make any necessary changes or edits quickly.
Improved collaboration can be a significant help in preventing any future misunderstandings or disputes between the two parties. Any conflict or dispute regarding timeframes, responsibilities, and payments can be properly addressed, with all contractual parties coming to a consensus.
In other words, a codified contract management workflow will play an immense role in creating seamless negotiations with counterparties during the contract management lifecycle.
Automation will eliminate repetitive and manual tasks so your team is free to focus on higher-value work and activities that will help drive your business forward.
Any new or revised contracts that need immediate review and approval can be automatically fast-tracked and legal teams will be used only when necessary so non-legal employees are empowered to run their own processes.
There’s also a level of searchability that enables you to automatically find relevant data that will ultimately save huge amounts of time in comparison to manual processes.
With automated workflows, you can streamline and centralise any processes and procedures regarding contracts. Since contract management systems typically include multiple contract templates and checklists, you can minimise risk and ensure employees follow all regulatory and company standards.
Standardisation will help you avoid spending time figuring out how to do certain actions, working on incorrect document versions 一 both of which will result in poor productivity that inevitably puts your business at risk.
Instead of wasting time searching for documents, manually locating information, and managing spreadsheets, you can easily search for everything that you need through contract management software.
Additionally, you will also receive a complete audit trail of the contract process generated in real-time, while reporting and dashboards will show vital activity data and specify any occurring bottlenecks.
Another benefit of having a codified contract management workflow in place includes avoiding inaccuracies in information, which could lead to renewals being missed if dates aren’t recorded accurately.
But what other problems can arise without a proper contract management workflow? Let’s have a look.
What are common issues that arise without a proper contract management workflow?
Organisations of all shapes and sizes across a variety of industries still use old-school methods like email and paper to manage contracts despite all the risk and issues involved. In fact, MarketWatch found that nearly 90 percent of spreadsheets contain mistakes; which can lead to huge losses. In one instance, one simple copy-paste mistake had cost a Canadian power company $24 million.
Whether contracts involve customers, vendors, partners, or employees, your organisation needs a reliable system for Contract Management to avoid risk and improve financial performance.
Here is a list of examples of other issues that can occur:
- Poor interdepartmental communication
When contracts are handled manually, they are not always accessible to everyone who needs them. This can slow down the whole contracting process as no one has a clear idea of where a contract is in the contract lifecycle.
- Confusion amongst all parties involved
Lack of efficient communication and collaboration creates more chaos and confusion among every party involved in the contract.
- Missed deadlines
Confusion may very well lead to disorganisation and inefficiency which puts your business at risk.
Who could benefit from contract management software?
A streamlined contract management workflow can create enormous benefits and help you achieve your business objectives. Whichever industry your business is in, you should consider switching to a better-automated process.
Every team in your company has a pain point that contract management software is able to address.
- Legal Team: Manages a large volume of contracting templates and are generating documents daily
- HR Team: Produces a high volume of contracts that can be overwhelming to manage and organise
- Sales Team: Needs to quickly generate contracts so they can focus on closing deals
- Procurement Team: Needs to seek approval from stakeholders and keep track of renewal dates and can ensure competitiveness for procurement renewals
- Finance Team: Needs visibility into contracts to reconcile contracts and billing, and generate accurate revenue expectations for their business
Implement a contract management workflow for your business
If you aren’t looking to implement a contract management system for your business yet, you will definitely be looking for one in the near future as your business grows.
As contracts come piling in, without a proper contract management system, the pain of a manual workflow can add up and the many drawbacks of not having an automated system will be felt throughout the whole company.
Curb costs, improve productivity and reduce delays by automating your contract management. If you leave it for too long, it will be too late to understand the nuances of an advanced system.
If you are ready to elevate your legal processes by adopting contract automation in your business to make contractions easier, faster, and more affordable, contact us to know more about our contract management platform and how it can help further your business.