Why Should You Get A Contract Management Software?

Why Should You Get A Contract Management Software?

Written By
Joy Cunanan
Updated on
October 10, 2023
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Contract management is a highly difficult and challenging responsibility for any firm. A transaction may be hampered by, for example, a straightforward contract expiry inquiry or the search for the most recent contract version. Businesses have adopted document management systems (DMS) to address this issue and increase process efficiency. Modern firms choose advanced contract management software over a standard DMS for better management.

We have briefly mentioned the benefits of having a contract management platform in this article. This time, we will deep dive into what contract management software can do for your business – from something as simple as securing your digitally-stored assets, to helping you achieve significant milestones such as increasing your revenue by shortening sales cycles, among many other benefits.

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Contract Management Software, often referred to as Contract Lifecycle Management (CLM) software, represents a comprehensive solution designed to empower sales, legal, financial, procurement, and contract administration teams with a unified set of tools for optimising their entire contract management process. By automating and expediting contract creation, from negotiation to approval, this software provides a secure repository for all contract-related documents and data. The primary goal of CLM software is to mitigate contract risks while enhancing efficiency, all within a secure framework that aligns with regulatory compliance.

Phases of Contract Management

The World Commerce and Contracting group reports that inefficient contract management can lead to costs amounting to over 9% of an organisation's total annual revenue. This underscores the imperative nature of adopting contract management software, a solution that replaces laborious manual processes with a digital alternative.

CLM software accommodates various contract-related scenarios, including licensing, sales, intellectual property, facilities management, employment, leasing, outsourcing, nondisclosure, and procurement. It seamlessly aligns with the two primary phases of CLM: pre-execution and post-execution.

Pre-Execution Phase

This phase spans a contract's lifecycle from the initial request to the final binding signature. It encompasses contract drafts, assembly, governance, and workflow processes.

Collection of Contract Requests and Drafting Contracts Using Pre-Approved Language from Clause and Template Libraries

The process of contract creation begins with requests, coming from a wide range of  of stakeholders including human resources, salespersons, clients, legal teams, and more. Contract Lifecycle Management (CLM) software offers a secure, organised platform for requesting access, mitigating the risks associated with conventional methods like email correspondence and request forms. Additionally, the software includes pre-approved contract clauses and template libraries to streamline document assembly while maintaining compliance with standard legal language.

Execution of Contracts, Including Negotiation, Redlining, Approvals, and Signatures

After the initial creation of a contract draft, the next step is execution. This involves a comprehensive review, which may necessitate negotiation, followed by approvals from involved parties. Contract management software streamlines this process by enabling simultaneous review and redlining within the software portal, eliminating the need for protracted email exchanges. It also supports  digital signatures, expediting the document's progression  to the next stage of the contract lifecycle.

Workflow Automation and Establishment of a Defined Process for Contract Creation and Execution

CLM software provides robust workflow capabilities that oversee contract requests through execution and governance stages. Automated workflows eliminate  manual tracking, ensuring a seamless contract management process. These workflows can be tailored based on contract type, role, and specific data, enabling organisations to maintain governance and compliance throughout the entire contract lifecycle. The transparency offered by these workflows empowers teams to monitor  key performance indicators and identify areas for improvement.

Post-Execution Phase: Maximising Contract Value and Compliance

The post-execution phase constitutes the latter half of a contract's lifecycle and serves as the natural starting point for organisations embracing  a CLM solution.

Centralisation of Contracts and Other Data in a Single, Secure Repository

In contrast to conventional methods,that often scatter contracts across various locations , CLM software centralises all contracts, documents, organisations, and contacts in a secure repository. This digital transformation enhances data security, privacy, and accessibility, aligning with the highest data safety standards.

Management of Contracts, Clauses, and Other Terms

With contracts centralised and accessible, the focus shifts to ongoing management. CLM software provides tools to streamline compliance and management processes, mitigating risks associated with contract terms, missed deadlines, auto-renewals, and audits. Task and email alerts, along with calendar reminders, ensure timely action, facilitating effective contract management and auditing.

Analysis of Contract Data with Search, Reports, and Dashboards

CLM software empowers organisations to derive meaningful business insights from contract data. It facilitates easy search, report generation, and dashboard development, providing visibility into potential contract risks, opportunities for process improvement, and timely responses to contract-related inquiries. Additionally, Optical Character Recognition (OCR) technology ensures swift access to contract content for efficient search.

Contract management software represents a paradigm shift in the contract management process, offering a structured approach to both pre-execution and post-execution phases. Through the adoption of CLM software, organisations can centralise contracts, streamline workflows, enhance compliance, and gain valuable insights from contract data. This strategic integration of technology positions organisations for heightened efficiency, risk mitigation, and overall success in contract management.

Features of a Good Contract Management Software

Centralised Repository

A fundamental feature of contract management software is a centralised repository that securely stores all contracts and related documents. This ensures that all stakeholders have easy access to the latest versions of contracts, eliminating the risk of working with outdated or incorrect information. A user-friendly search functionality within the repository enhances accessibility, enabling teams to quickly locate specific contracts or clauses.

Automated Contract Creation and Templates

A good contract management software streamlines the contract creation process by offering pre-approved templates and clauses. This feature not only accelerates the drafting process but also ensures that contracts adhere to standardised language and legal requirements. Additionally, the software should facilitate automated document assembly, reducing the time and effort required for manual contract generation.

Workflow Automation

Workflow automation is crucial for managing the various stages of contract creation, negotiation, approval, and execution. An effective software solution allows organisations to define and customise workflows based on their specific processes and approval hierarchies. Automation not only expedites contract cycles but also reduces the likelihood of errors or oversights.

Comprehensive Document Editing and Collaboration Tools

Robust contract management software should offer sophisticated document editing and collaboration features. This includes the ability to redline and track changes, enabling multiple stakeholders to collaborate on contract revisions in real-time. Version control is also essential to maintain an accurate audit trail of all contract modifications.

Alerts and Notifications

Timely notifications and alerts are critical to ensure that stakeholders are informed of important milestones, deadlines, or changes in contract status. These notifications can include reminders for renewal dates, approval requests, and upcoming milestones, helping teams stay organised and proactive in managing their contracts.

Compliance and Regulatory Tools

A good contract management software should provide tools to facilitate compliance with legal and regulatory requirements. This includes features such as clause libraries, which ensure that contracts adhere to standardised language and legal best practices. Additionally, the software should have the capability to track and report on compliance metrics, providing organisations with valuable insights into their contractual obligations.

Security and Access Controls

Security is paramount when it comes to contract management. The software should offer robust access controls to ensure that sensitive contract information is only accessible to authorised individuals. Encryption protocols, secure authentication methods, and role-based permissions are all essential components of a secure contract management solution.

Analytics and Reporting

An effective contract management software should provide robust analytics and reporting capabilities. This enables organisations to gain insights into contract performance, supplier performance, compliance metrics, and other key indicators. These reports empower organisations to make data-driven decisions and optimise their contract management processes.

Integration Capabilities

An indispensable  feature of effective contract management software is its ability to seamlessly integrate with other essential business tools and systems. This includes integration with Customer Relationship Management (CRM) systems, Enterprise Resource Planning (ERP) software, and financial management platforms. By facilitating data flow between these systems, organisations can enhance the efficiency of their contract management process and ensure that contract-related information is synchronised across the entire business ecosystem. This integration capability not only reduces manual data entry but also provides a holistic view of contract performance and its impact on various aspects of the organisation's operations. It enables teams to make more informed decisions and align contract management efforts with broader business objectives. Additionally, integration with e-signature solutions can further expedite the contract execution process, allowing for swift approvals and signatures, thereby accelerating the overall contract lifecycle.

What Are The Benefits Of A Contract Management Software?

A contract management tool can help parties collaborate more easily, gain the necessary insight into contract data, and save time and money with very little risk. A contract management system is a superior method of managing contracts because it also handles tracking and negotiating. 

According to a survey, inefficient contract management software could cost firms $100 billion per year in lost savings potential. Effective software is required to lower supply chain risk and guarantee compliance throughout the entire supply/supplier relationship. To be successful with a product launch, a global expansion, hiring, and other events, you must use cutting-edge contract management software.

Reduced sales cycles result in higher closure rates and more money made.

In contrast to days or even weeks for conventional paper-based contract administration, deals can be finalized within minutes of the conclusion of negotiations when using contract management software. As a result, the provisioning of customers can happen more quickly, which accelerates the time to revenue. Additionally, it stops transactions from falling through until the paper trail catches up.

E-Signature capability raises customer satisfaction and improves internal efficiency.

Since the ESIGN Act of 2000, e-signatures have been considered legally enforceable. It is now widely accepted that digital authentication is more secure than a traditional pen-and-paper signature, and customers have become accustomed to it. Customers appreciate it since it is dependable and convenient.

E-signatures are welcomed by internal "customers" for the same benefits of speed, convenience, and security. Everyone's job is made simpler with e-signatures.

Instead of focusing on contract management, sales efforts might be directed toward selling.

The automated operations made available by contract management software, such as e-signatures, contract authoring templates, fast contract approval routing, and others, free up sales staff to concentrate their skills on making sales. The absence of paper-based administration's hassles will almost surely boost the mood of the sales crew. and content workers use their time more effectively in general.

Dates that are milestones are given alerts.

When contract milestone dates are approaching, contract management software can notify sales. These warnings assist in planning customer outreach and preventing missed opportunities. Many of the actions required by the milestones can also be carried out automatically by the software.

Consolidated and precise contract data is available.

Contract management software avoids confusion and inaccuracies by centralizing contract data in a single electronic repository, which is a common problem with paper-based methods. Permitted personnel have access to all contract information, which is current and full. Clerical errors are automatically detected before being inserted into papers, eliminating the possibility of using obsolete or insufficient information.

It is possible to strike a balance between compliance and negotiation latitude.

Tim Cummins, the CEO of the International Association for Contract and Commercial Management, argues that businesses shouldn't be forced to choose between one extreme or the other in a blog post about the conflict between contract compliance and the ability for sales to customize contracts to win business. Traditional thinking leads us to believe that in order to achieve maximum efficiency, lower costs, etc., we must create one process with one contract; alternatively, we must offer custom negotiation in order to be "responsive," but in reality, we should work on developing one option within a specific segment.

Contract management software supports this contract design for particular segments through contract authoring templates. Additionally, it offers greater sales flexibility while limiting rogue activities that could endanger the business with its library of pre-approved legal terms and customizable safeguards to prevent internal policy violations.

Data from contracts offers business intelligence.

Access to useful information in contracts is made possible by contract management software. It offers the opportunity to quickly run custom reports, see dashboards, and search for contract-related data. This enables businesses to examine their past contracts in order to find best practices, strategic possibilities, and issues that need to be fixed. The program aids in assessing the past to show the way forward.

Easier file sharing and collaboration everywhere.

Contracts typically demand contributions from multiple departments, thus if there are insufficient collaborative efforts, the contract may suffer. The legal team may be required by the sales team to investigate the law, or marketing and procurement may desire to work together. This takes a lot of time.

People from many departments can collaborate on contracts more easily thanks to contract management software. No matter where they are located, stakeholders may review and approve changes without worrying about document version control or running the risk of using an outdated copy.

You will have more efficient document handling.

With contract management software, users may better manage their documents. It is unnecessary to squander time trawling through file cabinets or email inboxes in search of a certain contract. Another type of software, like platforms for customer relationship management, may interface with a contract management platform. This can serve to simplify corporate procedures and give users access to all pertinent data from a single location.

Improve your compliance. 

Compliance is essential when it comes to contracts. After all, if a contract is contested in court and found to be in violation of regulations, it may be declared null and void.

Things can slip through the gaps during the drafting and signing stages when using manual techniques. There is no way for anyone to be aware of a crucial clause that has been accidentally omitted or mislabeled until a legal difficulty later on.

In order to assure compliance, contract management platforms:

  1. Tracking and reporting important dates for both forthcoming and past performance deadlines
  1. Preserving all contract data in a single location to prevent loss or misplacement
  1. Supplying a solitary, central mechanism to guarantee uniformity in contract wording and approval

Increase your productivity and customer service.

A manual system of contract administration consumes a significant amount of labor. Your personnel is required to invest time in finding files, locating missing paperwork, managing spreadsheets, manually inputting data into the system, and redoing activities as a result of mistakes. All of this consumes time that could be spent on other worthwhile pursuits.

The majority of manual procedures carried out by your workers are automated by contract management software. It offers a central location where all of your contracts may be kept and accessible electronically, doing away with the need to look for lost documents or create reports by hand. Prior to a crucial deadline, it will immediately notify you so nothing gets missed. Additionally, it offers straightforward procedures that make it simple to keep everyone on target as well as the ability to automatically generate reports for you at predetermined intervals.

Improve the visibility of your contracts. 

Authorized personnel have better visibility into which contracts are in force and how they are performing when you keep all of your contracts in one location. A chance to revise or reassess a contract arises as its expiration date approaches. The increased accountability that comes with better contract visibility is another advantage. It is no secret that keeping track of important dates, commitments and other obligations are pivotal to keeping business relationships healthy. It will be simpler to keep track of who is accountable for the overall well-being of each agreement if everyone can see who has access to contract information.

Secure your file storage and backup. 

Contracts include sensitive information and are significant legal instruments. With manual storage facilities, it is typically not totally possible to keep the data in contracts secure. Meanwhile, to protect files, contract management solutions employ sophisticated encryption technology and passwords.

The same is true of backing up. Physical contracts may disappear or be ruined by weather conditions like fire or flood. Management software can guarantee safe backup to avoid the dangers of damage and loss by storing files in the cloud.

Scale Up Your Operations With Lexagle. 

Businesses usually desire to expand, and expansion occasionally takes place unexpectedly. Therefore, maintaining the course of events will call for a scalable solution. The contract needs to rise along with the organization's customer base. Organizations experience a bottleneck as a result, but with the appropriate contract software, they can quickly adapt to the newest expectations.

With Lexagle, you can reap the benefits of fully focusing on expanding your business, because you have software that constantly works for you in the background. We streamline your contract lifecycle from beginning to end, employing automation techniques and artificial intelligence to assist you in all stages of contracting. We give you the power to collaborate securely, negotiate effectively and comply with obligations in a timely manner, all with a single platform. 

Why Should You Get A Contract Management Software?
Joy Cunanan
Joy is the Digital Transformation Manager at Lexagle. As a marketing professional in the Tech and B2B industry for over seven years, she is always on the lookout for the next best solution in the ever-changing online world. With a passion for helping businesses thrive and optimize operations, she shares her expertise in the power of contract lifecycle management and its capacity of easing the contracting process for busy organizations worldwide.

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