Learning how to improve contract management is crucial to any business, especially those that rely on contracts and agreements with partners, vendors, or customers. Business contract management ensures that all necessary documents are signed, stored securely, and compliant with industry regulations.
This article will discuss the business contract management process, its stages, and its importance. You will also learn how you can enhance this process by using Fill, a feature-rich contract management platform.
5 Tips for Streamlining Contract Management
- Use Contract Management Software
- Automate Where Possible
- Set Up a Central Database
- Utilize Templates
- Keep Up-to-Date Records
1. Use contract management software
There are several ways to boost your contract management process. One of the best ways to improve contract management is to use software or apps. You can choose from a wide range of online solutions to consolidate and simplify your handling of contracts and other documents.
Here are some of the features that you should look for:
- ability to create and store contracts
- version control to track changes
- electronic signatures
- workflow management
- customization and branding
2. Automate where possible
Manually managing contracts can be a time-consuming and error-prone process. Automation helps you save time and resources, enhance productivity, and maintain consistency across all departments.
Contract management software can optimize many tasks, such as contract generation, approval, and reminders. Automating these tasks will allow you to:
- focus on negotiating better deals and building relationships
- spend less time on administrative tasks
- avoid duplication of effort
3. Set up a central database
A central database or repository is where your organization’s contracts are stored. This makes it easier to find, retrieve, and monitor contracts. It also allows you to see who has access to each document.
You can use one of the following for your central repository:
- cloud storage
- hard drives
- physical filing system
Using a cloud storage system has the benefit of allowing you to access your contracts from anywhere. When choosing this option, make sure you use a secure and reliable service provider.
4. Utilize templates
Templates help standardize contracts by providing a preapproved structure for agreements. They can be used for employment, sales, service, and supplier contracts.
These premade documents make it easier to:
- save time on the negotiation and drafting process
- ensure that all essential clauses are included
- maintain consistency across all contracts
Every time you write a new agreement, you risk making errors and being liable for them. But you can cut down on them or even stop them from happening when you use templates.
5. Keep up-to-date records
Records of all your organization’s contracts include:
- a list of the contracting parties – who they are and their contact information
- contract term – the duration of the agreement
- a summary of the contract’s key provisions – what each party agrees to do
amendments or modifications that have been made – changes that have been made to the original contract
Keeping records helps expedite contract management by:
- providing a complete history of the contract
- allowing you to track changes
- ensuring that everyone is working off the same agreement
- making it easier to find a specific contract or clause
What Is Contract Management?
Contract management is a process that ensures businesses uphold their contractual obligations while minimizing potential risks. It involves creating, negotiating, executing, and managing contracts, and eventually, termination or renewal of the agreement.
It is often used interchangeably with contract lifecycle management, a comprehensive approach to managing the contract from start to finish. Businesses use contract management software to manage their documents, streamline processes, automate tasks, and save resources.
Stages of Contract Lifecycle Management (CLM)
Contract lifecycle management is the management of a contract from start to finish. Lifecycle denotes that the process is dynamic and ever-evolving.
A contract’s lifecycle can be divided into pre-signature and post-signature phases. Each stage presents its unique challenges and responsibilities. The steps can be complex and time-consuming, requiring careful draftsmanship and attention to detail.
The pre-signature phase is when the contract is written, negotiated, edited, and approved. The stages include:
- Request or initiation: This is the beginning of the life of a contract. It involves creating a formal request or needs assessment, which is sent to the other party.
- Drafting of the contract: After assessing the need or the request, both parties draft the appropriate contract. This stage needs collaboration between both sides to make a rough draft of the agreement.
- Negotiation: This stage involves discussing and changing the terms and conditions of the agreement until both parties agree.
- Approval: After incorporating all changes, both sides need to review the contract and give their approval.
This part ensures everything goes smoothly after the contractual parties sign the agreement. This goes on throughout the contract and includes:
- Execution: The document is signed and exchanged between the parties. If you do it manually, there are many risks, and you might miss out on some opportunities. Contract management software can help you identify risky clauses or opportunities for more value.
- Monitoring obligations: This involves ensuring all parties keep up with the contractual responsibilities. Contract management software can help alert you when a party must meet the commitment.
- Measuring performance: Tracking performance across the entire contract lifecycle ensures you follow the rules and get the best value from the deal. You also need to track performance to decide if you should renew or end the contract.
- Amendment or renewal: When your contract ends, you need to decide if you will renew, renegotiate, or terminate it. Using automated workflows can help keep track of upcoming expirations.
The stages of contract lifecycle management are time-consuming and require attention to detail. That is why you must have business contract management in place.
Why Is Business Contract Management Important?
Contracts set out the details of every deal or relationship between two businesses. Analysts suggested that companies can save up to 2% of their annual costs by utilizing contract management. This is why contract management is essential for defining professional relationships and transactions.
It also allows you to:
Protect your interests
The business interests of all parties involved in an agreement must be represented and protected during negotiations. They should clearly understand what they’re trying to achieve and what’s at stake if the deal falls through. Contract management ensures that an organization gets what it needs from an agreement.
Enforce timetables and deliverables
Clear deadlines and deliverables are essential to ensuring that both parties uphold their end of the deal. Delays can cause a ripple effect that can impact the entire agreement. Contract management ensures that both parties are held accountable for meeting their obligations.
Organizations need to identify and assess the risks associated with an agreement before signing. Contract management ensures that all hazards are identified and mitigated. For example, the contract management team can take the appropriate measures if a client doesn’t pay on time. It will protect the organization’s interest by preventing financial losses and legal disputes.
With contract management in place, transparency and accountability are enforced and can quickly address any deviations. It gives companies visibility into the performance of their partners, allowing them to identify non-compliance quickly.
Store contracts in one centralized location
Contract management software provides a centralized repository for all the agreements, ensuring there are no lost contracts and that everything is updated in real time. It allows organizations to access their contracts from anywhere, making collaboration and communication easier.
Challenges to Contract Management
There are several challenges that organizations face when managing contracts. These include:
1. Lack of visibility and reporting capabilities
It is not easy to track the progress of a contract if you don’t have the right tools. Contract management software can help to provide you with real time visibility and reporting capabilities. It can make it easier to determine whether a party complies or not.
2. Difficulty with collaboration
Collaboration between internal teams and external partners can be complex without the right tools. A contract management platform can help to streamline cooperation by providing a centralized hub for all documents and conversations.
3. Time-consuming processes
Creating, reviewing, and approving contracts can be very time-consuming and inflexible, often leading to delays in deals and other essential business operations. This can have several negative consequences for a business, such as increased risk and lost revenue from missed renewal dates. Automating the process can help to speed up the process and ensure that contracts are signed on time.
4. Challenge with maintaining compliance
Organizations must adhere to specific regulations when it comes to contracts. Maintaining compliance among many agreements can be challenging without the right tools. Contract management platforms provide automated compliance checks and alerts to help organizations stay on top of potential risks.
How Fill’s Key Features Can Help With Your Business Contract Management Strategy
Contract management is critical for any organization that wants to stay ahead of the competition. Fill provides a much-needed solution for an effective strategy that will save you time and money. You will benefit from these Fill’s key features:
Secure and unique esignatures
Fill uses the latest security features to ensure that your documents and esignatures are safe. With 256-bit encryption and signer identity verification, you can be assured that your contracts are protected from fraud.
A contract repository is a great way to keep your essential contracts organized and accessible. Fill keeps all your documents in one secure place. Since everything is in the cloud, you can access your files with a stable internet connection.
Real-time audit trails and logs
An audit trail is invaluable for keeping track of document activities and ensuring compliance with regulations. Fill provides an up-to-date record of all activities, including who accessed the documents, when they were accessed, and what changes were made. It increases visibility and tracks every stage of the contract lifecycle.
Transferring data between multiple apps can be a hassle. Good thing that Fill makes it easy to integrate with other apps using our developer API or Zapier. You can connect the app with popular document-sharing solutions with a few clicks.
Free customizable templates
Fill offers free contract templates that can save you time and effort. There’s no need to draft a new one from scratch. Our contract templates help ensure that your agreement is legally binding. Whether you need to sign a simple contract or a more complex arrangement, there is sure to be a template that meets your needs.
An efficient contract management strategy is the key to success for any business. With Fill, you can easily manage your contracts and optimize your document workflow.