The Definitive Guide On Contract Management Software

What comes to your mind when you think about Mr. Feeny? A disciplinary figure who had a strict adherence to rules and regulations? Well, he was more than that; a mentor to the kids, an advisor and a person they could rely on when required. His habit of managing things well and following rules and regulations made him the principal, directly from a kindergarten teacher.

Contract Management Software is our Mr. Feeny in this digital age. Managing contracts is critical to ensure that your agreements are legally sound and enforceable. Businesses need to maintain a document that records all the terms and conditions of any agreement made between the parties and the business – in a way that everyone can understand it. A contract might be a sitting agreement, a future agreement, a conditional agreement, an implied agreement or even a presumptive agreement. Regardless of the type of contract being used in a business, it is important to have a system in place to manage them and get recommendations on what needs to change.

Contract Management Software AKA Mr. Feeny can help you with this daunting task. It keeps track of all aspects of your contracts – from negotiations and approvals to the terms and conditions within the contract, to comply with legal obligations and manage it through the contract’s lifecycle.

To know everything about Contract Management Software, read on!
 

Let’s Begin With What Is Contract Management Software?

Imagine you found out that your existing contracts with one of your clients have expired and your company has not renewed them. Oh, what would happen? The opportunity to do business with your client can be grabbed by one of your competitors and you might suffer business losses. It might take you a lot of time and hassle to get your client back, thanks to the mismanagement of one contract!

Any organization needs to manage its contracts and thus, Contract Management Software comes into the picture. However, before hopping directly to the software, let us first learn about contract management. It is a process that includes creating, executing and analyzing contracts so that they can secure an organization's operational and financial performance while reducing the risk associated with it. This job becomes easier by utilizing Contract Management Software.

Contract Management Software is a program used to manage various levels of contracts within an enterprise. This includes contract lifecycle management as well as contractor management for projects. This software also allows users to store contracts in one place, as well as send and receive any modifications that result from the contract negotiations. Besides, it also makes it easy to organize contracts so that businesses know what is applicable at any given time.

After knowing about Contract Management Software, let’s move ahead to know its roots in the next section.
 

Roots Of Contract Management Software

As Matshona Dhliwayo, the Canadian author of “The Art Of Winning” stated, “It is in the roots, not the branches, that a tree’s greatest strength lies.” So, let us know the roots of Contract Management Software to know its greatest strength.

The first major revolution in contract management occurred when storage became more efficient. The adoption of Customer Relationship Management Software (CRMs) and cloud-based repositories to store documents and customer data became commonplace, resulting in virtual filing cabinets.

However, salesmen were wasting a lot of time copying customer information from CRMs into new contracts or proposals. This created a potential for human error. Once the customer signed off, additional information like Post-Office (PO) numbers would often be needed to provide services. Additionally, one wrong stroke of the pen would send the entire process back to its starting point.

Electronic signatures solved this problem; however, it is only one side of the coin. Every step in the lifecycle of an agreement or contract has the potential to improve processes and save time by using various platforms at different levels.

Today, contract management has an automated workflow that helps teams track progress and access, store and edit contracts via a single dashboard, thanks to Contract Management Software. For example, the below dashboard shows contracts across the business:


Clause libraries empower team members to store templates and pre-approved clauses in a central location, so they can access them from anywhere. This reduces wait times and allows legal teams to focus on high-priority tasks, resulting in more efficiency. The Contract Management Software also makes reviewing quicker with its expedited features so that everything can be closed faster. The right Contract Management Software can help improve workflow at every step of the process of managing contracts.

Now that you know the roots of Contract Management Software, let’s know how the software actually works.
 

How Does Contract Management Software Work?

Mr. Feeny did everything systematically and so does Contract Management Software. This software follows a working hierarchy which is as follows:
 

• Step 1: Create A Contract

  Any contract starts with a template nowadays with a custom-built, browser-native editor. The process can be repeated for each contract data.

• Step 2: Collaborate With Colleagues

  Colleagues can collaborate on the document in-browser, using mentions to tag other users. Once it's ready, an automated approval workflow sends it out to designated approvers for review.

• Step 3: Negotiate A Contract

  The contract’s first draft is rarely the final version - contentious terms and language or non-disclosure terms are likely to be modified many times before everyone agrees. Contract Management Software lets you edit contracts in-browser, leaving comments and suggestions. The other party is notified via email and can accept or reject changes just as easily. Crucially, a record of all negotiation data is preserved so that teams can view the pattern of negotiations to learn from them.

• Step 4: Sign A Contract

  Digital platforms allow you to use technology that can replicate a physical signature's binary, permanent character. Some will allow you to paste in a scanned version of your written signature, while others prefer that you draw it in with a mouse. #DigitalTransformation

• Step 5: Tracking A Contract

  The contract can be managed with structured data, which means all the information is already available in the database. It is up to users how to make smarter decisions about clauses and other fields such as price rates and deliverables.

• Step 6: Renewing A Contract

  Users can define renewal reminders on the contract as well as who should be notified when it comes time to renew. The relevant stakeholders are sent email reminders ahead of the key date, so they aren't caught off guard by any unpleasant surprises. #NoNastySurprises

After learning about its working, let’s know who uses this software in the following section.
 

Who Uses Contract Management Software?

Let's unveil who can benefit from using Contract Management Software. This software is typically used in departments that handle contract-related tasks, such as creating, tracking and signing contracts. Legal teams, sales teams, human resource departments, procurement teams and finance teams are the prime users of contract management solutions.
 

• Legal Teams

  In-house legal teams use Contract Management Software that allows them to maintain templates and generate legal documents on a daily basis.

• HR Department

  Large companies usually have a high volume of contracts to deal with, since hiring new employees can be a daily process. So, HR departments often rely on contract management tools that produce contracts and documents. Some solutions even integrate with HR management tools such as Greenhouse and Workday!

• Sales Teams

  Salespeople hate anything that gets in the way of closing a deal, so they'll often use Contract Management Software to quickly generate contracts without the need to ask legal teams for help in creating them.

• Procurement Teams

  Procurement teams work with vendors and suppliers and need to keep track of renewal dates, as per signed documents. Contract Management Software helps them create documents and seek approval from stakeholders in the business before they can deliver on a procurement project.

• Finance Teams

  Finance teams typically need visibility into contracts so that they can reconcile them and generate accurate revenue expectations for their business. Contract Management Software helps in achieving this type of transparency.

Let’s hop on to the next section to know the benefits of this software.
 

 

Benefits Of Contract Management Software

As Nepoleon Hill quotes, “Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit.” So, let us look at the benefits of Contract Management Software.
 

• Business Functioning

  Contract Management Software will simplify how your organization functions by structuring business expectations and mechanisms needed for fulfillment.

• Improves Efficiency

  Contract Management Software helps automate documentation and legal processes by reducing manual efforts, which improves company efficiency and reduces errors in its scope.

• Improves Visibility And Transparency

  By structuring an organization's engagement with its stakeholders, contract management tools simplify transactional and performance tracking. It increases visibility and improves the transparency of the business processes and provides a clear picture of employee engagement.

• Enforces Compliance

  Contract management system dictates terms, conditions and procedures to be followed by various stakeholders. Hence, compliance is enhanced which helps in mitigating risks within the organization.

It’s not the end; the road to the future for this software awaits you in the next section!
 

Future Of Contract Management Software

The biggest challenge in modern contract management is the difficulty of keeping track of an increased number of contracts. Renewing these when they expire can be a time-consuming endeavor with many different kinds and each having its own expiration date.

Artificial Intelligence can sort through vast amounts of data and extract key information, improving the accuracy and efficiency of identifying contracts up for renewal. This reduces risks associated with letting contracts lapse quietly in the background.

If we look beyond, there are two models: the 'mass service' and the ‘high commitment’ model. The mass service model is inexpensive but offers lower value for contract management; it focuses on cost reduction. The high commitment adds a higher value to the approach and is based on customer satisfaction which is deemed as more valuable for businesses. Automation will increasingly handle various tasks within contract management.
 

Conclusion

There are a lot of expectations that your business needs to fulfil in order to acquire new clients and maintain existing ones. Just the way Mr. Feeny had expectations from Cory and his friends! With advancements in technology and industry policies, Contract Management Software is the only answer. Furthermore, it is smart for companies to improve their contract management system early on because when they do it later in time, it would be too much of a challenge!