In a previous post, Concord discussed the need for automation when managing the contract lifecycle and the importance of all-in-one contract management systems. This article will build on that, listing the top seven recommendations for how to best implement a CLM and the benefits derived from doing so.
Benefit 1: Create Better Contracts
The benefits from using contract lifecycle software begin in the very first stage–the initial drafting phase. Contract lifecycle management software (CLM) offers multiple benefits to your drafting team. Standardized templates can be easily created, stored on the cloud and distributed among team members. This not only takes far less time but keeps contracts uniform. When you use a standard template, it is automatically updated with any edits made by the template owner, keeping language up-to-date with the industry standards. Standardized language improves clarity, and promotes uniform formatting and style, and requires less time to review and edit.
We also recommend making use of an automated formal request process or workflow process for your contracts. By implementing an automated workflow individuals and approvers can be given specific access they need relative to a document and they will receive automated reminders indicating their needed actions. Having the document being worked on stored in a centralized cloud location, allows avoids copying, pasting, emailing, etc. by giving access a single instance of a document rather than multiple individuals making multiple copies. When information goes through less back-and-forth, the risk of incorrectly copied information diminishes and users and approvers can be assured that they are working with the most up-to-date version and have a record of all previous changes and versions. The document(s) are also more accessible, always available to everyone involved in the process because it is stored in a single, secure, and transparent location. New information can also be placed directly into the contract template and updates across all users who have access to it, saving time in copying out all of the information by hand.
A final benefit for the creation of a document is a substantial reduction in the time between a contract request is made and the fulfillment of that request. Users can generate a contract quickly to fit the needs of the request while being able to be confident that their CLM system won’t let anything fall through the cracks. Information won’t be lost in translation, so contract creation and fulfillment are not bogged down with double-checking and excessive clerical work .
Collaborative techniques also work to improve the contract in its embryonic steps. Your entire contract creation and negotiation team, particularly administrators, will have access to this central contract repository. They can watch the draft evolve, offer input, and make edits. The entire team can work more effectively together to create a crisp, clear, well-worded contract with fewer errors throughout the document and thereby less need for corrections and time-consuming back-and-forth.
Benefit 2: Streamline and Simplify the Negotiation Process
At their core, contracts represent relationships. Contracts should make establishing and maintaining good relationships easier and more natural. All too often though, companies face tremendous difficulty when navigating through dates, deadlines, versions, edits, input etc. Additionally, your company needs to be able to navigate such difficulties as vendor roles and needs, poorly defined roles during negotiation, and tracking changes within the contract itself, as well as communication with the other customer or vendor.
Negotiating contracts requires multiple drafts of the same contract, because no matter who drafts the document, the contract always starts off with the priorities slanted towards one party. Negotiations ensue, which brings about a second draft that includes all of the needed alterations.
Without software that tracks the multiple stages of the contract draft, your company would need to 1) generate a new draft, 2) keep track by hand of all of the information that was changed, and 3) be certain that the most current draft is the one they are working with. Keeping track of all these moving parts can be a nightmare for a contract manager. CLM software eliminates this problem. When a draft is stored in the cloud, not only can a single version of the draft be edited online with input from all parties, but the software will also track the changes that have been made, creating a new version reflecting the edits, and storing the previous versions. Both parties can be privy to the alterations, with alerts being sent to notify both parties of any changes.
Collaboration at this point happens not only between the contracting team but also between your company and the other party in the contract negotiations. They can comment on the contract as they view it, notifying you of their acceptance of terms, or of terms which may need to be changed. Without your permission, they cannot edit, but their input can still be taken into account as you draft and redraft the contract.
Using CLM software also brings increased standardization to online negotiation processes. Uniformity rises because legal language, best practices, fallback clauses, and various other formalities become common throughout the company. All contracts produced by your team will have the same formal elements because of the terms library that every member of your team can be granted access to.
Benefit 3: Accelerate Approvals
After negotiating a contract, the challenge of contract management is to streamline the approval process. CLM software aids you as you attempt to swiftly gain approval for acceptable and agreed upon contracts.
Documents can be added to an approval workflow to speed the process along, make sure that everyone is clear on their duty relative to the contract in question, and receive automatic notifications when their task needs to be completed. Some software also has a dashboard which shows all needed tasks in a single location, allowing the administrator to make multiple approvals at once for a much quicker and less tedious review process.
When a contract has been reviewed, e-signatures make it easier to acquire the proper signature and approval from the proper entity, because they can sign at any time from anywhere. Your team will then receive a notification that the proper approver has signed the contract via email, so they will know immediately and be able to proceed swiftly with the rest of the procurement phase.
Benefit 4: Complete Management Control
When you automate your contract lifecycle management process, you reduce the likelihood of missed deadlines and terms that go unfulfilled. You no longer have to rely upon post-it notes by the cubicle entrance, or reminders that go off on one person’s phone or computer. The alerts produced by your CLM software accurately inform your entire team of deadlines, payment due dates, payment amounts, upcoming renewal dates, and so forth.
Additionally, terms can easily be searched for by your team to better monitor compliance. A contract’s entire content, the descriptive elements, and information contained in the contract’s summary sheet can be searched for with a comprehensive search algorithm. This drastically reduces the amount of needed for reading through and checking the document. The summary sheet should also contain quick at-a-glance information key dates, terms, and deliverables dictated by the contract in an easy access location. You won’t have to sift through an entire contract to find the terms anymore because your automated system will do it for you. You can accurately monitor compliance, record past payments to avoid duplication and search any term that you need to in minutes.
Benefit 5: Create Easily Searchable content
If something is not contained in the summary, then it should be searchable in the content of the documents. Because the system is automated, it converts the legal language within the document into searchable text that you can then use to search the document easily to find terms that you could not find in any other way.
Additionally, the central repository of data makes data searching easier. There won’t be multiple copies floating around with slightly different information on each copy. Everything is accessible, searchable, and accurate to the last saved edit. It is up to date in every way, and that makes it easier to search for and identify the terms and conditions that you might need. Saving time with the storage and searching process makes it quicker and easier to produce the reports that you might need to generate for the use of the company.
The security, central storage, collaborative features, electronic signature capabilities, and follow-through features of an automated CLM system are necessary for any company wishing to get ahead in the modern age, as these useful tools bring increased revenue, visibility, collaboration, and efficiency.
Concord is a cloud-based contract management platform that’s changing the way the world is creating, negotiating, signing and managing contracts. With Concord, contracts can be stored online and negotiated on with vendors, contractors, third parties, etc. without ever having to leave the platform, leading to an easy and transparent process that ensures all parties are aware of terms, dates, and expectations without the usual headaches that comes with collaboration and negotiation through Word and Email.
Benefit 6: Better Manage and Monitor Contract Compliance
A common challenge for companies, particularly large companies that can have upwards of thousands of active contracts at any given time, is compliance. If a company does not have an easy-to-use system for keeping track of the terms of the contract, then they can’t assure that those terms are being met. Keeping a close eye on thousands of active contracts is near impossible with an old manual or paper process. With CLM software, however, keeping track of thousands of contracts is no harder than keeping track of a few dozen would be. Administrators can set reminders for deadlines and configure summaries for each individual contract that points out the more salient terms and conditions that need to be addressed, with associated dates and reminders. Also, the entire contract database, including all the content of each contract can be searched through at any moment, making finding any piece of information fast and simple. With all of these features at your fingertips, it’s far simpler to monitor compliance in a contract situation.
Benefit 7: Contract Reviews
The final benefit contained in this list is the ease with which reviewers can perform contract annual reviews much easier with good CLM software. Every year, even if the renewal is not approaching for some time yet, it is a best practice to have your team review the contracts. Having a review gives companies the opportunity to ascertain what is going well with this particular business relationship, and what is not. It allows you to analyze the efficacy of the contract, determine how to improve the contract, and begin to make plans for when the renewal cycle actually begins. If you determine that the contract is not worth keeping, then take action to evade the renewal and locate another supplier. If, however, you find that this contract is beneficial, you now know what you could do to grow the relationship when the next renewal opportunity comes around.
Performing annual reviews of paper contracts is the stuff of nightmares, but if the number of contracts is high, it can be impossible. CLM software is crucial for making reviews manageable so that companies can realize the benefits of doing them. Quick access to deadlines, summary sheets, and auto-generated reports can make reviews easier than ever thought possible previously.
One of the primary benefits of Contract Lifecycle Management (CLM) software is that it makes collaboration simple, easy, and transparent. By using a collaborative software program the entire team is allowed to access a contract draft in the cloud from wherever they are, make comments on specific portions of the document, and redline the document. Every member of the team will receive alerts when comments or changes are made, so everyone can stay informed. When you wish to integrate these changes into the document, it can be done easily online.
The platform is being used today by more than 40,000 companies in 130 countries, and tens of thousands of users who are now managing all of their contracts on Concord. Additional information can be found at http://www.concordnow.com/.