.svg)
With such a large number of contracts, there is no doubt that standardized contract award procedures — or in other words, contract management — are necessary.
What is contract management?
Contract management refers to the business processes that oversee the creation, implementation, and evaluation of contracts to improve business performance and reduce risks.
The relevance of contract management for companies is undisputed. Contracts, as legally binding documents, govern the relationships between the parties involved and define aspects such as pricing, scope of work, rights and obligations, project timelines and warranty conditions. Due to the scope of contracts, well-structured contract management can significantly improve corporate performance. On the other hand, poorly organized contract management can expose your company to various operational and financial risks.
The role of contract management has evolved over time and requires an in-depth understanding of all facets of the contract life cycle to enable valuable data analyses. Companies use contract management to optimize their performance and find out how they can achieve their goals more efficiently.
Eineinem Gartner report According to “CLM is evolving from an operational record system to a core enterprise-level system that takes into account business risks, expenses and revenue maximization.”
The drawbacks of traditional contract management
There are crucial aspects that traditional contract management cannot offer. Traditional contract management has a number of disadvantages, which is why companies are turning to innovative platforms such as top.legal:
Manual procedures: Contract management is often inefficient and error-prone when done manually. Manual processes waste time when creating new contracts, as a considerable amount of manual effort is required for redlining, legal review and status tracking. Manual contract management is not only time-consuming, but also incredibly expensive. When performing manual operations, you must consider the associated labor and overhead costs.
Collaboration is limited: Contract negotiations are inherently collaborative; they require extensive coordination and internal engagement with other corporate functions affected by the contract. Because of the inherent silo structure of corporate teams, it is extremely difficult to ensure this collaboration with standard contract management systems.
The risk is present due to a lack of standardization: Traditional contract management lacks risk controls to enforce and ensure compliance with contract processes. The use of multiple systems by parties and the exchange of information via spreadsheets or one-off papers involves a high risk of errors.
There is a lack of transparency and reporting following the signing of the contract: Human errors and incorrect data/metadata are possible as the ability to analyze contracts using outdated methods such as spreadsheets is limited. In addition, old systems make it difficult to find and retrieve contracts, and time is lost when searching for the relevant information in disordered filing cabinets/offline archives. Ultimately, these bottlenecks and lack of transparency result in missed deadlines and deliveries.
Why is contract management important?
On average, almost 40% of the value of a deal is lost due to inadequate contract drafting. The main idea of contract management software should be to provide an iterative process that progresses over time
While it's common to manually store contracts in folders and filing cabinets, this method is fraught with inefficiencies that can hurt a company's overall productivity.
Contract management software is not only important for this reasonbecause it offers an electronic solution to these problems, but also because it enables the organization of all contract documents using automated and efficient software processes. It can also help you track and allocate contract management resources by recording contract signing and renewal in an easy-to-manage electronic calendar.
By integrating an automated contract management tool, countless hours of work can be saved and countless contract management processes can be automated, which leads to an increase in value for your company.
The life cycle of contract management
Let's take a look the different phases of the life cycle of a contract in more detail:
1. Contract request
In this phase, the contract life cycle process is initiated. A contract application is entered into the system, in which both the seller and the buyer precisely define their expectations.
The core of contract preparation is based on this very first step. Make sure that there are no gaps and that all important information is available, including the partner's defined requirements, expected goals, terms to be understood, relevant documents, and supporting data.
2. Contract preparation
After the sound was created in the previous phase, it is now time to create the contract. In this phase, the contract terms for new contracts are written or adjusted for ordinary contracts.
This is also the stage in which templates and a clause library are created. This allows business teams to select the most appropriate contract templates depending on the type of contract.
3. Contract negotiation and review
Here, the parties negotiate the conditions set during the preparation phase and revise the document. This phase creates clarity by bringing both sides to a common understanding and setting the appropriate expectations.
Version control is also facilitated by contract management software. When a document is edited, a new version is created automatically. This allows the team to find and edit the latest document.
4. Contract approval
Once the contract has been amended to reflect the new agreements and negotiated terms, it is submitted for internal or external approval.
5. Contract execution
Contract execution, also known as contract fulfilment, is an important phase in the life cycle of a contract. In this phase, the contract is actively implemented and essentially includes the provision of services, the obligations and requirements set out in the contract.
In doing so, the contracting parties ensure that the agreed deliveries and services are provided on time and in the agreed quality. They continuously check and document whether the terms of the contract are being met. This also includes monitoring the contractual partner's services and deliveries and managing any discrepancies or conflicts.
In addition, the contract execution phase may include processing payments and invoices, managing contract changes, and carrying out regular reviews or audits to ensure that contract conditions are met.
6. Contract archiving
Contracts must also be stored somewhere and managed in contract storage so that they can be easily searched, tracked, and retrieved.
The software for contract management includes electronic filing cabinets for storing and organizing contracts. It indexes documents with the associated metadata to make it easier to find documents.
It can also convert PDFs into rich text documents using optical character recognition (OCR).
7. Managing obligations and ensuring compliance
Compliance requires the parties to comply with all conditions set out in the contract and the standards and guidelines established by the government, industry associations, and other agencies.
8. Reporting and audit
Contract management software maintains an audit trail and stores all contract-related information, such as who accessed the documents and when, who made changes, and so on. This data helps identify bottlenecks and compliance issues and to take action when a contract is disputed.
Above all, it ensures that companies are constantly prepared for audits.
9. Changes and revisions
In this step, reports are evaluated to determine the status of a contract and whether it needs to be revised. It is an advantage to work proactively on the adjustments and to make well-founded decisions well in advance of the contract extension date.
10. Contract extensions
This is the last phase of the contract life cycle, in which a decision is made on how to proceed with the contract — whether it should be terminated, extended or a new contract should be concluded. Contract management software informs users in good time about deadlines and renewal dates through automatic notifications.
Benefits of using contract management software
There are numerous options How you can benefit from contract management software.
Standardize your contract processes
With a contract management software solution, you can choose from a library of templates and clauses to ensure a consistent contract text and clauses across the organization. You can now put an end to the six different copies of NDAs scattered around the company.
Easily monitor and track contract changes
There's no need to worry about version control. All text changes, whether internal or external, are automatically redlined and can be easily approved or rejected.
Improve the efficiency of your contract approval process
Stop wasting time trying to figure out who needs to review a contract and then go after that person. The approval workflow ensures that the relevant items are approved and documented in good time by the responsible employees.
Keep all your contracts in one place and find them faster
Say goodbye to manually tracking contracts. CLM (Contract Lifecycle Management) technology with contract storage is a practical way to store contracts and related documents in such a way that stakeholders can access them securely and conveniently — from anywhere.
Use electronic signatures
Stop stressing about finding the right person to sign. Instead, use the electronic signature: It only takes a few minutes and works just like a physical signature.
Save costs, time, and effort
Contracts with insufficient transparency can lead to unintentional contract cancellations and extensions. Contract management software automates business processes and enables companies to create, revise or renew contracts in a timely and reliable manner.
Who can benefit from contract management software?
Every day, companies need many different types of contracts for different reasons. The features and easy-to-use functionality of contract management software make it an ideal partner for most business function teams in an organization.
Legal departments
Contracts are unavoidable for legal teams or legal departments as they play an important role in managing risk and ensuring compliance. The legal departments are involved in all phases of the process, from discussions to drafting to approval.
With ready-to-use contract templates and a clause library, contract management software helps legal teams speed up the contract creation process. It provides real-time information to track contract progress and react when needed.
Distribution
Sales representatives are constantly looking for new customers or projects. Contracts are legal documents that are essential to sell a product or service. This is how sales people close the deal. Any stumbling block in the contract signing process could prevent them from achieving their sales target.
You can use contract management software to shorten the contract creation cycle, communicate with customers in real time to address concerns, and expedite legal signing and closing processes. By connecting the software to other CRM solutions such as Salesforce, HubSpot, and others, they can manage the entire sales process from start to finish.
Human resources department
By centralizing and tracking all recruitment documents and activities, contract management software speeds up the hiring process. Securely send offer letters, contracts, confidentiality agreements, and other hiring documents to new employees. Check the status of contracts at a glance and send signature reminders when needed.
Finances
Finance teams can use contract management software to increase profitability by uncovering lost revenue and opportunities to cut costs, improve compliance, and coordinate and enforce terms and obligations.
Choosing the best contract management solutions
Contract management software is a cost-effective and efficient solution to streamline contract management and add value to your business. But with so many contract management software providers to choose from, how do you know which is right for you?
The following are some important questions to ask yourself before choosing.
✔️ Is it easy to integrate with your existing systems?
✔️ Is it adaptable enough to meet your needs?
✔️ Is it easy to use and learn?
✔️ Would you like to be able to contact a support team?
✔️ Is the platform secure and how powerful are the analytical options?
The 10 best contract management solutions
We have for you a list of best contract management software compiled so that you can quickly get an overview of the current market of the various providers
top.legal
About top.legal
top.legal is a cloud-based solution for contract management and automation. It was developed with a dedicated digital workspace in which all parties can centrally manage contracts, gain real-time insights into agreements, and optimize document creation, contract workflow, and communication in one place. top.legal enables users to significantly minimize the time and resources required to maintain and manage all contracts.
Contract Lifecycle Management (CLM) software helps users manage, track, and automate every phase of the contract life cycle, whether it's a small, medium, or large organization.
ContractWorks
About ContractWorks
A management solution for companies of all sizes and industries. Like most contract management technologies, ContractWorks makes it easy for companies to execute, store, and track all corporate agreements so they can focus on the relationships that those agreements cover.
In addition to these features, ContractWorks is proud to provide its customers with a team of support experts who help companies get the most out of their solution.
PandaDoc
About PandaDoc
Contract management software that focuses on managing the workflow of all sales transactions, collects important information and gives your customers a great shopping experience. Users don't have to worry about creating, approving, or signing proposals, offers, or contracts as this product is all-in-one document automation software.
Outlaw
About Outlaw
Contract management software focused on making the complex world of legal agreements easier and easier to understand. The user interface is designed to be easy to use and set up for any team, including teams with external employees.
Outlaw can also be integrated with your existing business tools, workflows, and systems. Automation, drafting, collaboration with customers and teams, electronic signature features, tracking progress, storing and managing contracts are all features of this contract management system.
Concord
About Concord
Concord is contract software that helps automate user document creation and approval processes. Users can use the advanced contract management tool in real time to write, negotiate, and collaborate with other parties.
Once they've agreed on a contract and written it, they can approve it using a modern e-signature tool, which simplifies the approval process. Concord is a software-as-a-service (SaaS) offering with mobile apps for iOS and Android.
Juro
About Juro
The platform stores all contract files and data in a single workspace so that they can be easily accessed and saved. It is trying to alleviate the typical problem of moving forward contracts. What used to require many tools to transport contracts from administration to legal, business and other areas of the company is now reduced to all key stakeholders using Juro Workspace to manage contracts.
Conga
About Conga
Conga Contracts is contract software that includes features to streamline document creation and approval processes. This application reduces workload through realistic AI help that takes on many repetitive activities. It also includes features for legally compliant electronic signatures and a range of external software connectors for a more consistent workflow.
Contractbook
About Contractbook
Contractbook is a cloud-based contract management tool that helps companies of all sizes create, share, and store legal documents and contracts. Key features include configurable document approval workflows, templates, milestone tracking, and version control.
It offers users ready-made templates that enable them to create contracts within the website and send them to individual or multiple recipients with legally binding digital signatures.
Icertis
About Icertis
Icertis is a contract management tool that is cloud-based and has a customizable dashboard. Users can view real-time statistics on workflows, compliance, and user actions via the dashboard to get a comprehensive overview of their contract life cycle. The platform is integrated with Microsoft Office so that the user can create contract templates using the Icertis clause library.
Ironclad
About Ironclad
Iconclad is a web-based platform that helps companies create, automate, and manage contracts and agreements. It provides a self-service platform where customers can design and modify templates to easily create any type of contract. Ironclad has key features such as an audit trail, redline preview, automatic signatures, searchable contract documents, and a workflow engine.
It allows companies to anonymously assess legal documents or agreements, consult before approval, and create audit trails to track changes.
