A Summary of Contract Management Software Best Practices in the industry
Introduction to Contract Management Systems
Contract management systems are made to assist organizations in creating new contracts and keep track of the projects that have already been started. They usually replace paper contracts and file cabinets, though some of them can support paper contract which allows its users to print physical contracts or at times scan in signed contracts. These manual skills can be very useful in keying in legacy contracts into the main system, and in circumstances where the third parties need a paper copy.
Nonetheless, sticking to paper records is usually discouraged by digital contract management best practices, as it may create roadblocks to automation and presents more room for mistakes. It is important to note that because contract management systems deal with legacy contracts in a different manner, the buyer should think wisely whether legacy contracts must be keyed into the digital contract system.
Contract management is intended to make enforcement, approval tracking, and contract authoring, and auditing more efficient. It is a component of sales acceleration/ sales enablement, as it streamlines and improves sales paperwork. Nevertheless, the software is entirely immaterial to users outside of Sales, including the users in Legal and Finance departments, as well as external users who are involved in approval and negotiations. For this particular reason, convenience as well as permissions and confidentiality are essential considerations when it comes to evaluating contract management solutions.
The basic contract management systems concentrate on making contracts from templates and even keeping signed contracts. The more sophisticated contract software is created to assist firms to automate each and every stage of the contract process, all the way from approval workflow, to scrutinizing contracts against compliance regulations and keeping an eye on crucial contract milestones.
What is CLM (Contract Life cycle Management) ?
CLM is the practice of consolidating, observing, and automating contractual process within a company Contract Life cycle Management, which holds that contract must be accessible and always top of mind so as to implement contractual events and obligations, etc. and accumulate all due income, follow through on promises and finalise any pending deals. This is in disparity to a signed-and-done, file-away tactic to handling contracts that can lead to lost revenue, penalties, or legal oversights.
Since utilizing human resources for regular contract vigilance is extremely resource intensive, and people are more prone to making mistakes, contract lifecycle management is accomplished by the use of CLM software. While modest contract software can permit only users to change contracts through templates or keep contracts in a database, the systems made for CLM/ enterprise contract management have more sophisticated features connected to project change management (for instance VORs), compliance, payment processing, reminders & scheduling, editing & collaboration, automation, and workflow. Instead of just a contract authoring tool or contract database, CLM software works as a digital contract manager of sorts.
The Best Practices in The Industry
1. Standardize Your Process
The normal organization’s contract 'process’ is really an ad hoc issue. The legal department strives to monitor contract procedures and policies, but they do it manually. In the meantime, users establish contact with the legal department often for basic status updates, clarifications, and information. All of these adds up to a burst of time-wasting emails and calls.
As the contracts make their way through the company, legal and operational teams manually enter the same information several times, while at the same time make corrections on inaccuracies and inconveniences that they are able to detect. This leads to more wasted time.
This can be avoided by codifying all the procedures and contract policies into one self-enforcing system which interface with the other different business systems.
2. Data Entry Should Be Distributed To The Most Logical Worker
Many attorneys waste too much possibly productive time keying in missing information to business systems. This is supposed to have been the task of the person who requested the contract initially.
Through putting explicit expectations in place for your requestors, you can make sure that they will offer particular essential pieces of information before the legal team even sees their contract request. You will remove the need for your legal team to unearth this kind of information, and you will be ensuring that the life cycle of the contract will go painlessly and smoothly for everyone involved.
3. Incorporate Compliance Into Your Process
A majority of organizations go to great lengths to document their compliance policies. These organizations then decide to leave the enforcement of these policies to the manual approaches.
Even the most diligent legal department will finally let compliance matters slip through the cracks apart from the case where they have automated workflow solution which self-enforces policies. In a system that is automated, the policy will not be just a documented one but also a running one.
4. Build An Online Repository For Frequently Used Clauses And Contracts
Why do you need to reinvent the wheel every time you include a termination for cause clause in a contract or a liability? You can run these requirements yourself and place them in a central clause library. And the fill these clauses into your contracts automatically. You will save innumerable man-hours per year and free up much more of the attorney’s time to concentrate on the distinctive portions of each contract.
5. Concentrate On Areas Where Contract Life cycle Management Can Result In Quick Wins
When starting out, concentrate on the areas where you have easy wins. These aspects can include creating a searchable library of reasonable contracts, electronic signatures, ERP integration and CRM, and automatic looping and routing. By focusing on one of these, or all of them, contract lifestyles will be significantly cut down.
6. Gauge The Effect Of The CLM Software
Concentrate on the following measurements when tracking improvements:
• A decrease in lost sales missed deadlines and regulatory penalties.
• A number of contract by individual and status.
• Reduction in the period taken to negotiate and close contracts.
• Decrease in DSO (Days Sales Outstanding).
• The percentage of closed deals on time versus those which slip into the next phase (find and locate the root cause of the delay.
It is also recommended to benchmark your firm’s measurements against the best-in-class to comprehend the true progress.
7. You Will Need A CLM Software Process Owner
The process has to manage by one person. Ensure that the firm designates a leader who will keep all the staff on track. However, there might be advantages and disadvantages which comes with a single person owning the whole process. Whoever is chosen as the leader must be able to make sure that the required checks and balances have been put in place.
It is an absolute necessity to think and plan ahead for a Contract Management Software solution that works for the entire company for years to come.
Because there are so many contract management software solutions , it is also better to think about a solution that does simply more than contract management
but performs contract automation.
Read More about: Contract Automation Software Resources