Contract management systems (CMS) are processes for managing the production, negotiation, execution and storage of contracts, Service Level Agreements (SLAs) and Procurement Master Agreements (PMAs).
These systems can be either manual (relying largely on paper documents), or digital with a mostly paperless operation. While both processes have their benefits, many medium-sized and enterprise businesses have now adopted digital contract management systems.
It is crucial that the business has a way of creating, approving and executing these documents easily, as well as storing them securely.
Contracts are important! Business is built on the understanding that when two parties agree on something – e.g. a sale, new employment, a purchase – they can trust the other party will fulfil all their obligations as part of the agreement.
Contracts, while only pen and paper (or pixels on a screen), are proof that the agreement (including all terms) was made.
How do you know if you need to digitise your contract management system?
When considering whether your current contract management system is working for you, there are two areas of consideration.
1) Think about where your contracts are now. If you needed to find the contract that’s going to expire next, could you do that easily? Or would you need to sift through a filing cabinet or database filled with every contract your business has ever created?
Despite only holding tremendous value once they’ve been signed and executed, contracts generally only get attention while they are being created.
Digital contract management systems are designed for intuitive and secure storage of your contracts. These systems allow you to filter and search through your contracts so you can isolate the one you need, when you need it. Legal leaders can filter through which contracts their team has worked on and easily read the progress status of each.
With Plexus Gateway, you can even set yourself reminders of contract expiry dates upcoming, giving yourself plenty of time to organise renegotiations for renewals.
2) Think about your contract creation journey. Is every contract unique? Or are you often creating a document almost identical to one created very recently? And how many people are involved in the process?
While not every business will have their own set of lawyers to create their contracts, SLAs and PMAs the moment they need them, the advantage of digital systems is that standardised, and frequently used documents can be templated and automated.
With automated templates, anyone in your business can begin the contract creation journey and feel confident that it is going to be compliant with internal requirements and not miss out on any key details.
A great example of this international solar power company, Sonnedix. They found that they were creating NDA after NDA, and the documents rarely varied. To reclaim time spent by multiple teams to brief, write and execute the contract, they implemented the Plexus Gateway contract management system that incorporates their custom NDA template. Now any time they need a new NDA, the team only needs to fill in a few details, (e.g., the counterparty, dates covered, etc.) and they can send the simple and compliant contract to the counterparty for execution in 12 minutes rather than multiple days as it was previously.
Over to you –
Reviewing your systems and processes is key to ensuring that your business does not get caught up in activities that don’t serve business growth objectives.
While manual contract management systems might be best for smaller organisations, it is important to review if those systems are still the most effective way for your team to manage contracts as you grow.