Contracts are the glue that binds the business world together – they define who does what, when they do it and how much they do it for. Almost every department uses contracts, whether it be to partner with new suppliers, signing on new clients or recruit new employees. With so many contracts floating around a business, it is important that there is clear accountability for the outcomes and follow up for each one.
While businesses place a huge emphasis on contracts in the lead up to execution, it is actually once a contract has been signed that it becomes the greatest risk to the business.
What is contract management?
Contract management is a system or process that clearly outlines how a business documents and stores their contracts. Traditionally, this process was largely completed by storing physical copies of agreements in filing cabinets. In today’s increasingly paperless society, it’s more likely that contract management is taken care of by a company-wide computer system.
The problem with some paperless contract management processes is it can become very difficult to find particular contracts – especially when different people and teams sort and store their contracts their own ways, often in separate locations.
Poor contract management can lead to agreements being lost, crucial time for renewal negotiations missed, and ultimately greater risk exposure for the business.
Is there a better way to manage contracts?
Some businesses go further with their contract management process through purpose-built contract management software. Good contract management software will have the ability for the business to create contracts, execute and store them within one easily searchable platform.
Intuitive contract management systems also have a reminder feature which allow for the contract creator to set up reminders ahead of key dates, e.g. as expiries and renewals.
Using contract management software formalises the contract management process. This way the entire business has transparency over how to create and store a contract and is clear on who is accountable for the contract.
Why Legal departments love using contract management software
While many business departments use contracts in their day-to-day activities, no department’s activities revolve around them as much as the legal department.
Leading legal departments have used contract management software to change how their business views Legal; successfully making the transition from being considered cost-centre to a source of competitive advantage.
These legal leaders go one step further with their legal contract management systems. These leaders use insights generated from contract management software to better manage risk, capture more revenue and more clearly communicate the value their legal department provides to the business.
When a Legal contract management system is effectively implemented in a business, Legal departments are able to spend more of their time providing higher-value legal support, rather than searching through computer folders or massive filing cabinets filled with every contract the business has ever created to find one in particular.
An effective contract management system ensures that there is only one source of truth, eliminating the confusion often found when multiple drafts of a contract are created during negotiations.
Legal contract management also drives productivity by giving everyone in the business the ability to sign, approve and store contracts straight from their devices. This ability prevents key business initiatives from being delayed due to team members working remotely.