Contract management is a critical aspect of any business operations, yet it often falls by the wayside as businesses focus on other priorities. In this article, you’ll learn ways that contract management can serve your business’ operations and make them more efficient.
Poor contract management can cause a business up to 9% of its overall sales, highlighting how crucial having a system in place to manage contracts effectively is. By using contract management software, businesses can streamline their contract processes, increase operational efficiency, and reduce the risks associated with contract management.
So what are the ways contract management software can improve the operational efficiency of businesses?
What are the common contract management features?
Fortune 500 companies, in particular, can have up to 40,000 contracts at any given time. With the help of the many features that contract management systems provide businesses, even companies of that size can streamline.
These are the common contract lifecycle management tools features that can help streamline your business operations.
A central location for storing and organizing contracts gives your team easy access and visibility to all documents and contracts. That way, you can maintain a comprehensive and organized library of contracts.
Having a repository can greatly reduce the risks of losing important documents and ensures contracts are easily accessible when required. Most contract repositories are also secure, giving permissions-based access to ensure that your confidential information is protected. There are also means and ways to search and filter contracts by keywords, status, and other criteria to streamline the search process.
Contract templates and workflow approvals
With contract management software, you can keep contract templates that provide a standard format for all your agreements, documents, and contracts, reducing the time required to create new contracts. Some templates you can store include:
- Employment contracts
- Vendor contracts
- Lease contracts
- Service contracts
- Non-disclosure agreements
- Partnership contracts
- Sales contracts
- And more
With these systems, you also have workflow approvals, which enable managers to automate contract approval, reducing the risk of errors and speeding up the time to approval. Automated contract management provides a consistent and efficient approach to contract management.
Contract negotiations and review
There’s no negating how crucial contract negotiations and reviews are for business operations. With collaborative contract review tools, multiple parties can review and negotiate terms in real time, improving the speed and efficiency of the contract negotiation process.
A contract management solution will also let you store a version history database. This helps to ensure that everyone is working from the latest version of the contract. Contract negotiation and review tools also provide a platform for effective communication and collaboration, reducing the risk of miscommunication during negotiation.
Contract analytics and reporting
Contract analytics and reporting provide businesses with insights into contract performance. This feature helps identify areas you can improve and streamline. Dashboards and reporting tools will also provide real-time visibility into key metrics.
Some of the data you can track include the number of contracts in process, the number of expired contracts, and the total value of contracts under management. Contract analytics features also track individual contract performance, providing valuable insights into contract compliance, speed of approval, and potential contract risks.
Electronic signature and approval
Lastly, your contract management software lets you securely sign and approve contracts electronically, a critical component of modern contract management. Electronic signature and approval eliminate the need for paper-based processes, reducing the risk of errors and speeding up the approval process.
Nowadays, electronic signatures hold legally binding and provide a secure and auditable trail of contract approval. Electronic signature and approval also enable remote contract approval, reducing the need for physical signatures and speeding up contract approval.
5 Ways contract management software can improve operational efficiency
So how can contract management software improve your company’s operational facility? Here are some of the most notable ways.
Streamline contract creation and approval processes
One way contract management software improves your operations is by streamlining the contract creation and approval process. This not only saves time but also reduces the risk of errors in the process of getting approval from higher-ups.
You can even integrate contract management software with field service workflows, so field operators and agents can get approval from your headquarters when on the field. This enables businesses to manage contracts for field services— such as sales, installation, maintenance, and repair— more efficiently and effectively.
Centralize contract storage and access
Ensuring that you store contracts in a centralized, secure, and easy-to-access database is key to better contract management. It’s also extremely easy to set up as most contract management solutions have some form of a content management system.
By centralizing contract storage and access, contract management software can help businesses improve operational efficiency by making it easier to pull out templates and signed contracts. With a content management system in your contract lifecycle management software (CLM), you can do that. Here are some other great CMS software examples for easy document access.
Automate contract renewals and expirations
Contract management software helps businesses to stay on top of contract renewals so you don’t miss important deadlines. This way, you improve the efficiency and recency of the contract management process.
Some contract management software examples provide automated renewal reminders so that businesses get notified about contract renewals in a timely manner. You can also automate the renewal process with an email send-out and signature collection mechanism to avoid manual touches by busy staff.
Enhance contract negotiation and review
Contract management software can also help to enhance contract negotiation and review processes. Some features that help with this are an electronic signature system, a revision history tracker, collaboration tools, and more. These features streamline the contract review process, reducing the time and effort required to review and negotiate contracts.
Additionally, this software can provide a centralized platform for contract negotiation, enabling all parties to collaborate easily and provide input on contracts. This streamlined process will also boost customer satisfaction as clients no longer have to endure long back-and-forth negotiations with your company.
Integrate with other business systems
Integrating contract management software with other business systems can help to improve the efficiency and accuracy of contract management operations. By integrating contract management with systems such as customer relationship management (CRM), enterprise resource planning (ERP), and financial management systems, businesses can automate contract-related processes.
You can also integrate it with your project management system so that your team gets a timely notification when it’s time to start providing a service. There are some great contract management systems that integrate with Basecamp, for instance. You can also check other alternatives to Basecamp that you can use with your CLM software.
What contract management system should I use?
Looking at a contract lifecycle management or CLM tools list, you’ll know there are many options out there. However, to find the best one for your organization, you can go through the list above and determine which ones might provide the features you need most.
Check out this list of the most common contract management systems:
Better contract management for better business operations
Contract management software can play a crucial role in improving the operational efficiency of businesses. They offer many benefits that help businesses manage their contracts more effectively. In extension, it improves other workflows, such as client negotiation, partnership agreements, employee onboarding, and so many more.
With a contract management system, businesses can make informed decisions and improve the overall efficiency of their sales, marketing, HR, finance, and other operations. To achieve the best results, you should choose a contract management solution that fits your specific needs and requirements.