What is contract management?
Contract management, as the name suggests, is the process companies follow to manage their contracts. It includes seeing a contract through the various stages in its lifecycle, such as authoring, approval, negotiation, signature, and amendments and renewals, if any. Another important aspect of contract management is the storage of the company’s contracts in a way that facilitates quick access, improves visibility, and aids in better contract governance.
When managing contracts manually, analyzing the contract management process to identify bottlenecks and mitigate them is a tedious task. This is why many companies are adopting contract management software to streamline their processes. This type of software also offers advanced analytics and reporting features that companies can use to glean strategic insights from their contract data.
Why is contract management important?
Contracts are an indispensable part of a business. They touch every department in a company and govern every dollar that flows into it. Poor contract management can lead to significant financial losses. Contracts also carry a level of risk because they’re legally binding. Inefficient contract management can pose the following risks when done traditionally:
- Prolonged authoring and review cycles, as a single document can run pages.
- There is a high chance of contract errors as the document is drafted and reviewed manually.
- Negotiation can be time-consuming because it involves back-and-forth emails, making it difficult to compare changes between versions.
- Signing contracts can take forever due to the long email-print-sign-fax cycles.
- Amending clauses in contracts in the event of new government regulations cropping up can be tedious, because the legal team needs to identify and amend the clauses manually.
- Missing out on renewal opportunities due to lack of automated email and in-app notifications.
- Losing contracts or difficulty in locating contracts/specific clauses due to haphazard storage and management.
Where can a contract management solution be valuable?
Contract management software is an indispensable tool to possess as your business scales up. It helps make your contract management process efficient in the following areas:
Simplified and streamlined processesA business typically uses six applications for its contracting process. With contract management software, you no longer need to toggle between multiple applications. One software streamlines your contract lifecycle and simplifies your contract management process.
Better risk mitigation Risk is an inevitable part of the contract management process. Stakeholders of obligations can overlook the fine details or fail to fulfill their tasks. This can impact a business financially and legally. However, contract management software can help companies mitigate such risks with the help of an obligation module that allows contract owners to keep track of the obligation status without even having to leave a contract.
Improved compliance Government regulations are cropping up all around the world, impacting the way businesses function. These regulations often result in changes to the language in business contracts. Contract management software helps businesses stay compliant with legally pre-approved clauses. The software also empowers admins with clause-based reports that quickly locate contracts containing a particular clause that needs changing due to company policy changes. This makes implementing changes faster, helping companies stay compliant.
Minimized revenue leakage In-app notifications and email alerts offered by contract management software ensure that businesses never miss renewals, minimizing revenue leakage. Time is money, and contract management software helps enterprises clock faster cycle times and improve productivity. On the sell-side of things, it allows revenue teams to focus on high-value tasks and not waste time on mundane paper work. On the buy-side of things, it helps procurement teams to get the best deals for the company through granular insights on counterparties and their past negotiations.
Seamless cross-functional collaborations Advanced contract management software comes with built-in integrations and APIs that allow businesses to integrate their contract lifecycle management (CLM) with other applications. For example, Zoho Contracts is tightly integrated with Zoho CRM, meaning a salesperson can initiate a contract request from the CRM to the legal team and take the contract through its lifecycle without ever leaving the CRM. This leads to streamlined and seamless collaboration between the sales and legal teams while also helping salespeople clock faster cycle times.
Who uses contract management software?
Contract management software is for all businesses, regardless of size or industry. Ensuring faster revenue recognition, improved buyer experience, reduced operational costs, and lower risks are only some of the many benefits of contract management software.
Modern CLM solutions adapt to businesses of all sizes and industries and their unique needs, and help them derive maximum value from their contracts. Contract management systems also come with industry-specific features, such as managing digital stamp paper contracts, which is useful for industries such as banking and real estate.
Contracts aren’t restricted to legal teams. Most business functions get involved in contracts one way or the other. This includes sales, procurement, finance, and HR. The sales team can clock faster cycle times with features such as contract authoring through self-serve models using pre-approved templates and clauses, approval workflows, and digital signatures.Similarly, with quick contract authoring, seamless negotiations, and improved performance monitoring, procurement teams can streamline their vendor agreements with contract management software.
When is the right time to invest in a contract management solution?
Now that you know how beneficial a CLM solution is, the next natural question is: When should you invest in a CLM solution?
Ask yourself these questions:
- Do we use multiple applications to manage our end-to-end contracting process?
- Are we spending too much time on paperwork, rather than focusing on high-value tasks?
- Due to minor tweaks in the agreement, do we have various templates for the same contract type?
- Are our templates and contracts stored in disparate folders in the cloud?
- Are we unknowingly introducing minor errors in our contracts?
- Are the approvals going through multiple rounds due to a lack of a standard clause library?
- Is it difficult to compare changes between versions of the contract due to back-and-forth negotiation?
- Are we still printing contracts and signing them on paper?
- Are we finding it difficult to keep track of obligations and ensure their fulfillment?
- Do we miss renewal opportunities due to a lack of automated alerts or email notifications?
If your answer to most questions is ”yes,” it’s time for you to invest in contract management software.
Zoho Contracts is a robust CLM solution offering advanced features that are simple to use. Click here to sign up for free or request for a demo. You can also write to us at support@zohocontracts.com