5 Reasons Businesses Move to Online Contract Management
For many companies, the search for an online contract management solution is sparked by either rapid business growth that leads to a higher contract volume, leadership’s desire to regain control of a mismanaged portfolio, or a specific contracting event that costs the business time, money, or reputational harm. Whether a high-value contract automatically renewed without your knowledge or a critical vendor agreement got lost, there are endless examples of problems that could have been avoided with an online contract management system.
Here are some of the top reasons businesses shift from manual to online contract management.
1. Enable streamlined contract access from anywhere
According to research from Aberdeen, 85% of companies default to manual systems to track their contracts. The International Association for Contract & Commercial Management (now World Commerce & Contracting) reports that 80% of companies struggle to find their contracts. These two findings are intrinsically related.
When contracts are stored across a combination of shared drives, email inboxes, computer desktops, and filing cabinets, simply knowing where to look for your contracts is a challenge. And when you do know where a contract is located, there’s still no guarantee you can access it.
Storing your contracts in a secure, online system means that your most important documents are always accessible. This is essential for any situation that requires remote access to your agreements and should be a key consideration during business continuity planning. When unexpected events prevent you from getting to your office, you must have a way to access the contracts that keep your business moving forward. Legal departments especially will likely face an increase in contract-related inquiries in response to events that interrupt standard operations.
2. Increase visibility into agreements and details
Corporate counsel and others involved in the contract management process are expected to remain in complete control of agreements at all times. This means that you can answer any contract question quickly and confidently, and know exactly where to find those answers if you don’t already have them. The ability to demonstrate your knowledge and back your claims up with contract data is also critical for your professional success and individual reputation. If you manage contracts manually, you’re putting yourself at risk of getting blindsided by questions you can’t answer.
Relying on a manual process also makes it challenging to achieve a high-level overview of your contract portfolio. If there isn’t one central place where everyone who touches contracts can go to find detailed contract information, your team could be making uninformed decisions without understanding how they impact other agreements. Many online solutions include reporting features so users can share contract data and insights with department heads, senior management, and others who need transparency into specific contract details.
Contracts that are stored online are much easier to manage than a portfolio that is divided across various offices or computer desktops and can be accessed at any time to start planning for needed changes, like renegotiation or restructuring. With an online contract management system, you know exactly where to look when you have to reference a specific agreement or contract details, like the value of the agreement, the termination notice requirements, or conflict resolution procedures. This comes into play anytime you need to manage an existing agreement, but it also makes it easier to find and reference archived contracts that provide valuable information for the creation of new contracts.
3. Eliminate tedious, time-consuming processes
As the name suggests, manual contract management takes time. Opportunities exist to streamline and automate many aspects of the contract management process, which produces efficiencies for your team. Without those tools in place, however, you’re stuck spending valuable employee time on basic, low-level tasks.
If you’re responsible for managing a sizable portfolio and you currently rely on manual processes, you know how time-consuming it is to keep up with all of the dates, deadlines, and obligations to ensure your agreements remain in good standing. And with a manual review process, getting to the information you need is an unnecessarily long and complex task. All of these challenges are exacerbated as the number of agreements in your portfolio increases.
With help from an online contract management system, you’re able to introduce automation into your contract management process. Many tedious, repetitive contract management tasks - like locating specific clauses and keywords, providing stakeholders with contract status updates, or tracking looming deadlines - can be simplified and streamlined, so you and your team spend less time managing contracts and more time focusing on higher-value business activities.
4. Stay ahead of opportunities to increase revenue and reduce costs and risks
Every contract should be continuously monitored to ensure that it makes sense to renew when the time comes. When a contract automatically renews without your knowledge, you’re missing an opportunity to terminate if it’s no longer needed or isn’t performing, renegotiate more favorable terms, or make updates to comply with changes to industry regulations. Manual contract management puts you at risk of missing these deadlines, which could cost your business time and money to correct the issue.
Staying on top of important contract deadlines using a combination of calendar reminders and written notes leaves you vulnerable to human error and oversight. Missing a critical contract deadline (that, for example, may result in a breach of contract) is another common triggering event that pushes many teams trying to get by with manual processes to finally look for an online solution.
When your agreements are stored in an online contract management system, you can see all of your important contract details in one place, and take needed action at the appropriate time. You can schedule reports to automatically send helpful information straight to your email inbox, so you can keep an eye on any contracts that have expiration dates in the next 30 days, for example. By transitioning your written reminders and manual calendar alerts online and taking advantage of custom reporting features, you’re guarding against critical contract deadlines slipping through the cracks (as mentioned previously, nobody wants to be responsible for an embarrassing mistake that hurts you or your company’s reputation).
5. Prepare for growth
Storing contracts on disparate systems and tracking contract details with spreadsheets can work if you have a small number of low value, low risk agreements - but it isn’t scalable. Effectively managing contracts takes time, hard work, and incredible attention to detail, even when you have the right tools in place. Trying to accomplish the feat manually becomes a near-impossible task once your contract portfolio grows to a certain size or level of complexity.
According to World Commerce & Contracting, the average Fortune 1000 company maintains 20,000-40,000 contracts at a time. While your company may only handle a fraction of that, it’s easy to imagine how staying in control becomes more difficult as your contract portfolio grows.
Rapid growth or expansion is one of the most common reasons to move a contract management process online. Any small to medium-sized business preparing for future growth should examine all existing contract management processes and resources available to support those efforts and determine if changes are needed.
Moving to a digital contract management system will put you in a stronger position to handle a major influx of new contracts down the road. And making this transition proactively when you still have control of a smaller number of agreements will be exponentially easier than tackling the challenge when you’re also dealing with a sharp increase in new contracts and deadlines to manage.