Ask developers about the merits of a software program, and you’ll probably hear a lot about the technical aspects of the features. Not to suggest that features aren’t important, but they shouldn’t be the main factor influencing a software purchase. So what should top the list? The most important consideration should be the benefits the organization will derive from whatever features the software offers. When we discuss key components of contract management software, we’re talking about problems features can help solve, and improvements they can help effect in overall contracting processes.
Streamlining Contract Approval
Cutting down on the time between initial talks and a formalized agreement can save the organization money. Projects get started more efficiently, both parties may enjoy improved access to contract details, and it’s easier to communicate key components of the contract.
A shared system accelerates the contract approval process by allowing decision-makers across different departments to access files immediately. Admins can post templates with guidelines about standard contract structures so that a consistent process is followed.
Electronic signature features can also help streamline contracting. Making electronic signatures the preferred option whenever possible reduces time coordinating meetings or mailing documents for signing. E-signatures are legally recognized as equally valid, and in some cases they can be even more secure than pen-and-paper signatures.
Minimizing Risk and Optimizing Security
One of the driving factors behind many organizations’ switch to contract management software is keeping contracts as secure as possible. Proper risk management helps protect a business against liabilities that could result in significant fines or penalties, or even jeopardize the business’ license to operate altogether.
It goes almost without saying that secure contract management depends on storing documents safely. It’s still worth repeating because secure file storage is important, and because it’s occasionally an aspect of contract management that falls by the wayside. Ensuring that files are both easy to find and kept out of reach of unauthorized users sets the organization up for smoother risk management practices regarding all documents stored in the system.
Besides the benefits of secure contract storage, using a contract management system offers additional security measures. For one, an audit record tracks who accessed the file, and what changes were made. This is important should circumstances come to a matter of proving that someone signed off on an updated version, made a certain edit, and so on.
Using a secure, electronic contract management solution also gives the organization added control over who views or edits files at all. Unauthorized document sharing can come with significant consequences. Measures that prohibit or at least strongly discourage downloading files without permission protects the organization against some types of information breach.
Maintaining Clear Records
Effective contract management software automates important aspects of the process. When you know in advance about project milestones, renewal deadlines, and other important dates, you have time to prepare for more successful negotiations and meetings. Not to mention that missing a deadline could result in the organization accidentally renewing a contract it would have been better to terminate.
Ideally, contract management software should make it easy to conduct a variety of advanced searches. When you’re managing thousands of contracts, losing sight of a few is an understandable occurrence. Maintaining optimal contract operations, however, means catching every contract before issues arise. Performing targeted searches for contract review is one step toward this ideal. Tag each new contract according to important parameters (date, expiration, size, type, location, etc.). Searching for a particular cross-section, and saving the results for future reviews, can improve a contract manager’s or legal oversight team’s ability to monitor all relevant contracts.
Clear records of which contracts cover specific organizational needs, where any overlap exists, and which contracts are high- or low-performing can help a business determine which relationships to expand and which to terminate as soon as possible. In some cases, successful contract management can push a struggling contract relationship to a more favorable status. If the organization can spot missed opportunities to capture savings, minimize rogue spending, or attain incentives written into a contract, there may be time to turn an underperforming contract around.
Saving advanced searches can also help with the learning curve for newer decision-makers. Whether the situation is as simple as a new hire or as complex as a business acquisition, records of how searches are performed help newcomers get a sense of work processes and high-priority contracts.
Tracking Trends to Provide Strategic Insights
In addition to improving work processes on the contracts themselves, a core component of contract management software is its ability to lend insight into the efficacy of contract management operations. That is, dedicated software can make it easier to understand how contract managers, legal counsel, and top-level decision-makers can work together more harmoniously.
Generating reports quickly makes it simple to get a high-level view of how all contracts within a particular category are performing. A more in-depth look at factors like average turnaround time to approve and sign a contract, or the schedule of contract reviews, may identify areas to further improve contract management practices. Automating and standardizing as much as possible helps workers who deal with contracts frequently limit errors and wasted time.
A C-level executive developing business strategy, for example, can pull up all contracts with business partners in a matter of minutes. Reviewing an audit log or auto-alert settings can tell the executive who last viewed or worked on the contract, and who’s responsible for handling the next review. If the executive needed to meet with the legal department, shared software simplifies the process of assigning the right people to the right files so everyone’s prepared to discuss the best strategic steps.