What Does an Effective Contract Management Process Look Like?

Having an effective contract management process should be the goal of every organization—but far too many fall short of this ideal.

According to industry surveys, more than half of businesses say that their contract approval processes are causing deals to stall, and only about one in three companies are using a dedicated contract management tool.

With so many organizations struggling to implement an effective contract management process, it's clear that there's plenty of room for improvement. Previously, we’ve written about signs of poorly performing contract management. In this article, we’ll discuss the opposite end of the spectrum: signs that you have a strong contract management process in place.

Here are five indications that your organization has achieved an effective contract management process.

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Improve Legal Department Operations with Contract Lifecycle Management

Legal departments have spent the last 10 to 15 years trying to figure out ways to reduce spend and maintain high levels of efficiency. One of the biggest areas of opportunity: improving the way contracts are managed.

The International Association of Contract and Commercial Management issued research showing that improving contract management can increase corporate profitability by nearly 10 percent annually. Implementing a contract lifecycle management (CLM) system helps legal operations not only contribute to such an increase in revenue, but to streamline the management of each contract so volumes of vital contracts remain error- and risk-free. CLM helps an organization integrate automation into the lifecycle of a contract so humans aren’t burdened with repetitive tasks, contracts are secure through software-based storage, and approvals happen more quickly.

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The Value of Analyzing Contracts

Contracts are extremely valuable tools in the business world. Primarily, these legal agreements establish the framework and rules of engagement for any business deal into which your company enters. A detailed contract will describe all of the precise deliverables attached to an agreement, along with fees (and related considerations such as currency caps), timelines, and other requirements.

But while much effort goes into preparing and negotiating agreements, contracts are all too commonly filed away after they have been signed. If they are pulled and reviewed, it’s often to monitor the performance of the business arrangement or because something within the agreement has gone wrong.

This is unfortunate and short-sighted. In addition to providing the framework of the business deal to which it pertains, analyzing contracts can yield useful business insights and lead to better contracts in the future.

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ContractWorks Spring Resource Round-Up

A quick visit to ContractWorks’ resources page will provide you with a variety of insightful free ebooks, guides, webinars, case studies, and more.

With so many great resources to choose from, we thought we would highlight three guides that many of our blog readers are finding useful and we thought you may as well.

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5 Functions That Must Be In a Document Management Lifecycle

If you consider how people often treat business documents, it would appear that it’s common to view them as static items that fulfill a purpose at just a single point in time. As one example, take contracts: while a great deal of effort goes into negotiations, once an agreement is signed, it’s all too typical to file it away and never refer to it again. In other words, many treat the development of the contract as the primary objective, while managing the document after the fact is given little thought.

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The 5 Pillars of the Contract Lifecycle

Considering that the majority of revenues for most businesses are tied to contracts with vendors and suppliers, improved contract management might be one of the simplest ways companies can grow revenues. From paper documents that can’t be readily found and referenced resulting in poor compliance to missed deadlines, contract management in the enterprise is typically rife with problems that can erode value.

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Avoid Time Thieves With Contract Lifecycle Management

Managing tasks and responsibilities associated with tens of thousands – if not more – contracts is, by nature, painstaking work due to complexities within contracts, coordination that must exist between teams and external parties, and a host of other factors. According to research, 78 percent of contract managers say they are under increased pressure to reduce contract-related costs. Additionally, contract managers must often contend with contract inconsistencies, a cumbersome contract management lifecycle, slow business processes, and other risks.

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Robots Never Sleep: What AI and Automation Mean for Lawyers

In 2016, a report released by Deloitte Insight struck fear in the hearts of many legal professionals when it predicted that nearly 40% of jobs in the legal sector could be automated (and therefore, eliminated) within the next decade. In raw numbers, Deloitte essentially put over 100,000 lawyers, paralegals, and legal assistants on the chopping block, citing the “profound reforms” within the profession over the next ten years.

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Contract Management Procedures: 4 Reasons Why Excel Won't Cut It

One of the biggest challenges of contract management is finding a solution for dealing with volumes of contracts that can reach the tens or even hundreds of thousands. Though cost-effective software solutions exist that help organizations seamlessly manage each stage of the contract lifecycle, it’s also easy to understand why manual tools such as Excel spreadsheets are so popular.

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Tips for Successful Subcontract Management Using the Contract Lifecycle

For many companies, providing goods and services to other firms by virtue of a contractual relationship is central to the heart of their business, and it is often quite lucrative. Of course, companies cannot always make their products or provide their services without the help of subcontractors. Companies with a high volume of contracts often enter into subcontracting agreements with other firms to manufacture goods or deliver services in a faster, cheaper, and/or more efficient manner.

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