This is the first in a two-part blog series covering the basics of contract management software.
Contracts are a vital and unavoidable part of doing business and implementing some sort of contract management system is a necessary albeit time-consuming process. As many companies grow, they use spreadsheets and email for contract management. Contract management software, purpose-built to streamline this process, is much more efficient. The problem is, however, that there are a ton of different software providers, all with a myriad of features, and it can be tough to know where to start.
So, what exactly is contract management software and should you consider implementing it? Does it really provide more value than a well-honed system of spreadsheets, filing cabinets, and email? Below, we’ve compiled the basics of contract management software and why it matters to your company.
Contract Management Software- The Basics
According to survey of contract management professionals by IACCM, the following are the top five must-have features of any contract management software:
- Contracts Database
- Contract Milestone Alerts
- Management Reports
- Capture Existing Documents
- Secure Document Repository
In addition to those must-haves, many contract management professionals cited the ability to set different user roles for security purposes as a feature often missing from typical contract management software.
What this is: Any contract management software must have the ability to track and store all of the data your contracts contain in one comprehensive database. Contract type, vendor name, expiration date, signee, and much more. Some contract management software will only contain the data and integrate with a third-party document repository to view the original contract. Other solutions, (like ContractWorks), will focus on simplicity and house the original contract in a secure repository with the data, making your contract management software a one-stop shop.
Why this matters: The time spent managing data on a spreadsheet is inefficient and, if added up, likely costs the company more than a software solution would. Plus, human-entered data on spreadsheets can be prone to error. Implementing a system that has a comprehensive database with your contract data will allow you to maintain the integrity of your data and it will save time, which will ultimately save the company money.
Contract Milestone Alerting
What this is: Spreadsheets can certainly capture a lot of information, and inputting important dates may come in handy, but those spreadsheets don’t send alerts about the data they contain. Contract management software allows users to create custom alerts to stay on top of important events, such as impending contract expirations or renewals. Generally, the cost incurred from missing one important milestone date will more than pay for an inexpensive contract management software solution.
Why this matters: If you’ve ever missed a milestone date, you know why this matters. Potentially missed expiration, renewal, or any other dates can cost a company a significant amount of money.
Contract Management Reporting
What this is: The information contained within contracts is valuable, and a primary purpose of contract management software is providing visibility into that data. Generally, contract management software will be allow users to generate reports based on specific criteria. ContractWorks, as an example, allows users to create reports based on any custom tags they choose. Reports are exportable to CSV, allowing you to share the information with other colleagues and management.
Why this Matters: Understanding the scope of a company's contracts can indicate a lot about a company. Management will often ask for reports that detail specific criteria about contracts.
In part two we will review Capture Existing Documents, Secure Document Repository, and Permission-based Roles.