Contract management software is a sophisticated way to ensure your company’s entire contract lifecycle is foolproof and compliant. In this article, we’ll explain the benefits of contract management software, the key features to look for, and whether contract management software is the right solution for your business.
The robust set of tools contained in contract management software help businesses streamline the creation, negotiation, versioning, approval, execution, and renewal of legal agreements across multiple teams and departments. It also serves as a secure central storage location that can help to ensure your documents are safe and only able to be accessed by employees with permission. Setting date reminders, tracking amendments, and quickly locating documents can all be achieved within the suite of tools offered by a good contract management software. In other words, it’s meant to end the headaches that come along with managing the flow of legal agreements across your organization.
Contract management software can help both large and small businesses accelerate the contract lifecycle across multiple teams while keeping documents secure and managing risk.
Most business leaders know that a sloppy contract management process can lead to a significant amount of risk. Missed expiration dates, unsaved drafts, or a poor governance / approval process can cause breakdowns in business operations that ultimately result in lost revenue. Once a business reaches a point of sustained growth, it can become impossible to keep up with the volume of legal agreements moving through your organization without some degree of automation and centralized storage.
Benefits of Contract Management Software
Contract management software increases visibility, compliance, and security around the contract management lifecycle. It can also lead to a faster contract management process, more closed deals, and more revenue.
When they are smaller, businesses or startups may rely on spreadsheets, shared drives, and calendar reminders to manage the contract lifecycle. This may be effective in the short term, but when a business starts to grow, it will very quickly reach a point where this approach becomes risky and frustrating. Once a company’s growth starts to compound, contract volume also starts to compound and the risk associated with the contract management process will simultaneously increase. It also becomes more and more difficult for leaders (and others) to find the contracts they need. By automating many components of the contract lifecycle business leaders are able to increase the speed in which the company grows and legal agreements move through their organization while simultaneously managing risk, improving searchability and safeguarding your documents.
A good contract management software will also give you the peace of mind of knowing your documents are stored in a central location and can be easily accessed by any approved team member from any location. Intuitive search and permission assignment capabilities will allow eligible employees to quickly find what they need, when they need it. This drastically frees up time and eliminates the need to have an on-staff contract librarian (either officially or unofficially) who is becomes responsible for storing and locating documents. Enabling your teams to easily collaborate on the contract management process can greatly increase your company's ability to onboard new clients or partners over time.
Additionally, many contract management programs enable business leaders to stay in the loop by providing quick views on the status or location of a particular document. With high visibility into the legal review process and the ability to set reminders for upcoming expiration dates, managers have the insights needed to make informed business decisions on the fly and confirm that the process for onboarding new clients or vendors is working efficiently.
Features You Should Consider When Purchasing a Contract Management Software
The particular features you need will depend on a variety of factors including number of employees, volume of business, and your industry. However, below are some of the most important features that all businesses should look for when searching for a new solution:
Effective Search & Reporting
Your contract management system is also going to serve as the primary repository for all contracts across your organization, so an effective search tool is critical for allowing various stakeholders to quickly locate and find a document.
One of the most important search features is Optical Character Recognition (OCR), which makes all scanned documents fully searchable. This feature makes it a breeze to search scanned documents for party names, legal clauses, expiration dates, and more. At a minimum, your contract management platform should have both OCR capabilities as well as an intuitive keyword search to facilitate the speed at which employees can locate contracts, key clauses, or problematic language.
Customizable reporting is also key. The way business leaders utilize the platform will be much different from legal or finance teams, and the insights they need will be naturally different as well. Look for a platform with customizable sorting and filtering capabilities or a customizable dashboard to help each team get quick access to the insights that they need.
Alert settings or reminders are a significant benefit to contract management software. Alert settings can remind your team about upcoming contract renewals or expiration dates, so your team will never miss an expiration date or deadline. However, it's important that the software communicates reminders effectively. A calendar view can help your team get out ahead of any changes well before an agreement expires or auto renews. Some software only triggers reminders within the platform, which can be missed by employees who do not consistently log-in. Email reminders are an important tool for making sure that key contract dates are not missed.
A Central Repository
Your contract management software should serve as the single point of storage for all legal documents. A searchable central repository can help you access your documents from any location while also keeping them safe and secure.
Sharing & Role Permissions
Not all employees will perform the same tasks or need the same level of access to various documents, controls, and features. User roles and permissions are one of the most important components of a contract management software as they allow you to manage risk in a way that spreadsheets and shared drives do not. By restricting what certain users can see, you can be sure that different users are only able to see what you want them to see
User-based permissions enable you to manage risk by ensuring only employees who need access to items or functions will have it. Read Only / No Delete permissions will give you the peace of mind of knowing that only employees with authority (attorneys, key managers, paralegals) can make edits to the contract record or remove contracts from the system.
User permissions are one way to manage document security but safeguarding your contract repository from hackers and data breaches is equally as important. If you’re considering a cloud-based contract management software, be sure that it’s built on a reputable hosting environment such as Amazon Web Services (AWS). You’ll also want to check that it is well-equipped with security features such as encryption, redundancy and virus detection. When selecting a vendor, making sure they have performed an annual SOC2 audit can help you be sure that their security is what they claim.
Depending on the size of your business, you may also depend on other third party platforms as part of your contract lifecycle. Finding a solution that is compatible with your CRM, e-signing platform, or single sign-on solution is an important item to consider. You don’t want to want to implement a business solution that doesn’t fit into your ecosystem.
A dedicated support staff can work with your team through an initial integration, provide customized training sessions for your staff, and ongoing support in the event there are any issues or bugs that pop-up down the road. When making a significant investment in a new software, having a top of the line support staff will help your team get up to speed as quickly as possible.
Contract Management Software Right for Your Business
Contract management software can help businesses of any size manage the risk associated with the contract lifecycle; however, the best time to implement a new solution really varies from business to business.
Generally speaking, if your company has reached a point of significant growth and contract volume is rapidly growing, it may be time to invest in contract management to help streamline the process. Also, if your current process is exposing you to risk, preventing your team from working collaboratively, or causing you to miss expiration dates, it may be time to consider an alternative solution.
Regardless of your business size, contracts are essential to your operations. As your business continues to grow, so will your need for an effective contract management system. There is no shortage of solutions on the market, so finding one that fits your individual business needs is the key.