Contract Management: A Complete Guide

As anyone who handles them knows, contracts are the backbone of every organization. These documents may only move between relatively few hands, but they provide the essential legal foundation for what organizations of all kinds can do.

With so much riding on contracts, having an easy contract management solution is essential. That starts with understanding the basics of the contract management process.

Let's dig into the contract management process, why it matters for your business’s bottom line, and how contract management software can help.

What Is Contract Management?

Contract management adds structure to all stages of the contract lifecycle, ranging from pre-signature activities like contract creation and negotiation to post-signature activities like renewals and reporting. With effective contract management, you know exactly how to find every contract and what stage of the contract lifecycle it’s in. Effective, scalable contract management helps streamline the contract process, reducing inefficiencies and minimizing risk.

A contract manager typically handles this process. Their job is to do things like draft proposals, negotiate terms, ensure legal compliance, maintain legal records and documentation, and report on contract status. 

It's a lot for one person to handle, which is why contract management software is essential to create a smoother and more efficient contract workflow. Contract managers can use solutions like ContractSafe to consolidate contracts, search for and report on them, and even automate alerts and renewals.

Why Contract Management Is Important

Adding structure and systems to the contract lifecycle is important because it keeps legal documentation efficient, scalable, compliant, and cost-effective. 

Operating an organization without sound contract management processes can make contract workflows less consistent and efficient while increasing the risk of mistakes.

Want to see it in action? Check out our contract management ROI calculator to see how much time (and money) you could save today.

Contract Management vs. Contract Lifecycle Management

The main difference between contract management and contract lifecycle management (CLM) is areas of focus. Contract management is more focused on post-signature phases, while contract lifecycle management broadly encompasses all contract phases.

Contract management is a more generalized ongoing process of activities like date tracking, reporting, and ensuring obligations are being met. This is either done manually (often with spreadsheets) or with contract management implementation software.

Contract lifecycle management also includes those contract phases, but it has a more granular focus on what goes on before contracts are signed. CLM is concerned with each part of the contract lifecycle — including contract acquisition, drafting, collaboration, and negotiation — and enables teams to manage them with dedicated software.

How To Know Which One Your Organization Needs

Not sure whether you should implement traditional contract management or CLM? Here are a few key considerations for determining which option may be right for you:

Contract Management vs. Contract Administration

While often used interchangeably, contract management and contract administration serve different purposes at different phases in the contract lifecycle. In many organizations, these roles will be filled by the same person, but the mindset and approach will look different.

Transitioning from contract administration to contract management can boost operational efficiency and enhance strategic outcomes.

• Contract administration concentrates on the initial setup of contracts. It includes all of the planning and prep work, laying the groundwork for clear terms and expectations and ensuring everything runs smoothly.
• Contract management takes a comprehensive approach, overseeing the contract throughout its entire lifecycle, from creation to renewal. It also extends beyond individual contracts to encompass the oversight of the entire contract database. 

Contract management enables organizations to organize, secure, and report on contracts en masse, leveraging technology to streamline processes and enhance decision-making capabilities.

What Are the Stages of the Contract Management Lifecycle?

There are several stages in the contract lifecycle that move from contract creation and negotiation through delivery and monitoring. While the individual steps involved can vary from one industry or organization to the next, here’s a broad overview of what they look like.

Stage 1: Contract Creation

The first phase of the contract lifecycle is the creation of the contract. This generally starts with verbal agreements that then need to be documented in writing to detail specifications like service details, start dates, prices, timeline expectations, and exceptions.

Stage 2: Contract Negotiation and Collaboration

The next step in the process is collaborative negotiation, which involves a back-and-forth conversation between parties. The overall goal here is to come to mutually beneficial terms.

Stage 3: Contract Review and Approval

At this point, both parties will review the contract terms internally. This stage often causes contract delays as late edits and a lack of clear processes on both sides come into effect. Thankfully, CLM software can streamline this by integrating with applications for e-signatures or workflow management, so no one is ever at a loss for next steps.

Stage 4: Contract Administration and Execution

Now it’s time to put pen to paper and sign your contract. Back in the day, this meant an in-person meeting using literal pens and paper, but these days, it usually means clicking a link and signing electronically. Because we think of everything at ContractSafe, electronic signature functionality is available in our repository of customizable contract features. 

Stage 5: Ongoing Contract Management and Renewal

Contract management is an ongoing process. You can't always assume terms will be met, so you need to keep an eye on milestones, monitor the status of post-signing obligations, track amendments, and conduct compliance audits. As the renewal approaches, this will help you decide whether renewing contracts makes sense for everyone involved.

Stage 6: Contract Reporting and Tracking

The contract management process continues even in the time between renewals. Tracking and reporting may be the most crucial points of the contract lifecycle, but they are also the most invisible. It's essential to continue monitoring contracts to keep ahead of expiration deadlines, stay on top of renewals, and analyze performance.

Learn about common contract management terms in our glossary.

How Can Contract Management Software Help?

The best contract management software tools are designed to streamline contract creation, negotiation, organization, reporting, and ongoing monitoring. This software brings contracts out of the Stone Age and into the cloud age with features that let organizations digitize, standardize, and even automate contract processes.

Contract management software benefits are practically infinite, but some notable ones include:

• Simplifying contract creation: With template libraries, data uploading features, stored data categorization, and automation tools, contracts practically write themselves.

• Improving accessibility: These solutions store contracts in one cloud-based location, so finding what you need is as simple as searching a keyword.

• Streamlining approval: Digitized contracts and e-signature capabilities allow all parties to access and sign contracts from anywhere.

• Integrating with workflows: Quality contract management software like ContractSafe integrates with the apps you already use, fitting them right into existing workflows.
• Enhancing monitoring and reporting: With automated renewal deadline alerts, centralized reporting dashboards, and real-time document tracking, everyone stays on top of contract status and performance.
  

Contract Software Must-Have Features

As you can see, there’s a lot involved in contract management. With so many moving parts, it’s hard to pull it all off without contract management software. Although many contract managers can create impressive color-coded Excel spreadsheets, these aren’t ideal because, let’s be real: These spreadsheets usually only make sense to the person who created them.

A solid contract management solution is user-friendly for everyone involved in the contract lifecycle. Here are some noteworthy components to look for when evaluating contract management software:

• Alerts and reminders: With more contracts than you can count, how can you be expected to stay on top of every deadline? Date-tracking alerts and scheduled reminders that go directly to your email (like ContractSafe's) do the remembering for you.
• Cloud-based repository: These virtual filing cabinets ensure that even when you’re out of the physical office, you can access exactly what you need when you need it — and so can the right people involved in the contract management process with custom roles and permissions.
• Security: Don't just look for security. Look for best-in-class security like ContractSafe offers, with features like encryption, malware and virus detection, and vulnerability testing. 
• Artificial intelligence: Everybody needs a (virtual) hand sometimes, and AI features like ContractSafe's [AI]ssistant can make work easier for everyone with features like smart search, instant data extraction, automatic renewal setup, and automatic organization.
• Contract tracking: Contract tracking functionality lets you see exactly where your documents stand with the click of a button or tap of a screen, helping you keep all your ducks in a proverbial row while keeping the contract ball moving — and metaphors mixed.
• Sharing and roles: Sharing may be caring, but not everyone in an organization needs to share the same access level. Customizable roles allow you to scale document access privileges on an individual basis, adding security while giving everyone just the resources they need.
• Integrations: Everything works better when your favorite apps play nice. Look for options like ContractSafe, which connects to DocuSign and syncs with Salesforce, so there’s no need to manually import documents or other information from one platform to another.
• Customer support: Support is key when adopting any new software. ContractSafe offers unlimited customer support to help your team with the initial platform integration. We’ll also provide customized training sessions and be available for future troubleshooting.

• Search: Using optical character recognition (OCR) technology to digitize contracts into text that a machine can read is vital. This allows for Google-like searching across contracts or even within a single scanned contract, so you can find all mentions in a matter of seconds.

Organizations across various industries use contract management software to save time and money. From healthcare administrators looking for compliance support to educators needing vendor management, the right contract management software should be customized — without being overengineered or overcomplicated — to fit your needs.

If you’re ready to say goodbye to color-coded spreadsheets and messy shared folders on Drive and Dropbox, then say hello to one of the best contract management solutions out there (hey, it’s not just us saying it!) and request a demo. We look forward to rocking your world.