Posted by Cannelle Magdane ● 4/12/21 4:05 PM
Do you Need a Contract Management Software? Assess Your Current Process
Contract management software, also commonly named Contract Lifecycle Management (CLM) software, allows businesses to automate their contract management process from end to end, reducing time to signature while ensuring contracts comply with your policies and processes. To determine if your company needs contract management software, you should first assess your current process or processes.
How to assess your current contract management process?
- Start by listing the type of contracts most commonly managed within your company: nondisclosure agreement (NDA), master services agreement (MSA), statement of work (SOW), quote, consulting agreement, partnership agreement, data processing agreement (DPA for GDPR compliance), business associate agreement (BAA for HIPAA compliance), data sharing agreement (for FERPA compliance), loan agreement, security agreement, employee contract, termination letter, letter of intent (LOI), share purchase agreement (SPA), etc.
- Next, for each type of contract, represent the entire process such contracts usually go through and all the persons involved (from creation, review, negotiation, and approvals to signature, storage, and renewal).
- Finally, ask yourself the following questions:
- Were you able to represent a clear and structured contract management process (at least for the most common type of contracts your company is dealing with)?
- If you were, is this process consistently applied?
- What is your average contract turnaround time (time from contract request to signature)?
- Are there any bottlenecks in your process?
- Did you identify any risk for your business? For instance:
- Inconsistent content in your contracts.
- No tracking of your negotiations, nor safekeeping of your exchanges with third parties (needed in case of litigation).
- Contracts are sometimes sent for signature without required approvals.
- No tracking of signatures, resulting in some contracts never being properly signed.
- Inconsistent storage of signed contracts, making it a lengthy process to locate signed contracts.
- Did you identify any pain points for your legal teams? For instance:
- Difficulty to keep pace with all incoming contract review requests,
- Repeatedly answering similar questions from the sales team (“Which template should I use? Where is it located? Is it the last version?...”).
- Struggling to keep track of negotiation processes with third parties and juggling with multiple versions of a contract.
- Manually following up after the sale to see if a contract was properly signed and stored.
- Devoting too much time on administrative/contract management work.
- What about your sales team? Did you identify any pain points for them? For instance:
- Difficulties locating and identifying the relevant template.
- Delays in getting a contract approved by your legal team.
- Inability to easily determine which legal counsel should be contacted for which contract.
- Challenges in tracking renewal dates, resulting in missed renewals and/or frustrating existing clients.
Answering all of the above questions will help you determine the area of improvement in your contract management process. A Contract Lifecycle Management solution could probably help you solve most of the issues you are facing. For more details on how a CLM can help you, see our earlier blog post, “Why Should You Automate Your Contract Management,” which details the key benefits of a CLM Solution.
Too busy to do a full assessment of your current processes? Here is a short assessment tool:
- Your legal team is devoting a lot of time to managing contracts, approvals, and signatures instead of focusing on high-value tasks.
- Your contracts suffer from slow turnaround times because your legal department is struggling to keep pace with all the requests they receive.
- Your sales sometimes struggle to find the last up-to-date templates and sometimes send outdated versions of contracts to prospects.
- You once discovered after the fact that a contract was signed by your legal representative without all required approvals being secured beforehand.
- You once discovered, perhaps months after sending it for signature, that a contract was never properly signed by your counterparty.
- You sometimes struggle to locate signed contracts, having to reach out to multiple members of your team to finally find a copy.
- Your sales team sometimes misses the renewal of client contracts.
- You were automatically renewed on a supplier contract that you intended to terminate.