In today's fast-paced business environment, efficiency and accuracy are more important than ever. This is especially true when it comes to managing contracts, which are the cornerstone of any business relationship.
Yet many businesses are still manually managing their contracts.
If you’re relying on Excel, shared drives, Google Sheets, email and even paper copies to store, track and manage your agreements, then your business is likely facing high levels of contract risk.
These risks can include:
- Poorly performing contracts and failure to realise agreed outcomes
- Missed renewals leading to high costs, unfavourable terms and duplicate services
- Internal bottlenecks as stakeholders lack accountability over the contract lifecycle
- High levels of contract administration preventing strategic activities
- Difficulty proving compliance with changing regulations.
In this article, we explore what contract automation is, why it should be opted for over manual methods, and how dedicated contract management software can help you elevate your processes.
What is Contract Automation?
Contract automation refers to the use of technology to automate the various stages of the contract lifecycle, from creation and negotiation, to signing, execution, and monitoring. This can include electronic signatures, automated reminders for key dates and milestones, and automatic archiving and retrieval of contracts.
By utilising contract automation, your business can save time and resources, minimise errors, ensure compliance, and manage contracts more strategically.
What Types of Businesses Need Contract Automation?
While contract automation can benefit businesses of all sizes and types, it is particularly useful for:
- Businesses with high volumes of contracts: Businesses that deal with a large number of contracts on a regular basis, such as retailers and manufacturers, can greatly benefit from contract automation by reducing the administrative burden and minimising the risk of errors.
- Businesses with complex contracts: Companies that deal with complex contracts, such as those in the legal, finance, and healthcare sectors, can benefit from the increased accuracy and efficiency that contract automation provides.
- Businesses that need to comply with strict regulations: For businesses in heavily regulated industries, such as healthcare and finance, contract automation can help ensure compliance by enforcing standardised processes and maintaining a complete and auditable record of all contracts.
The benefits of contract automation
Manually managing contracts is often the go-to choice for businesses, because tools such as Microsoft Excel (for example) offer comfort. It’s a tool from a trusted brand, easily accessible, requires little training and can be rolled out across the entire organisation with ease.
However, the danger of these tools comes to the forefront when stakeholders are using them however they want. This can mean working in different ways and on different versions of a contract.
Such use increases the level of risk throughout your portfolio because it’s impossible to achieve a holistic view of your agreements, or any threats, opportunities or failures.
Using contract management software to automate your processes leads to greater benefits such as:
- Increased contract visibility: Contract automation software, like ContractNow, provides a centralised repository for all contracts, making it easy to store, retrieve, and manage contracts in one place. Create a single source of truth for your stakeholders, know where all information is and - with OCR search functionality - find clauses and key dates quickly.
- Improved accuracy: Whether you’re automatically extracting metadata from legacy records or using automated contract templates and workflows, the risk of errors and omissions will be greatly reduced. Reducing human error not only helps to prevent costly disputes but also ensures that contracts are legally sound and enforceable.
- Proactive decision-making: Contract automation software provides automated alerts for key dates and milestones, such as contract renewals or expiration dates, ensuring that important deadlines are not missed. Protect your bottom line, reward deserving third-parties and keep your business operationally effective.
- Faster time-to-contract: Contract automation, depending on the capabilities of the platform you use, greatly reduces the time it takes to create, negotiate, and execute contracts. Automated templates and workflows ensure that contracts are created quickly and accurately, while electronic signatures allow for fast and secure signing.
- Cost Savings: By reducing the time and effort required to manage contracts, businesses can save on administrative costs. Contract automation can also help prevent costly disputes by ensuring that contracts are accurate and complete - reducing the chance of a breach occurring.
- Proven compliance: Contract automation ensures that all contracts adhere to the required legal and regulatory standards, helping businesses to maintain compliance and avoid penalties. A contract management solution can also automatically capture a history of all actions taken - along with a name, date and time stamp.
How to implement contract automation
If your business is ready to start its journey into contract automation, the steps outlined below will help you put the right foot forward.
1. Complete a Needs Assessment
Start by understanding the specific challenges your business faces in managing contracts, such as lack of centralisation, difficulty in tracking key dates, and compliance issues.
Assess the volume of contracts, the key stakeholders involved, and the specific features needed.
This will help define the criteria for selecting the most suitable contract management software.
2. Select the Right Contract Management Software
Evaluate different contract management software options based on the needs identified in the assessment.
Look for features like a centralised contract repository, automated reminders, electronic signatures, workflow automation, and reporting and analytics.
Consider factors like user-friendliness, customisation options, scalability, and vendor support. Requesting a demo can be helpful in evaluating the software’s suitability.
3. Build a Strong Relationship with Your Implementation Consultant
Work with your chosen vendor to develop a detailed implementation plan that outlines key milestones, timelines, and responsibilities.
Include a plan for data migration, training schedule for staff, and any customisation or integration work needed.
Building a strong relationship with your implementation consultant will ensure that the implementation process runs smoothly and any challenges encountered are addressed promptly.
4. Encourage All End Users to Adopt the Software
Provide required training to ensure that all end users can effectively use the new contract management software.
Encouraging them to adopt the system will ensure that the business realises the full benefits of the software.
Contract management does not just belong to a single team - without everyone’s buy-in, workarounds such as spreadsheets are still likely to be used.
5. Monitor and Optimise
Continuously monitor the performance of the contract management software and optimise its use. Regularly review the system to ensure it meets the business needs and make any necessary adjustments or customisations.
Ask for feedback from end users on the software’s usability and any features that could be improved.
Regularly reviewing and optimising the system will ensure maximum benefit will be received from it.
Contract automation is a powerful tool that can help businesses of all sizes and types to manage their contracts more efficiently and accurately. With benefits such as cost savings, reduced risk of errors, and improved compliance, it's no wonder that more and more businesses are turning to contract automation as a solution.
ContractNow is contract management software that offers a centralised contract repository and automated alerts relating to key dates, making it an excellent choice for businesses looking to streamline their contract management processes.If you’re ready to know more, book a demo now.