Contracts are more than just an X on the dotted line, and Contract Management is more than just signatures and boilerplate legalese. Between the word processor and the archiving is a resource-intensive, complex, maybe even years-long process. Contracts are the end result of a negotiation, even short ones. Negotiation takes time. You have to make multiple file versions, perhaps printing out each revision or emailing a new, annotated copy each time a minor change is made. The back-and-forths, edition after edition, the approvals from whole teams in different departments. It produces a lot of paperwork. Finalizing your contracts and revisiting them like clockwork will lighten the load and ensure more efficient agreement processes.
How is Contract Management different from Document Management?
Well, contract management is often implemented as a type of document management – within your existing document management system or enterprise content management system. Many of the same requirements and benefits still apply. Such as options for monitoring stages of a process or the ability to collaborate via workflow.
There are some distinct traits contracts carry, though. They are legally binding documents and so are governed by far more regulatory requirements than other files in your database. Regulatory compliance must be simple and built directly into the software at a core level. Contracts are subject to change several times before they reach disposition. It’s not just a simple stamp – although stamps and signatures do set them apart too – the contract is constantly in flux. There is a process to contract finalization that begins as soon as the first draft is created. Just as the process of creation doesn’t end until the contract is signed and fully executed. It has to be accessible to all involved, authorized parties. Or at least easily transferred from issuer to signers.
What are the Steps in the Contract Lifecycle Management process?
Entering the contract into your system
Of course, you have to start with uploading your contracts to your database or contract management software. This might be done by your legal or finance department, controller, or contract manager. The document should be indexed so that it can be easily found in a search whenever the next step comes. Hopefully that will be sooner than later. Certain document management software allows you to add accompanying files with the document, to be referenced during review.
Sharing and negotiating over the contract
It’s best to kick off the conversation tout suite. You can establish security permissions for your document that restrict which users in your organization are able to view it, amend it, and share it. Most contracts are only relevant to legal, sales, and procurement, but some may require a full court press from other departments. A content management solution will allow you to securely send contracts to third-parties, perhaps with a secure link shared over email. The other parties will be able to view but not edit the document. The negotiation process can begin.
Managing the contract amendments
As you alter the contract over time, you will return to older versions and track what has changed. You can manage your document’s lifecycle, see who edited what and when, and return the contract to someone in the process for further edits. You may also add more accompanying documentation with future revisions so that the contract’s development is all in one place when auditing the project. Once a contract has completed this path, it’s ready to sign.
Approval process steps and electronic contract signing
Some documents require several signatures. That’s not a problem. With notes and stamps, you can point out where to sign, initial, and date. With eSignature capabilities, it is easy to sign a contract and then send it back fully executed to all parties. Simple as that.
Assessing processes and contract renewals
It’s not quite time to pop the champagne just yet. A good contract management solution won’t leave out the longest and most important step – following the agreement. As any sales associate or legal department knows, even archived contracts are never truly archived. It’s time to follow the steps outlined within for onboarding or delivery. There is the matter of ensuring that milestones are being met at or ahead of schedule. Reviewing the signing process for any bottlenecks and then streamlining the next negotiation. Last but not least, setting up a retention policy in your document management software to notify you when a contract is approaching its renewal date or its end date. All of this can be set up and tracked in your solution.
How do I ensure successful contract management?
Digitize your files. Organize any that are already digital. Backup your database. All of these redundancies and spring cleaning will speed up and secure your review process so that you can find all of your documents when you need them. Plus, digital files lead to digital workflows. You can’t negotiate in the 21st century if everything is on paper.
Create custom eSignatures and document templates to shrink ramp-up and approval timelines. Templates for each contract type your legal team produces regularly? You’ll be dropping in the key client information and sending the document off in no time. eSigning is much faster for everyone involved, as well. It allows more parties to securely file copies of the document without having to rely on the mail system or scanning and emailing repeatedly.
Retention policies. Version history. Auditing. Monitoring. Notifications. This all forms airtight contract lifecycle management. That is what you need to be successful. When you have control over your documents, you have control over where those documents take you. Document management with contract management is the way.