Article Summary

• Manual contract management, relying on spreadsheets and email, introduces significant risks including lost revenue, legal exposure, and inefficient workflows.
• Contract Lifecycle Management (CLM) solutions centralize contracts, automate critical tasks like version control and renewals, and provide a contract database.
• Investing in enterprise-grade CLM software transforms operations, ensuring compliance, boosting efficiency, and providing a competitive edge over legacy tools.

 

Effective contract management is not only a legal concern but a strategic move for organizations. For many the process remains manual, often relying on a patchwork of spreadsheets, email chains, and shared drives. This outdated way of managing contracts not only consumes valuable time but also opens the door to significant financial and legal risks. 

From tracking essential contract renewals and contract expirations to ensuring compliance, the sheer volume and complexity of agreements can overwhelm even the most diligent teams. 

It’s time to explore how modern CLM solutions can transform your approach, bringing much-needed efficiency and control to your entire contract lifecycle management.

The Risks of Manual Contract Management

Using outdated, manual processes for contract management can introduce inefficiencies and vulnerabilities. 

Without a centralized system, it’s easy for teams to accidentally work from outdated drafts, leading to errors and delays. Imagine the issues caused by a sales team using an old pricing schedule for a new client contract because they couldn’t quickly locate the most current version. 

This isn’t just about the documents; it’s about the lack of a comprehensive contract database, one that makes it easy to find and report on contracts. This can lead to missed deadlines, unfulfilled obligations, and ultimately, lost revenue and increased legal risk.

Version Chaos: Why “Final_Final2.docx” Isn’t Good Enough

We’ve all been there: staring at a document titled “Contract_Final_Final2.docx” and wondering if it really is the final version. This confusion, caused by manual version control, is a product of inefficient contract management. When multiple stakeholders are collaborating on a contract, passing documents back and forth via email, it becomes nearly impossible to maintain a single source of truth. One person might be reviewing “Draft_V5” while another is making changes to “Draft_V5_ClientEdits.” 

CLM solutions are specifically designed to eliminate this chaos, ensuring that everyone is always on the same page, working with the most current version of a contract. Can your team confidently say which version of a contract is the most current, without starting a new email chain? If not, a CLM tool can help. Schedule a free online demo with the All Star Software Systems team.

Missed Deadlines & Auto-Renewals

One of the risks of manual contract management is the potential for missing critical dates. Without automated tracking and contract renewal reminders, important deadlines for termination, renegotiation, or contract expirations can slip through the cracks. 

This can result in costly auto-renewals of unfavorable terms or, conversely, the unintended lapse of crucial agreements. This oversight can directly impact your bottom line and operational continuity.

Be Audit-Ready in Minutes, Not Weeks

In today’s regulatory environment, it is necessary to be able to quickly produce a complete audit trail of your contracts. Whether it’s for internal compliance, external audits, or legal discovery, scrambling to gather documents from various locations can be a time-consuming and stressful ordeal. 

A well-implemented CLM solution helps maintain a comprehensive digital paper trail, documenting every change, approval, and interaction related to a contract. This ensures compliance with regulatory and internal policies, allowing you to be audit-ready in minutes, not weeks.

Email Isn’t a Workflow, Here’s Why

While email is an indispensable communication tool, it is fundamentally inadequate as a contract workflow system. The lack of accountability and tracking in email-based contract negotiations and approvals is a significant drawback. Who has the latest version? Was that approval granted explicitly or implicitly? What’s the status of a particular contract? These questions often lead to endless email threads, missed steps, and bottlenecks. 

Contract workflow automation within a CLM software provides a structured, trackable environment for every stage of the contract lifecycle, from initial request to final execution and beyond

The Contract Database

At the core of an effective CLM system is a sophisticated contract database. 

This isn’t just a digital filing cabinet for documents; it’s a dynamic repository of organized details pertaining to the contract request and content that is inserted into contract templates. 

Imagine a system where you can use filters to present contracts in a certain state (e.g., “pending approval”) or contracts ready for a certain action (e.g., “due for renewal next quarter”). Beyond simple search, a contract database offers interactive dashboards reflecting key metrics of this contract data, providing invaluable insights into your contractual obligations and performance. 

All of this is presented through a friendly user interface that allows easy interaction with the data and the multiple documents and versions of documents associated with each contract.

CLM vs. Legacy Tools: What Enterprise Buyers Should Know Before Making the Switch

Are you still investing in spreadsheets and SharePoint when your competitors are automating their contract lifecycle? The shift to enterprise contract management is about gaining a competitive edge through efficiency and reduced risk.

For enterprise buyers, justifying the investment in a new system often comes down to a clear understanding of its advantages over existing tools. Let’s look at how modern CLM solutions stack up against common legacy tools:

• Outlook: While great for email, Outlook offers no structured contract management capabilities beyond basic communication. There’s no version control, centralized contract database, or automated reminders for contract ticklers.
• Google Sheets / Spreadsheets (Excel): These are great for data, but they lack true document management, workflow automation, and security features for sensitive contract data. Manually tracking contract expirations and contract renewals in a spreadsheet is prone to human error.
• Dropbox / SharePoint: These provide document storage but fall short on process automation and features specific to the contract lifecycle. They don’t offer the complete contract negotiation tools or contract workflow automation found in dedicated CLM software.
• Docusign: Excellent for electronic signatures, but Docusign is just one piece of the broader contract lifecycle. It doesn’t provide the comprehensive management, storage, or analysis capabilities of a full CLM solution.

What to Look for in an Enterprise-Grade CLM Solution

When evaluating CLM solutions, especially for larger organizations, several key features and capabilities stand out:

• Centralized Control: A single source of truth for all contracts, ensuring consistency and easy access. This eliminates scattered documents and reinforces a strong contract database.
• Automation: From intelligent document creation to automated routing for approvals and reminders for contract renewals and contract expirations, contract automation is paramount.
• Advanced Features: Look for a comprehensive clause library for rapid document composition, interactive dashboards for real-time insights, and rapid application development capabilities to customize workflows.
• A CLM Expert Partner like All Star: Beyond just software, the right partner provides implementation expertise, ongoing support, and strategic guidance to maximize your investment in CLM. All Star specializes in helping organizations leverage the best contract management software to achieve their goals.

FAQs:

Q: How do you manage contracts effectively? 

A: Effective contract management involves centralizing all contracts in a secure, searchable contract database, implementing automated workflows for creation, negotiation, and approval, and utilizing tools for proactive tracking of key dates like contract renewals and contract expirations. Embracing CLM solutions is key to achieving this effectiveness.

Q: What is the best software for contract management? 

A: The “best” software depends on your organization’s specific needs, but top-tier contract management software will offer features like:

1. Contract automation
2. Centralized contract database
3. Strong version control
4. Comprehensive reporting
5. Integrations with other business systems. 

CLM solutions, like those offered by All Star Software Systems, provide an enterprise contract management approach.

Q: How can AI be used in contract management? 

A: AI contract management can significantly enhance efficiency by automating document analysis, extracting key clauses and data, identifying anomalies, and even assisting with contract negotiation tools. AI can also help with predictive analytics related to contract risks and opportunities, making your CLM tool even more powerful.