Contract management automation is designed to enable qualified professionals to focus their attention on planning and executing informed decisions. Using data and analytics, professionals get a better understanding of their contract portfolio, which helps streamline processes, identify risks as well as proactively recognize opportunities.
How Contract Management Automation Impacts Workflow
Contract management automation is not about replacing key individuals but rather about improving the evaluation of the organization’s contracts, mitigating risks, meeting deadlines, and offering improvements on contract oversights.
The automation of a contract management process lets you define rules for each contract type. Data can be consolidated and digested and automatically routed through a workflow to reduce the time that is wasted on monotonous administrative tasks so time can be better spent on data-driven decisions.
Benefits of Contract Automation
There is a growing need for automated contract management processes in organizations, regardless of size. Manual processes, spreadsheets, and paperwork filing are no longer sufficient. This approach does not support the contract lifecycle and while it may be low cost to maintain, there is a high price to pay for inadequate solutions.
Automating your contract management process offers system scalability, controlled accessibility, security, consistency, and predictability. These benefits result in reduced costs, avoid exposure to risk, increase the performance of key staff, and are a significant saving on time and effort. Automating tasks in the contract lifecycle gives you the opportunity to maximize your contracts’ value.
Automating Key Processes
Important processes within the contract lifecycle can be automated and organizations need to leverage technology for better contract management related to contract writing, collaboration, negotiation, and approvals. Contract management software is configured to engage relevant people at defined stages through automated contract notifications, alerts, and reminders.
Contract Initiation and Writing
Creating and authoring contracts is a critical step that starts the contract lifecycle. It is at this point when all concerned parties need to collaborate on the contract terms that form the finalized document. The traditional contract initiation stage usually involved piecing together scattered clauses that resulted in inadequate compliance management, minimal or no version tracking, and disorganization of related subcontracts.
Manual processes are prone to errors, missed clauses and milestones, and a decentralized process that causes obstructions throughout the contract lifecycle. Automating the process has multiple benefits that include improved clause management, monitoring of compliance tasks, and document version control.
The dynamic creation of contracts employs the use of templates that allows you to merge and insert custom fields and clauses from a predefined library. This ensures the accuracy, compliance, and timely creation of all documents. Collaboration is improved with the electronic distribution of draft contracts to relevant members who can review and annotate before approval.
Automation generates better contract negotiations with improved collaboration between vendors, users, and stakeholders that expedite the contract negotiation process. Typically, contract negotiations go back and forth and can lead to confusion and bottlenecks.
An automated, centralized system helps track changes in clauses and notifies the relevant stakeholders while allowing edits and merging of predefined library text. Collaboration and version control on contract editing becomes simple, efficient, and organized. Contract participants can review, edit, upload, and download the most recent document version.
A notable feature in automating contract negotiations is the ability to apply clause ownerships for better control of the contract’s content. Changes made to clauses can alert a clause owner or legal expert for review and approval. Based on defined rules, invested parties can engage in a contract whenever notified.
Automated contract approvals use workflow rules to streamline the process. It coordinates the approval process to ensure key parties are notified for approval and signatures. Workflows can dynamically change depending on the outcome of the negotiations and business users are able to manage rules, and updates, while supporting manual intervention whenever required.
The quicker a contract is approved, the faster it can be executed. After the relevant members have confirmed approvals, digital signatures can be requested to finalize the process. Secure integrations for electronic signing work with user-defined workflows to sign, distribute, and upload contracts that are ready to be effected.
Assessing Contract Performance
Automating the contract lifecycle allows executives and business owners to gain indispensable performance insights across the entire contract portfolio. Contract management software like Parley Pro offers a range of features to delve into analytics that shows key information on contract cycle times, abnormalities, cost and savings, risks, and statistics on renewals.
Defining, measuring, and reporting on the Key Performance Indicators helps the business assess its performance of the contracts and specific staff. Automated CLM solutions offer the ability to put KPIs in place to extract relevant data that is key to managing the business.
Key Performance Indicators
There are many different KPIs that can be defined, and these can vary from company to company. You can have multiple performance measures based on performance targets defined by the business leaders. Automation tracks and collects data throughout the contract lifecycle and allows you to generate reports to ascertain if objectives were met.
Important KPIs for contract management typically include:
- The length of a contract cycles
- Trends by contract type, customer, supplier, or by location
- Contract renewal rate
- Collaboration between contract partners
- Meeting deadlines and key milestones
- The cost-effectiveness of the contract management process
Assessing KPIs gives you vital information to learn and improve all aspects of the contract process so you and your team can focus on doing things efficiently that set the success for the business.