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5 Insanely Simple Contract Automation Use Cases You May Have Overlooked

Dermot Whittaker contract management software, efficiency, automation

If your organization is using a contract management system, you have probably addressed the use cases that led you to adopt it. You have a repository for contracts so that they are no longer lost. You have forms and workflows that create contracts and guide them through finance and legal for approval. You are associating your contracts with related documents such as statements of work, licenses, certificates of insurance, amendments, and addenda.

And YES! you have an expiration report that gives you ample notice before your contracts expire or auto-renew.

Now what?

Here are five simple contract automation use cases that offer incredible value. The business case for these is clear and they require little configuration.

Auto-Generated Reports

Contract management systems can create and send reports at the same time each day, week or month. The reports commonly show contract status (requested, approved, executed) but can include data such as time to signature, spend under contract, or sales closed. Two useful additions to this simple feature include:

  • Automatic Emailing – this sends the report (or a link to it) to the relevant parties. This is perfect for organizations with a hands-on executive team or a governing board where contract information is reviewed at regular meetings
  • Distributed Reporting – this sends only the portions of a report that are relevant to an individual. For example, contract owners receive a report only on the contracts that they are responsible for. Managers quickly learn to trust and read the reports once they realize that they don’t have to scan page after page looking for what pertains to them.

Automatic Reminders with E-signature

E-signature does save time – provided the counterparty follows through and signs the agreement. Nine out of ten times, that happens quickly, but getting that tenth person to sign can waste your staff’s time with phone calls and emails. This distracts a contract manager from the entirely new work she has moved on to. Where multiple signatures are required, it only takes one busy executive to delay an entire contract.

Auto-reminders ping the counterparties when review and approval of an agreement is still pending.  The frequency of the reminders is up to you. For most deals, one reminder is enough to get the job done. If there is a genuine delay (caused by a last-minute concern or a change in personnel), reminders eventually trigger an alert to the contract manager to follow up personally.

Review Task Reminders and Escalations

Workflows for internal contract review – from procurement to finance to legal, for example – are what contract management software is all about. One person completes her review and the next person receives a task notification with a due date and a link to the draft contract. But what if the next person gets distracted, or has a backlog of other work, or needs more time to perform due diligence? The contract manager expecting the contract will need to follow up personally – unless automated task reminders and escalations are enabled.

With automated reminders, when a review task is overdue, the person who is late receives a reminder email with the same instructions for review as the first. After one or two reminders, the reviewer’s supervisor receives an email as well – an escalation that lets the person with immediate authority investigate the bottleneck and resolve it. The contract manager driving the project can see the status of the contract in a dashboard but needn’t pick up the phone as long as he can see that reminders and escalations are still in play. Personal intervention from the contract manager may eventually be warranted, but in the meantime that manager can stay focused and productive, the goal of contract management software.

Approval Thresholds

Approval thresholds are a dynamic and automated means of enforcing your contract approval policies, even as terms change throughout the course of a contract negotiation.

Systems that provide approval threshold functionality will automatically request approval from the right parties if predetermined limits are exceeded. Common examples of thresholds that are monitored closely include discount levels, net terms, total value of the contract, total spend value of the contract, and so on. Sophisticated systems ensure that no agreement can go forward without the necessary approvals you’ve established ahead of time.

The same technology can insert additional protective language into a contract when thresholds are exceeded.

Milestone Tasks – Single or Recurring

Every contract includes obligations, and obligations can be broken down into milestones that represent steps toward accomplishment. Even if an obligation falls to your counterparty, it is in your interest to track it with a task, owner, due date, and alert  especially if other tasks or larger projects depend on its completion.

Automated milestone alerts are easy to set up and help prioritize work for contract managers or business users with multiple responsibilities. Milestone alerts remind contract managers or business users that obligation-related tasks are coming due. The same system of reminders and escalations used for contract review can keep those responsible focused on fulfilling the contract’s obligations. This system also serves department managers who want to find and resolve bottlenecks.

Some obligations are meant to be fulfilled on an on-going basis. Every week or month, for example, a sub-contractor may need to show that maintenance to a physical plant was completed. Or someone at your organization may need to periodically assess the staffing of a facility to be sure that it meets regulatory requirements. Contract management automation can address these recurring obligations by auto-generation tasks during the life of a contract. This eliminates the risk both of missing the obligation and of failing to set up new reminders going forward.

These simple use cases are within reach of most contract management systems. If you have a contract management system, you can start today. If you don’t yet have a system, this low-hanging fruit is another reason for making contract automation your organization’s next investment.