Contracts form the basis of every business relationship. When someone signs a contract, the document outlines each party’s expectations. Those contract expectations often include what products or services you will provide, the date you will deliver your products or services, and how much money you will receive in compensation.
Contract templates make it easier for companies to generate contracts that include common expectations. Instead of creating a document from scratch, you fill in a few blank spaces on the contract template.
Unfortunately, most companies discover that contract templates only offer limited benefits. Even once they have approved contract templates, they struggle to manage their agreements, negotiate new deals, and enforce compliance.
Managing your contract templates within a CLM (Contract Lifecycle Management) system improves all of these features. By adopting a CLM system, you will likely find that your business benefits in at least these eight ways.
Speed Up the Contract Approval Process
Using paper contracts, it can take days, weeks, or even months for multiple parties to reach an agreement. Even if you use a courier to carry the document between parties, people still have to spend a lot of time reading the contracts, noting items that they would like to change, and waiting for others to approve the changes.
CLM systems speed up the contract approval process so you can focus on finding new clients instead of wasting time negotiating with existing clients.
Making Changes to Digital Documents
Since CLM systems use digital contracts, you can alter them from your computer. You don’t need a paper copy of the contract in front of you. You just open your software, make the changes you want, and save the document.
Track All Changes Made to Digital Contracts
A well-made CLM system will track all of the changes made to your documents. You can open the file and review changes made over time. The ability to track and view all changes made to contracts helps you understand how agreements change over time and how you can comply with the agreements.
CLM Systems Give You Instant Notifications
When someone makes a change to a contract in your system, the CLM sends a notification to everyone involved. This gives you a real-time perspective of the contract’s evolution. It also gives you an opportunity to counter or approve changes quickly. You don’t have to wait for the contract to arrive. Everyone has a clear view of the changes right on their screens.
Getting notifications also makes sure that you understand every change made to your contracts. When you get alerts that point to every proposed change, no one has the opportunity to sneak in legalese that puts you at a disadvantage.
Assign Tasks to Individuals
You may need to get information from several people within your organization before you can finalize a contract.
A CLM will let you assign tasks to individuals. For example, you may use the system to tell your accounts manager to provide pricing information. When he or she completes the task, it gets updated in the system and you receive an alert showing you that the task has been completed.
You can also assign tasks to people outside of your organization. Some clients drag their feet during contract negotiations. Assigning a task to them gives a gentle reminder that they need to focus on reaching an agreement.
Sign Documents Electronically
Waiting for someone to send you a paper contract can feel like it takes forever. Depending on your staff size and organization, it could take a day or more to receive the final version of a contract.
After you sign the document, you have to send it to the next person on the list. When you have a complex agreement that involves several people, it can take quite a while for everyone to sign the contract.
You can eliminate those delays by using digital contracts that let you sign electronically. A CLM makes it possible for everyone to sign the finalized contract instantly. Instead of waiting, you can get approval and move forward with your plans.
Faster Approval Means Lower Legal Fees
Since CLM systems speed up the contract approval process, lawyers don’t have to spend as much time reviewing documents. With a paper document, your lawyer has to go over every line to find changes. The cost adds up quickly when you have multi-page contracts that contain a lot of details.
When you use a digital CLM system, though, your lawyers only have to pay attention to changes in the contract. By reducing the amount of time that they spend reviewing documents, you save your business a lot of money.
Create a Library of Approved Language
When you use paper contracts, you need a lawyer to review every word of your template. The slightest mistake could harm your company by changing the agreement.
Digital contract templates don’t need as much attention from legal experts. Instead of getting approval for every term in your contract, you can develop a library of approved language. Then, you can pull approved language from the library to tailor contract templates for individual clients.
Lawyers don’t need to review the contracts because they have already approved the language.
Increase Contract Compliance
Contract compliance becomes more difficult as your business grows. When you only have a few contracts to manage, it’s easy to meet expectations. When you have thousands of contracts to manage, though, you can forget to fulfill obligations.
Improving Your Contract Compliance
What happens when you don’t comply with every agreement in a contract? First, non-compliance can cost you money. When you don’t fulfill obligations, your clients may decide not to pay you. They may even take you to court to recoup money from past payments.
Secondly, you can damage your company’s reputation. Businesses want to know that they can count on you to follow through with your promises. Noncompliance shows that you don’t manage your business well. Some people will assume that you tried to avoid a part of the contract on purpose. Others will assume that you’re negligent. Either way, they won’t want to hire you in the future.
When you manage contract templates with a CLM system, you have a clear list of your obligations. If the contract states that you will deliver X products on Y day, then you can see the obligation plainly.
By using a CLM, you grow your brand’s authority and find more opportunities to increase revenues.
Improving Your Clients’ Contract Compliance
A CLM system also helps ensure that your clients comply with agreements. Every contract, after all, involves two or more parties.
Creating clear objectives for your clients makes it more likely that you will receive orders on time and get paid the agreed-upon amount. If your contract includes bonuses or penalties, a reliable management system will make sure that everyone follows those rules.
Create a Central Depository to Locate Old and Current Contracts Quickly
Companies that use paper contracts find it extremely difficult to manage their documents. At best, you can file the paper contracts under a client’s name. The more successful your business becomes, though, the more contracts you need to store. It doesn’t take long before you have to dedicate one or more rooms to storing contracts.
Clearly, you create a lot of inefficiencies when you use paper. At some point, documents will get lost, misplaced, or thrown away.
Create a Central Depository for Your Contracts
A CLM system, however, makes it easy for you to create a central depository that stores all of your contracts. As your number of contracts grow, the depository will store them without any problems. Since most CLMs use cloud technology, you don’t even need to purchase new hard drives. You always have the right amount of space to store your contracts.
Find Any Contract Within Seconds
Paper documents make it nearly impossible to locate old and current contracts quickly. When you convert to a digital system, though, you can find any document within seconds.
You don’t even need to know which specific contract you want to find. Instead, you can search your contracts by keyword. Keywords could include the names of clients, project managers, types of jobs, locations, or practically anything else.
No matter how old your contracts get, they remain in your CLM system. It doesn’t matter whether you closed an agreement yesterday or a decade ago, you can retrieve the document from your CLM system with nothing more than a keyword.
Improve Your Contract Negotiation Process
Contract negotiations don’t have to include spending hours in a conference room, talking to lawyers, and researching past agreements. A CLM system streamlines the contract negotiation process so everyone can focus on reaching milestones instead of futzing with documents.
Automatically Renew Old Contract Agreements
Some contracts involve such basic agreements that you can renew them automatically. You don’t need to meet with your colleagues or other parties. Instead, you just tell the CLM to renew your contract when the current one ends.
View Past Agreements With Clients
Many times, though, you will want to renegotiate with vendors to get a better deal that rewards your company or personal finances.
Since CLM’s store and organize all of your contracts, you can view past agreements instantly. Just access the digital contracts, read the content, and decide whether you want to make changes.
When you talk to other people involved in the contract approval, you will have the information that you need for a persuasive argument. Perhaps you need to increase your prices to offset the rising costs of materials. Maybe you want to secure a financial bonus for finishing the project early.
Without a way to view past agreements, you won’t have the data that you need to state your case. CLM systems help you manage past contracts, which makes it easier for you to improve your current negotiations.
See Contract Changes in Real-Time
Renegotiating an existing contract can take longer than reaching agreements with new clients. Some people won’t want to deviate from the previous agreement. Others will want to make significant changes that benefit one side.
You need to see every step of the renegotiation process so you can provide approvals or counter offers.
With the top CLMs, you receive notifications that point you toward every change. The CLM will even underline or highlight specific changes to make sure you have all of the information needed to make smart, fair decisions.
Manage the Contract Escalation Process
Does your current contract management system provide a clear escalation process that helps you reach agreements, finalize obligations, and close projects quickly?
A CLM streamlines the contract escalation process by alerting everyone involved when changes occur. If one of your managers approves and signs a part of the contract, you will get an alert that gets your attention. Then, you can evaluate your manager’s work to make sure you agree with the agreement.
As more people agree or object to the deal, you can watch the contract move toward finalization. At the end, you get a completed document that shows every step towards the contract’s details.
Personalized, Branded Communications
You want messages from your company to include your logo and other identifying features. The top CLM systems will let you personalize messages so they look like they come directly from you instead of the software.
You get several benefits from personalized, branded communications. For example, personalized messages:
- Show clients that the message came from you instead of a scammer.
- Improve your brand’s visibility.
- Ensure current and potential clients have your contact information.
Don’t choose generic contract templates that could come from anyone. It makes more sense to use a CLM that lets you personalize messages and contracts.
Integrate With Your Sales System
Does your current contact management system make it easy for clients to pay you?
Often, clients have to pay invoices by sending checks to your physical location. In some cases, they might have the option to pay online.
Ideally, you can integrate your entire contract lifecycle management into your sales system. Doing so makes it easy for companies to pay each other. It also provides a technological connection between your contracts and your payments. In the future, you may need to research whether an event occurred or not. A connected contract and sales system makes it much easier to discover what happened.
Generate Reports Automatically
Finally, managing your contract templates within a CLM system makes it possible for you to generate reports automatically.
Your CLM system already has all of the information that it needs to analyze your contract performance. You can set the system to generate a report once per month. That way, you can keep a close eye on factors like:
- How long it takes to negotiate contracts.
- Whether you and your clients comply with contract obligations.
- How many people were involved in a contract’s negotiation.
- The differences between contracts.
CLM systems offer a lot of flexibility, so you can generate a report on almost any topic. The system will use contract keywords and metadata to find and analyze the information that pertains to your current projects.
You can also use your CLM system to generate ad-hoc reports. If a client requests a report that includes 3 years of data, you can ask the CLM system to make it for you. It only takes a few minutes because the software does most of the work.
Find the CLM System That Helps You Manage Contract Templates Best
As you explore CLM systems, you will find that some offer more features and functionality than others. Software companies will also charge different prices for their services.
Once you choose software that works for you, use these tips for managing contract risk in a CLM system. The tips will help eliminate internal communication milestones, prevent people from missing milestones, reduce human error, and give you an efficient way to store contracts.
Every business relies on contracts. Make sure you have an efficient system that helps your company exceed growth expectations.