How to Spend Less Time Managing and Reviewing Contracts
Proper contract management is a critical process that ensures smooth operations for your business, regardless of your industry. It helps mitigate risks by having all the parties involved respect the agreed-upon terms.
It enables you to keep track of your clients, nurture relationships with them, collect and analyse valuable data, and much more. However, it’s often a simultaneously time-consuming process unless it’s well-optimised.
At first glance, it seems as though advanced contract management that doesn’t take too much time or effort is impossible. After all, there are so many moving parts to contracts that reviewing them and keeping track of them can easily take up hours of your day.
Still, any process can be improved when you have a well-thought-out plan. Learn how to simplify contract management and streamline all related tasks.
Perform background checks
Whether you’re just starting out or in the middle of rolling out your expansion plans, it may seem tempting to quickly sign contracts with any party that would work with you – be it clients, suppliers, or even legal representatives.
However, rushing to enter legal agreements is the first and most significant mistake that will hinder your contract management and review processes.
You must be highly selective of who you sign your contractual agreements with to ensure that you spend less time managing and reviewing your contracts. You need to know without a shadow of a doubt whether the other party can legally enter into a contract with you and whether the said contract would harm any of your existing agreements and relationships.
That’s why it’s imperative that you perform thorough background checks on all your clients, suppliers, and other relevant parties before signing contracts with them.
Analyse your current process
If your contract management and review process is slow and cumbersome, you can’t simply make changes haphazardly. That way, you’d only risk making matters worse.
Instead, you’ll need to analyse your current processes, identify bottlenecks, and develop restructuring plans.
For instance, perhaps the only thing slowing you down is the fact that it takes you days to get signatures from your clients and suppliers. Scanning your documents, sending them, and having your clients print them, add their signatures, and send them back is an unnecessarily long process.
Here, the simple solution would be using electronic signatures – there would be no need to overhaul your entire contract management process.
Perhaps the only issue is poor document organisation, so you’d only need to upgrade your file storage systems.
Still, several bottlenecks and inefficiencies may be slowing you down, and you need a complete restructuring of your current processes.
In any case, you won’t know unless you evaluate what you’re currently doing right and wrong. Only then can you be sure that any changes you introduce are valid, effective, and time-saving.
Unless you’ve already done so, the next step is creating templates for all the different contracts you deal with daily.
A detailed template is a life-saver that allows you to draft new contracts within minutes since you’ll only have to manually input variable information such as dates, names, and addresses.
Even if you need your contracts to be more flexible and customisable, a template gives you a good starting point. You won’t have to create anything from scratch, not to mention that standardised contracts are much easier to review later on as you can quickly skim through irrelevant information.
In addition to contract templates, you should have your standard clauses, terms, and disclaimers in an easily accessible library to make adding them to your contracts easier.
Contract automation comes in many shapes and forms. For instance, you can automate communications through contract lifecycle management (CLM). A CLM can track contract activity, send real-time notifications to relevant stakeholders when new changes are made, and keep your entire team adequately updated.
You could also use artificial intelligence (AI) technology to quickly go through all the documents you have and identify and extract relevant information within seconds.
AI can instantly scan your contracts and additional documents, identify your clients’ risk factors, propose mutually beneficial contract terms and conditions, and so much more.
Automating even a single aspect of your contract management can save you hours upon hours of hard work, allowing you to focus on the more important matters.
Set up a robust review process
The next part is setting up a robust review process, which can often be easier said than done. The more comprehensive your review process, the lower your legal and financial risk.
Start by ensuring proper task delegation. Junior teams, for instance, can easily handle minor, lower-risk contracts that don’t affect your company much. However, it would be risky to give them more significant contracts where even a minor human error could have massive implications.
Therefore, you’ll want to ensure that your task delegation is virtually flawless if you want to spend less time on your contract reviews.
Of course, you’ll also want to create a comprehensive checklist that needs to be followed with each contract review. Some key elements that most reviewers need to pay attention to are clarity of language, information accuracy, deadlines, uncommon deviations from standard contracts, and the like.
It’s in your company’s best interest to schedule frequent meetings where the teams responsible for contract reviews can offer feedback and discuss whether any changes need to be made to the process.
As a general rule of thumb, you should strive to offer positive reinforcement in the workplace as it typically yields positive results. Employees who receive incentives, rewards, and benefits for their efforts tend to work harder, make fewer mistakes, and deliver higher-quality work.
However, praise and rewards can only do so much to streamline your contract management and review processes. If you want better results, you must introduce some punishments, especially for unnecessary delays.
Contracts are legally-binding agreements, and any time you break the deadlines outlined in them, you face certain risks. Therefore, you need to ensure that your company is never the cause of unnecessary delays.
Additionally, you might want to consider punishing delays that the parties you’re signing your contracts with caused. If your clients or suppliers are indecisive about contracts, you could introduce fabricated deadlines, after which some of your contracts’ beneficial terms and conditions may no longer apply.
Use contract management software
The simplest, most effective way to streamline your contract management and review processes is to use advanced contract management software.
Contract management software allows you to store, create, and review contracts from a single centralised database.
You can use this software to automate your document creation, create custom forms, customise templates, and review your documents using AI technology. With the right choice of software, you can also create detailed audit histories, send and request electronic signatures, and set deadline reminders.
Most importantly, you can access essential information without much ado and ensure that all the parties involved respect the terms and conditions of your contracts. You can seamlessly automate virtually every aspect of your contract management and review processes and focus on the core of your business.
Talk with people in authority
Most commonly, legal teams are responsible for contract management and review. After all, many contracts are filled with complex legal terminology that it truly takes an expert to decipher and understand every term and condition mentioned.
However, it’s not only legal teams that you should include in your contract-related processes. In many instances, you’ll also need to have your marketing and sales departments, for example, in your contract management and review. They’re commonly responsible for a large chunk of all the contracts within your company.
Therefore, you’ll want to keep different departments in the loop and keep communication open with all the people in authority who have a say in your contracts. Streamline communication and make contract management and review a collaborative process.
Evaluate and document before signing
Even with completely perfected contract creation processes, some mistakes can still slip through the cracks. That is especially true when you have flexible, customisable contracts that differ significantly from one client or supplier to another.
To ensure that everything is accurate, transparent, and easy to understand for all the parties involved, you’ll always want to evaluate and document everything before signing.
Though a thorough evaluation and documentation take some time, it’s ultimately time-saving as you’ll minimise the risks of mistakes and inaccuracies and thus make your contracts easier for later review.
Negotiate essential terms in detail
Finally, you’ll need to be exceptionally careful with negotiating essential contract terms and conditions. Everyone on your team needs to be fully aware of the negotiation process and understand precisely which points can be flexible and which ones you should never change.
Ideally, you’ll want to create a detailed employee handbook where you’ll outline your commonly used negotiation strategies, go over your contract creation, management, and review processes, and explain negotiable and non-negotiable terms and conditions.
When it comes to adding the final signatures on your contracts, ensure that you and all the parties involved are crystal clear on the essential terms and understand your responsibilities perfectly.
Contract management and review aren’t easy. It takes a lot of time and effort to keep your contracts properly organised, accurate, and accessible. However, there are ways to streamline processes and simplify virtually every step.
Templates, automation tools, and robust review processes are only some ways that will help you stay on top of your contracts with the utmost ease. Still, you’ll need advanced contract management software if you want to spend less time on your contracts while simultaneously gaining more from them.
Give Contract Eagle a try and see just how easy it is to revolutionise your contract management processes when you have the right solution.