What is the contract management system?

Contracts form the backbone of the day-to-day function of a business and are a crucial tool for risk management. In every industry, contract management software constitutes an essential part of the business operation.

With the growth of the business, the volume of the contract increases; therefore, management of contracts requires to be efficient and scalable.

When managed manually, through the shared drives spreadsheets, there are several risks of adopting ineffective methods, creating a significant amount of stress on the internal team. Generally, the volume of contracts is compounded annually; therefore, the internal workload and cost increase while managing them manually.

By adopting the digital contract management software, A well-managed arrangement facilitates a clear understanding between both parties and reduces any obstacle of confusion.

Contract Lifecycle Management (CLM) strategically tracks and manages contracts signed among their stakeholders. A contract management solution guarantees the best maintenance of the contract in terms of performance and legal compliance. Though the digital contract management cycle is not a one-stop solution for businesses, it is an essential part that renders several legal and financial benefits.

The digital contract management system is a technique to track a contract from end to end and manage it during its life cycle. A CLM tool confirms that both parties profit as intended at every step of the intelligent contract, starting from the proposal to execution, storage, update, and expiry/renewal.

A CLM software confirms that all fundamental aspects of a contract – mutual approval, legal validity, acceptance, sufficiency, consideration, and legality are maintained smoothly. The contract lifestyle management also ensures the key performance indicators such as - contract stages, risk score, time management, and execution.

Why is it essential to streamline contract collaboration

The automated contract lifecycle management system introduces several benefits. The contract collaboration using the CLM tools ensures the easy generation of contracts, smooth approval, and develop the performance of the agreements, etc., are some of the features the CLM software offers throughout the contract collaboration. The main advantages of streamlining the contract collaboration are as follows:

Easy and efficient initiation of the contract

At the beginning of the contract workflow, the easy contract initiation using several means available under the contract management software such as -drafting the contract as per certain specific requirements is now easy, with the saved templates, meeting the parties' demands to the contract. The shared documents and spreadsheets can not meet the criteria enough.

The saved contract templates are easily obtainable using automatic optical character recognition (OCR) scanning and document indexing. A simple typing of the requirement in the designated field will reach the correct record in the repository.

Eye for details for contract drafting and negotiation

Each contract is different from the other, and there is a need for customizing each one of them. Standardized contracts ease down the management of risks from a long-term standpoint.

According to Forbes, evolving business relationships require companies to drive contract standardization, which can be ensured with the help of a comprehensive clause and template library.

The editing of contract collaboration for any editing, addition, and removal of clauses, uses the cloud-enabled contract management platform. Contract analytics is advantageous as it permits internal teams to collaborate with external stakeholders.

Standard templates provide a brilliant initiation for companies to facilitate the contract lifecycle for every contract collaboration.

Assessment and Communication

The automated reminders and the critical dates prevent missing a deadline and meeting the obligations using the digital contract management cycle.

Installing an adequate channel for the negotiation and approval process is critical at the point of assessment, evaluation, editing, and review of contracts. The pivotal stage involves negotiation, vetting, and redlining.

Moreover, the frequent compliance, structure, and formal notice period produce an alert to send automatic notifications. This is a crucial feature of the digital contract management system.

Centralized implementation of the contract

When the execution of the contract was a manual process, the signatures on the document caused unavoidable delays, logistics problems, and operational hindrances. With the feature of e-signatures practice today, execution of contracts is possible from any device, safely and securely. This feature standardizes the business processes ensuring improvement to the overall customer experience.

The e-signature integration enables the organization to gain:

1. Time-saving and cost-effective
2. The execution of the intelligent contract reduces the effort
3. The risk of manual errors is eliminated
4. The data is more secured with data piracy and limited access features.

The cloud-based and centralized contract repository provides credentials to contract-related records on any device from anywhere, subject to approval, to ensure data privacy and security.

Security of Contract Administration

The smart contract platform secures a good insight into contract management by furnishing information and dashboards. Specifying standard information and dashboards by the contract lifecycle encourages the users to create, save, and share their reports.

Besides creating a new version of the contract on the modification, a well-developed digital contract management software saves the previous version for reference. As the contract collaboration involves several edits and amendments, the feature of saving every version helps to discover any prior understanding whenever required.