Five Steps to Getting Started with Contract Management

Transcription

1 Five Steps to Getting Started with Contract Management White Paper (281)

2 Contracts play a major role in your daily interactions with clients and suppliers alike. Regardless, many organizations acknowledge that they lack a strong handle on these critical documents which limits their ability to get the most out of these agreements. The industry has changed drastically over the past few years, so new ways of looking at contracts and a high-quality approach to contract management via solutions that emphasize automated services and digital storage can give you and the contract team all the tools you need to extract the most value out of your contracts. Whatever the scale and size of your business, this kind of control is a highly desirable asset to daily business functions. Gain Control of the Contract Management Process So how does a company begin the journey toward complete control of the contract management process? This white paper explores several vital steps that will have an immediate impact on your organization. Let s start by breaking down the five major steps that go into refining and optimizing how you handle legal documents: Move your contracts from the desktop or shared drive 1 to a central repository 2 Cut out Excel spreadsheets that can lead to missed milestones Make sure your contract system incorporates third party language in a searchable database 3 4 Stop using your last contract as your new template or draft. Embrace standardization and use templates that simplify contract creation Finally, if you have nothing (or close to nothing) in place when it comes to contract management, there is no need to try and reinvent the wheel with a custom built contract management system. The market is mature enough to adopt a packaged contract lifecycle management system (CLM) that works on the cloud and puts you on your way toward having a great contract management system. 5 (281) sales@prodagio.com 2

3 Step 1: Move Contracts from your Desktop or Local/Shared Drive to a Central Repository You should consider the way your company s contract team shares and collaborates on contracts that are either in progress or currently stored for later referencing. By instituting an automated system that includes a central repository, your company can adopt best practices that make creating and handling these documents considerably easier. First, by instituting a standardized platform for collaborating and sharing contract details and documents that are currently in progress, your contract team can make sure everyone is on the same page and working with the latest version, thereby avoiding confusion and time wasted on modifying older documents. Having varied drafts on each stakeholder s desktop become a thing of the past, and your company gains the ability to allow employees to work on contracts from around the globe without the headaches that come with an inefficient and error-prone process. Continuity is another major goal that you can expect to achieve when placing contracts and all associated documents into a central repository within your contract management system. With a repository that offers access to all the authorized members of the contract team, continuity can become a cornerstone of your contract process. Information or vital details will no longer reside solely in team member s heads or within assorted documents around the workplace. Instead, every revision, , and note has a special home in the repository, thus promoting a stable and continuous flow of work. Finally, implementing a software or service that relies on a central repository to build a better contract management approach will result in increased security. With a strong system, only authorized users will have access to these documents, which will protect your important and sensitive contract information. Going a step further, a CLM system that logs every point of access and creates a history for each document will ensure that your contracts have protection that dwarfs anything found within a manual system. For managers and other leaders, creating defined roles defined around organizational, functional, and user-based qualifications introduces further controls to the process and limits access to only those who need the information during the construction and review of the contract. Step 2: Drop Excel and Stop Missing Key Dates and Milestones in the Contract Process Another major step toward gaining complete control of your approach to contract management through automated CLM is to say goodbye to using Excel in the contract management process. When it comes to handling your documents and tracking important events, you can do so much better by implementing a smart contract management system that gives you stronger tools and services that cut down on errors while increasing efficiency. One of the critical missions of the legal or contracting team is to track renewal dates, expirations, Intellectual properties, and milestones for billing, etc. The list is long and can become a major headache for the team as they try to pull all of these responsibilities together. With an industry-leading CLM system, you can set reminders and publish reports that give you a far more reliable and less error-prone way of keeping track of due dates and deadlines. In our frequent discussions with procurement and legal professionals, we ve found that too many organizations currently rely on spreadsheets since not all of the information related to the contract is contained in the contract itself. The reality of the situation is that a contract management system makes it incredibly easy to maintain awareness of all this information, especially if your contract team is dealing with the difficult task of managing multiple documents at the same time. Whereas spreadsheets offer great tools and services for handling certain types of data, an automated CLM system exists exclusively for the task of handling contracts. This means organizations can achieve better contract management standards, leading to fewer data entry and storage-related errors that often occur when transplanting and retyping information from other platforms. (281) sales@prodagio.com 3

4 Step 3: Make Sure Everything Contract Related is Searchable, Including Third Party Agreements Many contract teams have to deal with contracts from outside sources on a daily basis. However, expecting these other parties, such as clients and suppliers, to adhere to your standards and formatting guidelines isn t always feasible. Sometimes you do not have a choice in the matter, especially when dealing with large entities. Instead, you can make sure your CLM system gives you the ability to transplant this data and information automatically and accurately into your new central repository. From here, you and the contract team can search and retrieve this contract data with minimal effort, saving time and streamlining the development and management process. Once both sides agree on the contract, nobody really wants to spend extra time thinking about the details until they absolutely need the information. However, with a searchable CLM approach, this contract data can stay at the forefront of your mind, leading to some serious gains for your company. For instance, with easier access to third party information, you can complete tasks that were once time-consuming such as identifying risk in market changes, tracking contract performance over time, and creating quality contracts in general with relative ease and expedience. To make sure you can take advantage of these benefits, work with a repository that includes the following three features. First, you need the ability to search for specific text throughout contracts, especially the body. This gives you and the rest of the contract team the ability to cut down on time spent browsing through lengthy documents. You should also be able to include data and restricting parameters in these searches. For instance, consider the scenario in which you d like to search for every contract with state of Texas determination, but only within the confines of the last six months. With this kind of capability, this task would go from being a time-consuming headache to a few quick clicks. Finally, the ability to search third-party agreements in the same manner as above completes the trifecta. When it comes to a great contract management system, moving data from inherently limited file cabinets and personal memory to a searchable virtual index gives your contract team a massive advantage that makes daily work tasks far more manageable. When all of these features come together, your contract management system can truly excel through the storage and retrieval phase of the document lifecycle. Step 4: Create and Share Standardized Templates Instead of Using Your Last Contract as a Template It is vitally important to standardize the contract development process as well. With templates that use preapproved legal language, you can simplify contract creation and negotiations. Naturally, you can update and modify these templates as needed. However, simply having these tools as part of your CLM process can remove the need to build from of the latest contract, an inherently risky approach. To mitigate risk, work with a template that doesn t base itself solely upon the last contract. Instead, you should take a more strategic and high-level approach to mitigating risk across all of your contracts. Furthermore, the use of electronic clauses and templates can help build a more consistent approach to the development process, lowering risk without incurring massive amounts of legal fees and expenses. To properly implement standardization with these tools, consider a few of the cornerstones of the process. First, team up with your legal department or advisor to ensure that only approved and binding language makes the cut. Once you ve accomplished this, you can use your firsthand knowledge of common areas of negotiation and revision to turn these portions into clauses and fallback clauses. After this part of the process reaches completion, you can then empower your sales or purchasing team with the information and tools they need to negotiate and create legal contracts without having your legal team reviewing every document. For businesses that need to handle large volumes of contracts, expediting this process via a contract management system can pay major dividends. (281) sales@prodagio.com 4

5 Step 5: Buy a Packaged CLM System That Works from the Cloud Instead of Developing Your Own Alternative The final piece of the puzzle is the choice to commit to a packaged CLM solution, not a custom-built one that will be hard to adjust and scale as your needs change. You also don t have to spend vast amounts of time and money on new hardware, and you ll save your IT department the time and effort it takes to build a custom solution from the ground up. When it comes to prebuilt CLM options, the industry has many robust and reliable offerings, including Prodagio Contract. This choice requires careful consideration. If you currently use a CRM or ECM to manage contracts, you lose out on a significant amount of best practice features and efficiency enhancements. These tools, unlike a proper CLM system, weren t designed with the specific capabilities contract management requires in mind, leaving contract teams unable to extract the most amount of value from contracts. A packaged system comes with some very useful features that go far beyond storage, ensuring you get the most from contracts. First is an approach to authoring that simplifies the contract creation process. Once the contract team finishes developing the contract, term management features help guarantee that contract performance hits peak levels throughout the duration of the document. Finally, analytics that cover the entire contract portfolio maximize value and performance from your entire stable of contracts. You should also look for a software package that is configurable enough to adjust to the needs unique to your industry. Depending on your business, management requirements might fall more on the buy-side of things and less on the sell-side, or vice-versa. For example, the contract data that companies in the oil and gas industry track is considerably different from what media and entertainment firms require from their contract management systems. After you key in on the specific needs of your company, you can pick a smart and effective automated contract management system that gives you the data you need in a quick and effective manner. Bringing All of These Steps Together Of course, dealing with contracts can require digesting a lot of information, so a little review will keep things in perspective as you work toward strong contract management via an automated CLM system. As you build the right approach, remember that keeping all of these documents within a central repository for these documents can prevent some major headaches and help your contract team achieve a new level of organization and efficiency. Additionally, cutting out spreadsheets and using this repository to track important events can help you gain better control, allowing you to hit key dates and milestones. As you integrate contracts into your repository, third party documents will obviously need a home in the collection as well. Working with a system that can transcribe these documents into a readable format you can search is a major priority. For this reason, and those listed above, purchasing a packaged CLM system such as those offered by Prodagio can help you solve your contract issues quickly without a prohibitive investiture in new hardware or IT labor. You can even work from the cloud to further reduce the amount of services required to get the system up and running. Finally, working with standardized templates rounds out the process and gives you the ability to minimize risk and expedite the development and negotiation process. Now that you have all this information in hand, feel confident that you will make the right decision when it comes to integrating a contract management system that gets the most from every document. Learn more at (281) sales@prodagio.com 5

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