For a contract’s existence, two or more parties must come to a common ground and set several rights and obligations. All the parties involved in the contract are supposed to abide by the contract, and in case of any disagreements, they all refer back to the contact to settle the issues.
Most businesses have invested in contract management software to create negotiations, data analysis, renewal, and signature of their legal contracts. It increases the businesses’ self-sufficiency and unity.
Over the years, there has been an increase in the complexity of making contracts, and they are carried out on several online platforms. Moving to the digital platforms reduced the workload of signing hard copies, data storage, operation speed, and the associated costs; hence most companies are adopting the software.
Some of the terminologies used.
It is a unique feature in the software that allows the other standard and frequently used software packages to work together with the specific contract platform.
The contract parties can sign the agreed-upon contract electronically while using smartphones, computers, or tablets.
Lifecycle of a product
Lifecycle describes the period that the contract will remain relevant. An example would be a three-year contract, and after the elapse of time, the agreement will no longer be applicable unless it is renewed. Some of the contract management systems have a setup system that gives updates and alerts to inform the contract’s expected expiry users.
Upon parties signing a contract, all the contained obligations become effective, and the associated deadlines arise as stated during the lifecycle of the contract. Managing the set obligations is crucial to all the stakeholders.
Negotiations aim to incorporate all the parties required and make appropriate changes before finally having the final agreement. Contract management software helps the parties make all their changes without writing them down on a piece of paper.
It is a contract database that needs to be structured and searchable, and it houses all the businesses’ contracts (post-signature area).
Most businesses commonly create templates for a majority of their documents when they use the contract management software. The templates are used to create more similar documents instead of starting from scratch; for example, a document’s details include; names, dates, and salary.
It is the ability to look at the previously done versions of the contract before agreements were attained.
Redlining in contract management software entails making changes in a visible document to the interested and subsequent users. The technique was adopted from proofreaders who marked and highlighted hard copy documents using red pens or pencils. The redlines in word processing visualize the made changes during document editing.
Teams using contract management software
Various teams in business use the software differently depending on their specific needs.
Human resource teams
During the recruitment process of new employees’ most prominent companies, they make many contracts. The human resources teams are non-lawyers; hence they mostly rely on a contract management tool that helps generate contracts for the newly hired company members that are lawyer-approved. Some of the installed software has excellent integrations with human resource teams’ tools daily.
Lawyers are the greatest contract drafters and managers, but they also need the contract management software’s efficiency to manage templates and generate the necessary documents daily effectively.
Most large business organizations have highly dedicated teams and are focused on procuring from their selected vendors’ various goods and services. The procuring process requires processing the suppliers’ terms, signing documents, and tracking the contract’s renewal dates. The contract management software designed for procurement teams can effectively seek necessary approvals from the business stakeholders.
The sales team often adopts contract management solutions to reduce obstacles that may arise before closing a deal and quickly generate the contracts without necessarily relying on legal practitioners for contract creations. They usually search for solutions with excellent integration with software that they use daily.
Contract management software usually helps increase transparency and visibility in contracts to assist in the reconciliation of billing and contracts and accurately generate their business expected accurate revenue.
Why you need contract management software
Businesses and legal practitioners invest in contract management collaboration when they have huge volumes of contracts that are not easily managed using word and shared drives. In the case a business signs in more than twenty contracts monthly, it benefits mainly from investing in the software. Investing in the contract management software reduces the extra cost of hiring contract specialists in business, saves time, and increases their operational efficiencies.
Importance of contract management
When contracts are poorly managed, they result in a business’s exposure to severe legal risks. A lot of time is wasted manually handling the arrangements, hence reducing the number of contracts signed in a company compared to when it adapts the managing contracts’ digitized process.
It helps reduce friction between teams and improve velocity reducing harm and liability of a company’s deal closure. Improves the lifecycle management by ensuring the critical dates are not missed and timely renewal of contracts.
Cost of contract management software
Most offers given by contract management software providers are monthly or yearly subscriptions. There are discounts for the clients who use the annual subscriptions, and they are favorable for businesses with high contract volumes.
There are low-cost and free plans that work perfectly for the small businesses that handle a standard number of contracts. The only problem associated with the low-priced plans is that they rarely include critical options like reporting, branding, and advanced customizations.
In conclusion, contract management software aids in handling different amounts of contracts to a business and helps improve their efficiencies in their management services, including; signing contracts, hiring, and tracking contracts. Depending on the business’s size, research needs to be carried out to adopt the relevant software.