Employing a streamlined contract management system not only saves time when generating and negotiating contracts, standardized contract content speeds approvals, simplifies management of provisions, and creates more time in your day to focus on other strategic business initiatives.
In the first post of this blog series, High-Performance Contract Management: The Time-Saving Value of Centralization, we examined the critical importance of having easy access to your contracts and visibility into your contract data. Managing contract provisions and requirements can make or break operational performance since we simply can’t manage what we can’t see. We also introduced the three building blocks to high-performance contract management, and outlined how centralizing and digitizing contract documents is the first step to gaining powerful visibility into data throughout your contract portfolio.
Are you ready to take the next step?
How do you currently manage your organization’s agreements? Do you find yourself or your team spending time digging through mountains of hard-copy documents and electronic files looking for current provisions or updated versions? Are other tasks piling up while you spend time reviewing virtually the same contracts repeatedly? If this sounds familiar, you are not alone.
Standardizing your contract medium, templates, and clauses creates efficiency and generates greater returns on your investment of time, effort, and resources. Further, standardization plays a key role in ensuring compliance with business rules and regulatory requirements, minimizing financial penalties, and reducing reputational risks.
Where to start?
To yield positive, measurable results in administering and managing contracts, start by:
- Standardizing the medium in which your contracts are created and stored,
- Developing contract templates for your most common contracts, and
- Establishing standard contract terms using a clause library.
Define Your Contract Medium
With a globalized economy and the digital age firmly in place, paper-based contracting no longer supports the way or pace of business today.
Many organizations still create contracts electronically and email them for execution; unfortunately, the digital efficiencies often stop there. In addition, if returned electronically, contracts often remain as attachments to the emails or are printed and filed with the contracts returned by mail. While this process is inefficient, it creates an even greater challenge for an organization: the inability to mine the contractual data for business intelligence that can reveal opportunities, drive decisions, reduce risk and increase revenue.
Converting contracts to text-searchable digital files allows the information to be reviewed more quickly. It also allows them to be analyzed in multiple ways — using advanced data mining and machine learning tools to uncover valuable business insights buried in the text.
Contracts stored in a digital, electronic format simplify management while also providing cost efficiencies and improved productivity.
Identify Template-Friendly Contracts
Creating contract templates is a must. Drafting a new contract when a similar and approved version already exists wastes time for contract managers, as well as legal, finance and other stakeholders who are required to review and approve the same contract language repeatedly.
Establishing and implementing pre-approved contract templates can generate value across your organization:
- Templates eliminate the need to recreate, renegotiate, and obtain approval for each contract, saving time and resources
- Productivity drives faster contract execution and a stronger focus on performance
- Pre-drafted, pre-approved language creates uniformity across similar contractual arrangements
- Familiarity with templates and the terms within them makes it easier to perform and track obligations
- Building rules and regulations into templates supports compliance
When determining the types of contracts that could be standardized using a template, consider those that include data that 1) drives your business processes and 2) defines requirements.
You will want to design your templates for the most frequently used contracts in your business, and make sure to include pre-drafted language that has been pre-approved by legal and other key stakeholders. Some examples of contracts that lend themselves to templating include non-disclosure agreements, employment agreements, and sales agreements for standard products or services.
Standardization is the second building block for high-performance contract management. Standardizing contract content will minimize risk, streamline time-consuming tasks such as reviews and approvals, and increase productivity across the organization.
When your contracts are negotiated and executed faster, you’re going to be able to collect on them sooner. If they are automated and accessible, you’re able to optimize performance and execute on your responsibilities.
Move to efficiency
Managing complex contracts doesn’t require complex administrative work or excessive office space. Implementing the right tools and technologies supports a productive and streamlined contracting process which is a valuable resource to an organization.
In our next blog post in this series, High-Performance Contract Management: Using Standardization to Uncover Hidden ROI, we will outline considerations for converting your contract medium to fully digital, searchable files and the five steps to creating contract templates and clause libraries that put you on the path to high-performance contract management.
You can find a more detailed, step-by-step checklist for standardizing your contracts in our eBook, 3 Building Blocks for Cultivating a High-Performance Contract Management System.