Why is contract automation so important in today's corporate world?
Contract management is critical for companies as it is the monitoring of contracts through a well-documented system and process that enables the monitoring of agreements, including their terms, transaction components and recoveries. The importance of contract management in any business is to ensure that key people in the business understand their responsibilities and promises to customers and suppliers and that they are honoured.
Pain points in the absence of contract automation
You have seen the contract management process described above and it has been underlined that contract software will help you avoid bottlenecks and friction when you are dealing with many contracts. Here are some of the daily problems you face if you do not use or implement contract automation:
1. doubling the work
Thecreation of a contract starts with a Word document, which is then submitted to the other side for evaluation before being completed in further third-party programmes. Imagine what it would be like to do this work every day. The following infographic shows what an inefficient contract workflow looks like:
2. increased time expenditure
Your time investment increases especially when you are looking for old documents. You have to dig deep into the keywords to find it, either because the paper is lying somewhere in the office or because it is from a previous email. This is a task you have to do several times and it takes a lot of time.
The time required for drafting contracts in the sales process can be significantly reduced by 50-70% with top.legal software.
3. manual work
Printing, scanning, checking and posting manual documents takes up a lot of time. This means that you cannot spend your time on things that help the legal department generate more revenue because they are not busy doing manual work most of the time.
According to estimates by top.legal, the contract management software saves 85 % of the time spent on administrative tasks by the sales team.
4. unsatisfactory experience with counterparties
We already live in a technologically advanced world, but if your contract signing process is still manual and outdated, as it was in the 1970s, you won't stand out and companies will be reluctant to work with you. And most companies put the quality of those business relationships in a black-and-white signature process like this:
5. version control chaos
As all contract amendments are usually sent to the other party by email, you can expect turmoil whenever you change the contract. In order to finalise the final draft, you need to review previous emails to see if you have missed any comments. This is a difficult and time-consuming task.
How does a typical contract management automation process work?
According to Aberdeen Research it takes a company an average of 20-30 days to create, negotiate and close a contract.
With an automated contract management solution, your company can get the most value out of the agreements you've worked so hard to achieve, while reducing your risk. Contract drafting, evaluation, negotiation, execution and recording are just some of the parts that make up the entire contract process. However, with the right approach, revolutionary contract management software and the right tools, these activities can become the simplest component of the entire contract process.
Use automatic templates for drafting contracts
Templates ensure that documents are consistent and correct. You don't need to worry about human error in drafting or using older document versions. By choosing a template that suits your needs, your stress level is minimised.
Using common templates speeds up your transactions because you don't have to create a document from scratch or search your files for previous templates.
Use self-service contracts to your advantage
Self-service contracts allow users to create contracts without consulting the legal team. Self-service contracts significantly minimise the time needed to create traditional contracts such as NDAs, as there is no need to consult the legal department each time.
With pre-approved and readily available self-service templates, each team member can be sure they are using a template with all compliant fields.
Create workflows for approval
The entire contract lifecycle process is simplified and standardised through an automatic approval mechanism. With this method, the company can spend less time searching for documents and more time doing the actual work.
Processing times for applications, expense claims and approvals can be reduced from more than a week to a few hours in most companies if implemented efficiently.
Automate the signature process
Signing the contract is usually the last step in the contract management process. If you do not automate the process, collecting signatures can take weeks or months. This is especially true for contracts that require multiple signatories. It is even more daunting because it exposes contracts and sensitive information.
The process can be accelerated through the use of electronic signature. Using stand-alone software is impractical, so investing in an automated contract management system with an integrated function is a good choice. Typically, managing directors are responsible for signing, but department heads may occasionally be authorised to sign as well.
Use APIs to link contracts
APIs enable teams across your organisation to share knowledge, take ownership and work autonomously. Your contract automation software is designed to be used by all your business teams. Therefore, it is critical that it integrates with the various SaaS tools used in your business and can launch contracting from there.
Make the most of contract reporting
Companies often focus on other factors and neglect contract reporting. However, it can reveal a lot of information about any business. A great way to do this is to give all employees involved the opportunity to comment. The reports show how the contracts have performed and how they affect the overall performance of the company.
How can contracts and agreements be automated?
Legal teams can use a contract automation platform to create an automated workflow that allows business partners to draft their own contracts without having to involve the legal department each time. After selecting a contract automation platform, users would then complete the following steps.
Key features of Contract Automation
Powerful contract editor
A full-featured native word processor for editing and modifying legal documents online without sacrificing experience.
Allows multiple users, including counterparties, to edit a document simultaneously. With an automatic save function, all changes are saved in a single version.
With time and date stamps, a consistent flow of all users can track all changes to the document. Contract automation software should also be able to track all third party contract versions and revisions.
Contract databases and reminders are automated
Stores all contracts in a secure and chronological order. Tags and filters can be used to quickly sort and retrieve contracts. Contract automation technologies must also be able to automatically detect the expiry date of contracts, send renewal notifications and reminders to the appropriate teams and avoid opportunity losses.
Enables internal actors and contractors to sign and execute contracts faster, easier and more consistently.
Live demo of contract automation software:
Watch this smooth and interactive demo where we present our product:
Automate contract templates with top.legal contract automation software
1. confidentiality agreement (NDA)
A non-disclosure agreement allows the parties to agree on confidential information that they want to discuss with each other but not with third parties. When it comes to sensitive or proprietary information, such as terms and conditions, product details or trade secrets, NDAs provide confidentiality and data protection. NDAs are among the most common contracts in the business world and are used everywhere from sales to employment to publishing.
2. framework agreement for services (MSA)
A company and its client(s) agree on most of the parameters that will govern their future relationship in a Master Services Agreement (MSA). It may be an addendum to an order form and refer to various DPAs, SOWs and other three-letter acronyms, but it is the legal and commercial framework that governs the relationship. This form of contract is common among fast-paced sales teams, especially SaaS companies like the high-growth technology and services companies we often work with.
3. letters offering employment
The cover letter is an important point of contact between the company and the candidate during the negotiation process. It is the document that makes the job offer to your best candidate, including basic information about the job, dates of remuneration, terms of employment, start date and more.