Creating and managing business contracts is a daunting task. Not only do you need to comply with numerous laws and regulations, but you also have to ensure that you renew the contracts on time. And if your business deals with hundreds of contracts, things can get complicated quickly. Contract Management Software
That’s why businesses rely on contract management software as a service. It makes it easier for legal and contract administrators to create, negotiate, and renew business contracts. Furthermore, it acts as a central repository for all documents, ensuring you can access contract-related data anytime and anywhere.
This blog will explain a contract management system, why you need one, and the features to look for while choosing the best one suited to your business needs. Let’s get started.
What is Contract Management Software?
Contract management software is a tool that helps you manage your contracts. It lets you track the details associated with your agreements, such as who’s involved, what they’re supposed to do, and when payments are due. In addition, it allows you to create professional-looking contracts without legal assistance.
A good contract management system enables you to manage the entire process, including the following,
- Create contracts
- Collaborate with team members and third parties
- Get contract approval
- Sign the contract
- Store and track the documents
A contract management tool can streamline the entire process when integrated with an ERP system. That’s because an ERP is a database of information that can auto-populate the contractual fields, such as vendor details.
For instance, construction software in UAE, like FirstBit ERP, can help you manage everything from project costing and accounting to reporting and documentation. When integrated with a contract management system, it also allows you to create and manage contracts from one place.
Why Do You Need a Contract Management System?
Contract management systems allow companies to manage contracts and ensure they meet their obligations. Unfortunately, businesses, big or small, that don’t have a contract management system are putting themselves at risk of lost productivity and non-compliance. Here are some of the ways that contract management software can improve efficiency.
- You can manage your contracts in a central location. Instead of searching through emails or spreadsheets, you’ll have all your contracts in one place. This makes it easy to find what you’re looking for when you need it.
- Contract management software helps automate processes with smart contract templates. It automatically fills the fields with relevant information from past agreements.
- It provides an audit trail for every action taken on your contracts and agreements, so you always know who did what, when, and why. It also helps track progress toward completion so you can see when things might go wrong or are going well from an efficiency standpoint.
- It makes it easier for everyone involved in a project to know what they need to do, when they need to do it and how much they will be paid for their work. This ensures no surprises or misunderstandings during or after a project is complete.
- Today, you can find contract management software as a service (SaaS). This means teams can collaborate, review, and approve contracts from anywhere in the world. As a result, it speeds up the entire process.
- Depending on the type of ERP system you integrate with your contract management software, it can allow you to create accurate budgeting and costing. As a result, you can evaluate your financial position and identify potential problems early.
Contract Management Features to Look For
Now that you know what a contract management system is, let’s understand the features you should consider before finalizing one.
- Templates: It should allow you to choose from standard or custom contract templates that have been pre-written by lawyers and accountants. It should also let you create your own custom template to fit your unique needs.
- Collaboration: Share contracts with others involved in the project, including vendors, clients, and co-workers. Work together on documents in real time and get comments back instantly so everyone can see what’s been said at every step.
- Approval workflow: It lets you set up different approval processes for each contract that needs approval before being sent for execution to a third party. You can set up automatic approval or rejection rules to save time while ensuring it meets the company’s guidelines.
- Document storage: A good contract management system should be able to store all documents related to your contracts, such as proposal documents and agreements themselves.
- Document versions: It’s important to know what changes have been made over time in any document. This will help prevent mistakes when signing contracts or proposals.
- Email: Send contracts as PDFs or email them directly from the app to save time.
- eSignature: This feature allows you to sign and send documents electronically, eliminating the need for faxes or shipping.
- Renewal reminders: Your contract management software should alert you when an agreement is about to expire, so you don’t miss a deadline or payment due date!
- Data security: Contracts are confidential, and you’d not want unauthorized access. Thus, look for a tool that offers role-based access and encryption for all data in transit and at rest, has a comprehensive data retention policy, and regularly tests vulnerability.
Who Uses Contract Management Software?
Companies across domains use contract management software to save time and money while reducing risks. Here are some departments that benefit from a contract management tool.
The HR team processes lots of contracts related to employment. Thus, it is vital to have a contract management system that allows them to create and share contracts with candidates quickly. They can also get the contract signed digitally, making onboarding seamless.
These teams are responsible for purchasing goods and services from third-party suppliers. They need to create contracts with vendors and suppliers to avoid legal issues down the road. It’d include the cost of products, payment method, credit terms, etc.
Finance teams use contract management software to forecast revenue and manage billing details and budgets. For instance, you can analyze your payment obligations and compare them with payment receivables to understand your financial position. In addition, you can create a workflow to understand your responsibilities for upcoming contracts and plan more strategically for unpredictability.
Sales teams are often on the run to close deals quickly. However, you wouldn’t want potential clients to wait for days or weeks to receive a legally-binding contract. So instead, you can speed up the process and get things done within a day using a contract management software template.
Marketing teams must create contracts for services like business partnerships, influencer agreements, and photography releases. Thus, they need a contract lifecycle management system to avoid legal issues.
How to Choose a Contract Management System?
If you’re thinking of investing in a contract management system for the first time, here are some things to consider.
- Choose cloud over on-premise: Contract management software as a service (SaaS) offers more benefits than its on-premise counterpart. That’s because it can be accessed from anywhere, is scalable, secure, and doesn’t require a huge upfront investment.
- Experience the software: Try the software before you make the payment. Most tools have a free trial that gives you hands-on experience with the software. This will give you a better understanding of whether it is the right fit for your business.
- Customization: If you want your contract management system to fit into your existing workflows and processes, make sure it’s flexible enough for customization.
- Check integration options: A good contract management system should integrate seamlessly with other systems you use in your company. As a result, employees won’t have to spend time switching between different programs to find contract details or make changes.
- Look for mobile capabilities: Mobile technology has made everything easier, so your contract management system must have mobile capabilities. This will make it easier for employees working in the field or projects that require being away from the office for long periods.
- Security: Contract management systems should be secure and compliant with industry regulations. This includes having an audited security infrastructure and maintaining compliance with ISO 27001 standards.
Contract management software allows you to create legal contracts with vendors, employees, and customers. However, creating and managing contracts is time-consuming and prone to errors. That’s where a contract management system can help. It enables you to automate and centralize the process while keeping confidential data secure. Follow the tips mentioned above to choose the best contract management system for your business.