To grasp the importance of contract management, you just have to compare companies that follow its principles with those that don’t care about them. The latter usually lose 9% of their revenue annually while the former grow their profit steadily.
Losses are inevitable if you spend too much time creating standard documents, misplace the necessary files, and miss deadlines. But if you’re sick and tired of it, contract management software is your go-to. Curious to learn more? Read on to discover the benefits and importance of contract management software for your business.
How to know if you need contract management software?
Reason number one for adopting contract management software is your current management system working too slowly and inefficiently. But how to know if something could work better? Check these clues:
- Your employees spend hours or days drafting and signing typical contracts
- Finding the necessary document in the storage takes ages
- You lose attachments or contract files
- You miss deadlines for document renewals
- Any employee, regardless of their position and role in the project, can access documents
- Tracking changes in documents and finding the proper version is a nightmare
- Contract re-evaluating and report compiling feel like a drudgery
If at least one of these statements speaks to you — you definitely need contract management software. Let’s see how it can help you.
5 benefits proving the importance of contract management software
Automated contract management beats manual in so many ways. Its advantages make contract management software a must for any business that wants to thrive. Let’s explore them to figure out how they can improve your work.
Each contract undergoes the following lifecycle:
At each stage, your employees may bump into issues delaying their next step. For example, a manager must manually draft a document and email it back and forth to get approval. It might take days.
But contract management software removes this problem.
It takes minutes to create a document using automatic template-based drafting. Managers only need to enter the customer’s data, select clauses, and let the system generate the document automatically.
Every stage of the contract lifecycle can be automated, from drafting to renewal. It means your employees won’t have to waste hours on manual tasks as the system completes them in minutes. At the same time, the software will forward top-priority tasks requiring human attention to assigned employees.
As a result, your employees can save up to 40% of their time and increase their productivity.
Better contract performance
Your contracts can also work better if you use automated reporting. Contract management lifecycle (CML) systems collect and analyze data to create reports for you. More advanced, AI-powered versions can even suggest what indicators to pay attention to.
For example, you may find that your vendor doesn’t fulfill the contract terms or that other vendors offer more benefits for the same price. Knowing that, you can revise contracts in good time and terminate unfavorable conditions. You can also set the best terms or work processes for future agreements.
Lower business risk and improved compliance
Complying with all terms and regulations is a challenge for every organization. But it’s especially difficult when you work with hundreds of contracts. So, if your storage system is poorly structured, you will most likely face these three problems.
First, you can easily miss or lose the document required for audit and reporting to clients or government agencies. In this case, you can expect either a few days of frantic searching or a fine.
Second, you risk breaking data protection law if anyone can access documents with a link or file. Your employees might leak private company or customer information on purpose or by mistake if they can read, copy, or download contract files, while you have no control over them. The risks are even higher if you have no protection from external threats, like hackers, in place. In this case, you won’t wait long for a lawsuit.
A third common problem is an untimely renewal of contracts or forgetting to revise them. It can cost you thousands of dollars if renewing the agreement on the same terms is not profitable. Or you might lose your profit if the vendor stops supplying you with the necessary product because the contract has expired.
Contract management software solves these problems in a jiff.
In the first case, you can quickly find documents using the search engine, keywords, and filters. In the second case, you can track activities and set up permissions to access, read, change, or copy documents for different employee roles. Meanwhile, all your files will be securely stored in cloud storage with the highest level of protection against external threats. Finally, in the third case, the system knows when contracts are about to expire and notifies managers to revise or renew them.
So the risks of losing profits due to fines or missed opportunities are significantly lower
Better customer service
Contract management systems improve customer service in a few ways.
First, the more time your employees have, the more they can devote to customers.
Second, the real-time editing service provided by CML systems cuts days of back-and-forth emails. You can refine all the contract details in real-time. Your clients can comment online right in the contract draft and get notified of any changes. They don’t even have to log in.
Third, pre-approved templates reduce the likelihood of errors and typos in drafts. This means that the document’s final version is truly final.
Finally, e-signature removes all paperwork and the need for postal or courier delivery. All parties can sign a contract online with a couple of clicks.
As a result, you spend far less time on formalities and keep your customer happy with the speed and quality of service.
Lower costs and higher revenue
All these benefits lead to the main advantage — you increase your revenue.
By freeing your employees’ time from routine manual tasks, you save money on hiring and training additional staff.
By improving contract performance, you avoid profit losses due to unfavorable conditions.
By reducing non-compliance risks and missed deadlines, you avoid fines and lost financial opportunities.
And finally, by providing the best service, you get loyal customers and partners.
This way, contract management software works for you and your profit.
It often takes a lot of work to determine how important things are. But not in the case of contract management: it gives you concrete, quantifiable results. After adopting the CLM system, you can easily measure how the contract lifecycle, team productivity, and profits improve.
The best thing is that you can experience all these benefits without any risks — just request a free demo of the AXDRAFT CLM system. Our team will guide you through its features and tailor the platform to your needs.
The major benefits of effective contract management are:
- Better team productivity and performance once mundane tasks are automated
- Shorter time of contract lifecycle management
- Lower risks of losing profit due to missed deadlines or non-compliance
- Shorter drafting time
- Fewer errors and typos
- Higher revenue from contracts
A contract is a legal document where the parties fix their obligations and all the terms of their agreement. With effective contract management, the company ensures full compliance with these terms, evaluates their cost-effectiveness, and has greater transparency for timely contract change, renewal, or termination.
Contract management software automates daily manual tasks related to contract lifecycle management. This type of software can perform different parts of work, including:
- Contract drafting based on pre-approved templates
- Forwarding contracts to assigned employees for approving and signing
- Smart document storing
- Building reports
- Sending notifications about deadlines, document changes, and other critical issues to managers or clients