Do you remember in Bruce Almighty, when Bruce (Jim Carrey) opens the drawer when he meets God (Morgan Freeman) for the first time? That’s what contract repositories looked like in most companies twenty years ago: lots of drawers and shelves with hundreds of papers stuffed into them. Unfortunately, some companies continue this storage practice even today, in the digital era.
Some businesses have moved forward and use built-in contract repository systems in enterprise resource planning software, Google spreadsheets, or simply folders with hundreds of PDF files. All these options can be considered repositories, which are more convenient than their paper counterparts. However, these repositories still only store contracts and don’t help you manage them.
These days, most organizations require more efficient and automated solutions, called smart repositories, for storing and managing contracts.
In fact, in 2021, 81% of companies surveyed by World Commerce & Contracting were considering implementing contract automation. If you don’t yet understand why you should spend money on a smart contract management repository, continue reading this article. We promise you’ll see their value by the time you finish reading.
What is a smart contract repository?
Smart contract repositories, like their predecessors, store documents, but they’re smarter: every document has metadata (data about data) assigned to it, either automatically or manually. In addition to using artificial intelligence (AI) to discern patterns in the metadata, smart contract repositories have several additional useful functions:
- Built-in search engine to filter and sort through contracts
- Automated workflows
- Automated reports based on structured data
- Notifications of important deadlines
With a smart repository, you can constantly monitor and manage your contacts throughout their lifecycle with less effort, while the system does most of the manual work for you.
Why is it essential to manage and monitor your contracts continuously?
Putting a signed contract on the shelf and not looking at it for years is not the same as throwing a book about healthy eating in a drawer. Yes, they are both boring, yet useful, but unlike the book, a contract contains information about prices, parties’ obligations, and rights, and as a result, contracts affect your profit. So, if you don’t continuously monitor and manage your contracts, you may encounter problems like those described below.
Wasted time and growing headcount
Without digital access to contracts, employees must embark on a quest whenever they need to find and collect a contract’s supporting documents. They need to request records from multiple departments, get permissions, unify formatting, ping stakeholders, and look for relevant clauses.
While they’re occupied with their quest, you need additional employees to take over their tasks. As a result, personnel spending can skyrocket.
Dissatisfied employees
Few people love paperwork, even if it’s a part of their job description. But when using legacy repositories, working with contracts requires massive amounts of paperwork and manual analytics.
For example, if your legal department wants to evaluate their company’s performance, the lawyers need to manually review contracts to see whether obligations were fulfilled. This takes time and, let’s be honest, bores them to death. It’s unlikely that this is what a lawyer was thinking about doing day in and day out when they went to law school.
Consequently, these employees may be dissatisfied with their job and feel like they’re wasting their potential. Dissatisfied employees mean high turnover, which leads to high human resource costs.
Delays in making decisions and fulfilling obligations
Contracts stored out of sight are easy to forget about. This can mean missed deadlines, penalties for non-compliance, and delayed contract renewals.
This situation is not uncommon among companies that use legacy repositories. According to World Commerce & Contracting research, due to inefficient contract management, revenue loss for the average company is 9%.
Unwanted contract renewals and unreviewed terms
In some cases, contracts are automatically renewed if one party doesn’t cancel the renewal before a specific deadline. In other cases, companies manually renew contracts and keep the same conditions without noticing bottlenecks that could have been fixed by changing the terms of the contract. In both cases, companies experience losses when they don’t review contracts and remove unfavorable terms.
As you can see, lack of contract management can be problematic, and solving the problems that arise requires a lot of time and effort when contracts are handled manually. That’s why you need a contract lifecycle management (CLM) platform with a smart repository. This will automate much of your employees’ routine work.
What features are vital for a smart contract repository solution?
Dozens of smart contract repositories are available, and they differ in terms of features and storage options. You should consider these essential features before you choose a smart contract repository solution:
- Data protection from external hacking threats and internal data leakage risks. Find out what data protection measures solution providers use and whether they are sufficient.
- Automated templates and contract management. Choose a repository with the highest level of automation to improve your workflow.
- Convenient built-in search engine. Double-check that the repository has all the filters, sorting options, and search features you need for convenient work. AI-based repositories have the most detailed search capabilities, such as metadata search, so consider them first.
- Clear analytics. Choose an option that offers you the most comprehensive and convenient analytics in the statistical, table, and graphical forms.
- Machine learning (ML) at the core. ML offers more and more automated and advanced contract management over time as algorithms learn and adapt to your company’s needs. If you’re thinking about the future, machine learning is a must-have.
- Availability of integrations. Double-check that the repository can integrate with the services and tools you already use in your business processes. This way, you avoid jumping between systems and ensure smooth data transfer.
- Flat learning curve. The easier it is to learn, the faster your employees can get to work.
Learn, compare, and choose the smart repository option that suits your company best. Since smart repositories are often part of contract lifecycle management solutions, don’t forget to communicate with your software providers; they can give you all the details and offer you a personalized solution.
How can a smart repository help you?
You’ll see benefits just a few months after choosing and applying the best smart repository for your company.
- You’ll cut personnel costs. Automation relieves your employees of routine tasks, gives them more time to focus on more complex tasks, and you won’t need to hire additional staff.
- You’ll increase job satisfaction and efficiency. Employees can focus on lawyering and strategic company objectives. Job satisfaction increases because they feel more highly valued for their contributions to more complex tasks that require professional knowledge.
- You’ll improve contract performance and increase revenue. When you centralize all your contracts and can easily find what you need, your company is more efficient.
Automated analytics will help you see where you can revise and improve contract clauses. Notifications will help you keep up with deadlines. Consequently, you’ll reduce losses associated with human error and bottlenecks.
- You’ll increase the security of your data. A hierarchical access system makes it almost impossible for employees to download, copy, or use confidential contracts. Storing contracts in the cloud and creating documents without passing them through the network makes them more immune to hacker attacks. You can feel confident that all your contracts are secure, as is your reputation, without the threat of lawsuits.
You’ll see even more benefits if you choose a smart repository as part of a СLM platform. For example, AXDRAFT’s СLM offers multiple perks, including customization for different company workflows, hierarchical access to prevent data leaks, an e-signature option, and most importantly, AI-based document drafts.
That last feature speeds up contract management processes. Case studies of Slack, Carlsberg, and other companies showed that after implementing a CLM, employees spent no more than 5 minutes on each document.
Conclusion
Continuous monitoring and management of contracts are essential to successfully operate a business, regardless of its size. Still, this process doesn’t have to be complicated and time-consuming for your employees. Fortunately, there are smart contract repositories and modern automation software.
With ML at the heart of an AI software solution, you can automate most contract management processes and make them error-free. You’ll no longer miss deadlines or make avoidable mistakes in contract drafts. And you won’t spend hours searching for the right contract. Switch to a smart repository instead of outdated office software.
If you still have doubts about whether this solution is suitable for your company, check it out for yourself on the AXDRAFT CLM website or request a demo.
FAQ
A contract repository stores all of a company’s contracts. Today, when talking about contract repositories, we most often mean electronic databases in various software programs. But cabinets with paper versions of documents are also repositories.
A contract database is the same as a modern contract repository, which is a searchable system that stores all contracts and their supporting documents.
A contract lifecycle management (CLM) system is software for automating contract management across all lifecycle stages, including:
- contract requests
- drafting
- negotiation
- execution
- management and compliance
- renewal
CLM systems include various features to automate workflows, like a smart repository, contract analytics, and management of access levels.
A contract library stores clauses used to create contracts. It helps you quickly find the necessary elements, including standard, alternative, and modified clauses, as well as sub-clauses, to draft new contracts.