December 22 by Eric Dreshfield
Effective Contract Automation in 8 Steps
1) Request Automation
By automating the contract request process with a guided self-service tool, individual business groups can request the contract types they need and contract creators—usually in the legal department—can respond according to measurable service level agreements they have with their business teams.
2) Automated Contract Drafting
With contract lifecycle management, the drafting process can be significantly automated with centralized templates that are automatically filled in with contract details. Once your lawyers have approved contract templates one time, software can reuse the templates over and over with almost no intervention.
With contract management software, all changes can be tracked in real time with visibility to all involved on your side, maintaining accuracy and consistency throughout negotiations. Since most of a contract manager’s or lawyer’s time is spent working with Microsoft Word, it’s important that your CLM system allow users to perform the negotiation tasks directly inside the tool they’re most familiar with using already.
4) Automated Approvals
It’s critical that your system have the ability to facilitate the approvals and controls needed to protect the company’s interests while maintaining the flexibility to automatically navigate the quickest route to executing the agreement. Approvals must come from all of the appropriate internal teams. With an advanced contract management system, this can all be done electronically and even on mobile devices, dramatically decreasing your contract cycles.
Execution is the stage where the contract goes into effect, at which time the terms become a set of instructions for the different parties who need to deliver against them. This is where having a seamless process for getting contract details to fulfillment is critical. This is also where revenue recognition kicks in.
6) Obligations Management
Integrate contract management systems with front- and back-end systems, so changes to the contract are delivered to sales, customer success, fulfillment and operations teams for action. With strong obligation management tied into CRM and ERP, you won’t miss a deadline or lose track of a payment.
7) Compliance Automation
It’s important that your repository have detailed search and reporting capabilities. You want to be able to search for business terms, contract clauses, performance to obligation and—when all else fails—for free text. Without a repository searching for information in your contracts can be costly, time-consuming and distracting.
8) Amendment & Renewals
Your contract management software should provide alerts, reporting and search abilities that enable you to stay on top of renewals and handle amendments. Just like in the compliance step, a manual system will make renewals and amendments truly difficult.
The Future of Contract Automation
1) Alerts, Notifications, Reports
Take your contract automation a step further with alerts, notifications and the ability to generate regular, automated reports and the documents (or at least the links to those records) can come to the user before the user knows they even need them. Novel interaction methods such as full mobile capabilities and a virtual assistant make accessing the right document ridiculously easy.
2) Playbooks, Self-Service
Layer on top of this intelligent central repository the ability to automate your contract playbooks and self-service contract management becomes possible. Many large companies have seen a significant reduction in their contracting time by simply automating their NDA process so non-lawyers can request, review and sign NDAs without involving Legal at all.