September 20 by Zack Alspaugh
“Contract Management” is more than just the management of documents filled with lots of legalese, some terms and conditions and a few signatures. Sure, taken individually, each contract can be viewed as just that, a collection of the rights and obligations of each party for a specific project or timeframe. But collectively, a company’s contract portfolio provides the roadmap for a strategic vision of the enterprise.
Yet, survey after survey shows that many companies still view contract management as an administrative task, an afterthought, rather than a core component to their corporate vision.
In this three part series, we will break down the ways in which your company can convert your contracts management processes into a strategic asset.
Part 3: Accelerate deals by enabling Sales to create, manage and approve contracts that are already blessed by Legal
The Perception of Legal as the Sales Bottleneck
The contracting process is often seen as a source of discord and expense, with lawyers accused of obstructing rather than enabling business growth. The reality is that Legal lacks the resources to review every contract yet is nervous about empowering unqualified staff to make important legal decisions.
The end result is a “turf war” of sorts, as Legal looks to protect the business, foregoing the speed of business that the commercial team demands. Because lawyers are trained to look for the worst-case scenario, and focus on the things that could go wrong, while those with business training focus maximizing the value of the deal without considering the liabilities of an agreement, it often seems that Legal and Commercial interests are at odds. Whether this tension is real or imagined, it can cause conflict and stress during the contracting process, and lands Legal with the title, “Sales Prevention Department.”
Naturally these two opposing priorities can collide like waves on a rocky shoreline, especially if you rely heavily on manual contract management processes. Legal needs to be the contract gatekeeper, but you have to be careful that it also doesn’t become a set of handcuffs for Sales.
Becoming the Deal Accelerator Instead of Roadblock
So how do companies give lawyers the flexibility to propose, review and negotiate commercial and financial terms or empower non-lawyers to deal with legal language and redlines? This is where technology can be a great facilitator. Instead of choosing between efficiency or risk management, companies can use contract lifecycle management (CLM) solutions to leverage existing resources to achieve both speed and compliance. CLM enables businesses to capitalize equally on both the commercial and legal know-how without having to decide whether to trust an unqualified resource or waste an overqualified resource.
Contract management solutions can be configured to incorporate a company’s contract playbook to provide conditions for when certain language should be included in a contract during initial drafting. During contract generation, those conditions are evaluated by the system and the system will automatically include or exclude single terms or entire clauses based on factors like jurisdiction, risk level.
With the right contract management solutions, non-lawyers can be trusted to generate the agreement because the legal guidelines are already embedded in the process. Additionally, rules around approvals can be built in such a way that the contract manager gets real-time feedback on required reviews and approvals. This empowers the contract manager to make timely decisions—like whether additional approvals are absolutely necessary or not. In this scenario, the contract manager could be empowered to choose an alternate term or clause that has been deemed standard or compliant and doesn’t require additional review in order to move the deal to execution faster.
For instance, companies with effective contract management in place saw:
Faster contract processing
Increase in contract accuracy
Increase in compliance
Increase in contract processing volume
Getting Your Time Back
By enabling non-lawyers to be self-sufficient during the contract lifecycle, while operating within the approved legal framework. Reducing the number of inquiries made to Legal for routine and standard contracts allows lawyers to focus on more important tasks or more complex deals that require increased focus and attention. The result is a synergy between the commercial and legal sides of contract management where speed is no longer sacrificed for risk management and contract managers, whether lawyers or not are empowered to actually manage, rather than just administer, the contracting process.
Taking it one step further, integrating these contract management solutions with the rest of your Quote-to-Cash processes will allow you to shorten more than sales cycles. Smoothly connecting contracting to fulfillment, billing, and revenue recognition eliminates errors that can be costly to correct, reduce risk and ensure you aren’t missing any renewal opportunities or any owed terms uncollected. Ultimately, your contract lifecycle management will be more effective, more efficient, and more profitable.
Did you miss part 1: Compliance with Insights – Know Where your Contracts Are? Read it here.
Did you miss part 2: Work Your Way: Increase Legal Productivity by Working Smarter? Read it here.