September 6 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 contract management processes into a strategic asset.
Part 1: Compliance with Insights – Know Where your Contracts Are
Reduce risks in your agreements through complete visibility and insight into all details, changes and history
Contracts govern 80% of all of your revenue, yet 40% of legal departments lack the necessary insight into critical contract information. This is a major pain point, not just for Legal, but your whole business. You can’t fix what you can’t see. It’s critical you have visibility into all of your commitments in order to reduce revenue leakage and business risks.
Do you actually know where your agreements live?
Today, most companies can’t easily search or report on their contracts, leading to high costs when contracts must be audited or produced for discovery. You can find nearly anything on the Internet right from your mobile phone. A simple search has millions of results, with the one you want listed first. So why is it so difficult to find your business contracts?
To improve visibility, organize your contracts by groups, identify common components and store them in a searchable electronic repository. Your commitments can be monitored in real-time without the heartburn of digging through inboxes or filing cabinets. With all of your agreements organized, building a Contract Template Library and Standard Legal Playbooks are easy next steps. You can define the rules guiding contract creation, determine which contracts are the preferred versions and which are alternate versions, and control when variances should be used. This will allow you to efficiently and effectively incorporate the latest and most favorable language across contracts.
Adding Intelligence into the Mix
It’s also important that you harness intelligence within your contract management processes. Smart contracts are here, it’s time for Legal Departments to step into the present and take advantage of available data already housed within your contracts. Insight driven from artificial intelligence will allow you to dramatically reduce risks by analyzing contracts for contract value, expiration and SLAs. You’ll know which terms and clauses are most effective, which language slows negotiations, and insight into which deals are ending so money can be collected and opportunities to renew aren’t missed. Just ask Singapore who accidentally overpaid on government contracts by hundreds of thousands of dollars because they didn’t have visibility into their agreements.
With better visibility comes better execution. Your Legal Department can establish exception management in which you’ll receive a notice anytime a sales rep tries to submit a contract to a customer with outdated legal language or non-standard terms. And if you’ve got the right tools in place, your contract management solution can automatically replace the legacy information, eliminating the potential compliance risk, and leaving you to focus on more important tasks.
Be sure to check out Part 2 in this series next week: “Work Your Way” where I explain the importance of adopting solutions that allow you to work in solutions with which you’re already familiar, like Microsoft Word.