January 16 by Steve Feyer
These days technology is automating everything: customer service, investing, and even cooking burgers. Now you’ve decided to automate how you create contracts, so your staff attorneys can focus on more important matters than repetitive document creation. Great! It’s time to let your team manage the kitchen instead of flipping burgers, so to speak.
There are many tools that will produce a professional-looking contract quickly and according to your specifications. Yet there’s much more to contract management than simply creating an accurate contract document. Make the wrong investment and you’ll be unable to manage all the contracts you produce—you’ll just end up with new bottlenecks in your business.
A contract generator is a necessary part of modern contract management, but generation isn’t enough. Here are four reasons why a simple contract generator won’t solve your contract automation needs.
No Conditional Assembly
A simple contract generator uses a template that you’ve designed, your pre-written language, and your data to generate the document. This works if you have to generate the exact same contract every time, but if your business is more complex than the average burger stand, you’ll need conditional assembly.
This capability uses your data to determine how to generate the contract, and can employ different templates, clauses and data fields, all dependent on the conditions that matter to you. For example, you may want to include different privacy language depending on the state or country your contract will be used in.
In real-world situations, there may be many complex conditions that govern your contract, including conditions that interact with each other. Without conditional assembly logic to produce the right contract, you’ll be unable to meet your objectives with your contract generator.
One industrial company had installed a contract generator that could use only basic rules, and found that they could not produce sales contracts any faster than before. With a new contract management system, including conditional assembly, the average time needed to create a contract dropped from 5 days to 30 minutes.
No Parent-Child Hierarchy
Using a basic contract generator, each document you create is treated as a complete package in and of itself. Yet in the world of legal agreements, contracts often refer to each other in important ways. Contracts often have a parent-child hierarchy in which one contract governs another. Put another way, the legal language in a parent contract also applies to every child contract underneath it.
A sophisticated contract management system can define complex contract relationships, including multiple levels of contracts and cross-references. With a simple contract generator, you’re hardly better off than if you had a big stack of paper on your desk, and that’s not managing your contracts – that’s shuffling papers!
No Obligations Management
Once you’ve created a contract, what do you do next? The contract itself probably has a lot of the answers: from the products and services you’ll need to provide, the payments you will make or receive, to your deadlines and rights, and so on. An obligations management capability turns the text of your contract into the instructions you need to follow.
But a simple contract generator can never create anything more than a document. This might not matter if you have only a few contracts, and can remember what is important in each one. If you’re in a company of any significant size, you may handle thousands or millions of contracts, and manually translating your contract language into actionable obligations is expensive and error-prone. Doing that, or doing nothing amounts to an invitation for disaster.
With obligations management technology, your contracts can be used to guide your business accurately, so you’ll be able to focus on improving your business instead of reading your contracts.
No Alerts and Notifications
A basic contract generator only gives you a clean document—it’s up to you to know when you’ll need to revisit it. How do you keep track of renewals, cancellations and other key events? You need alerts and notifications to make sure you manage your contracts effectively and don’t miss any important milestones.
Take renewals for example. A basic system may give you a checkbox to notify you if a contract is expiring in 30 days, but you need more control. What if you want to be notified about different types of contracts 60, 90 or 180 days before expiration? What if you want to auto-renew certain contracts? And what about when a person changes jobs—can you be sure that a notification won’t go to a dead inbox?
There are many factors critical to managing your contracts, and they all matter. One software company added alerts to its contract repository to manage renewals, and discovered that they had failed to consistently execute price increases, costing 8% of revenue.
Contracts: The Next Generation
There’s no question you need a contract generator for your business, but if you’re depending on basic software you are putting your company and your contracts at risk. These four capabilities show why a simple contract generator just isn’t enough.
Talk to Apttus to learn more about the capabilities that help modern businesses succeed with their contracts.