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What is contract management software?
Contract management software allows organizations of all sizes and kinds to create, store, and manage contracts throughout their entire lifecycle. These systems help users draft contracts, define terms and conditions, and keep track of critical milestones. A well-organized contract management platform allows businesses to efficiently manage their relationships with vendors, suppliers, employees, and customers as their business grows.
The benefits of contract management software
- Improved productivity: Drafting contracts is a tedious, time-consuming task that requires editing and legal supervision at each step. Most businesses don't have time to spare, and contract management software can improve contract creation efficiency through pre-built contract templates that can be used with minimal adjustments to meet your business needs. This saves time and effort, and allows businesses to move to the sharing and signing stages in less time.
- Organized storage: Businesses have to store, manage, and retrieve a lot of contracts, which can be an operational nightmare if you're storing and searching through hard copies. Contract management software eases this burden by storing contracts in a digital, organized repository. Users can search the entire repository with a few keystrokes and clicks, and even filter by name, date, party, region, deal value, and more.
- Mitigate risks: According to Gartner, 60 to 80% of B2B deals are now managed through contracts. This means that breach of contract or missing deadlines not only results in a loss of revenue, but also damages a brand's image. Other research suggests that ineffective contract management can lead to a loss of up to 9.2% in annual revenue, a significant loss no matter your business size. A well-implemented contract management system helps all stakeholders remain compliant with all agreed-upon terms and conditions, and keep track of key contract milestones/deadlines. These systems can also mitigate unforeseen risks by alerting stakeholders to renew contracts before an expiration date and avoid service interruption.
Typical features of contract management software
- Contract drafting: Establish the general terms and conditions of a contract.
- Document management: Manage contracts and related documents in a well-categorized order.
- Workflow management: Set, assign, execute, and monitor business activities in sequential order.
- Contract lifecycle management: Manage all workflows involved in the lifecycle of a contract, from drafting to negotiation and signing all the way through expiration or renewal.
- Completion tracking: Keep tabs on all contract milestones and check whether all terms and conditions have been implemented/completed as per the contract.
- Full-text search: Search for contracts and related documents (as well as the content within) using a text string.
Considerations when purchasing contract management software
- Security of contractual data: Contracts are critical assets of any business, making their safety and security paramount for your organization. Most contract management software in the market is cloud-based, meaning it's essential to evaluate the data security standards of any solution you shortlist, as well as the security standards of the software vendor. Evaluate whether the software complies with relevant industry-specific standards, and determine whether the vendor keeps their cloud services up and running with adequate backup and recovery services.
- Full-text search capabilities, and reporting levels: Advanced contract management solutions should be able to search not only for contracts and related documents but also for content within these documents through full text-based queries. Look for a solution that can analyze contractual data and present relevant insights through an analytics dashboard that not only displays key contractual terms but also tracks deadlines and mission-critical milestones. Ideally, the system should be able to notify users if it identifies any abnormalities in a contract's execution.
Relevant contract management software trends
- Artificial intelligence and machine learning will improve contracts: Contract management software vendors have started adding artificial intelligence (AI) and machine learning capabilities to their solutions. AI can analyze the general conditions listed in a draft and come up with smarter clauses and phrases to create stronger contracts. AI can also help improve the searchability of contracts and contractual data when there are thousands of contracts to search through.
- Contracts are getting more complex than ever before: Businesses are expanding into new geographies, breaking decades-old traditions of business dealing and taking extra steps to close deals. This has increased the demand for more personalized contracts, with diverse contracting models and licensing options. Expect this trend of moving beyond traditional "one-size-fits-all" contracting models to continue.