Are you tired of waiting weeks on end to get a contract approved? You’re not alone. Research from Forrester and Aberdeen group has found that it takes an average of 3.4 weeks to get a contract approved. This is a clear sign that many organizations could benefit from rethinking their contract management workflow and finding ways to optimize them.
Contracts are not created and managed in isolation. Instead, they involve multiple stakeholders and business users throughout their lifecycle, from creation to signing. The complex network of individual contributors and collaborators involved in the contract management workflow underscores the importance of optimizing the process.
In this blog, we will go over 5 strategies through which you can improve your contract management workflow and optimize the time, cost, and efforts required to get the contract to signature.
Are your workflows optimized?
Unoptimized workflows are often characterized by inefficiencies and bottlenecks, leading to delays in approvals, increased errors, and increased costs associated with managing contracts. In addition, the lack of visibility and control in these processes can create a high level of risk for organizations.
Here are 5 ways in which you can improve your contract management workflows today:
Review and Identify Points of Friction and Delays
Before you can improve your contract management workflow, you need to identify what are the key improvement areas or bottlenecks.
As per research by the World Commerce and Contracting Association, there are on average more than 40 points of friction across the average contracting lifecycle. And effectively managing these points of friction is essential for successful contract management. Unfortunately, many organizations tend to handle these issues in a reactive manner, resulting in delays, unforeseen errors, and the need for constant firefighting.
It is in these 40 points of friction that a large portion of untapped ROI potential lies. If you weed these friction points out, you can weed out delay and hidden costs.
Review your existing workflows and map out each stage of the contract process. Look for areas where delays and friction may occur, such as during the approval or negotiation process.
Templatize to Empower Business Users
Having readily available templates for your frequently used types of contracts is crucial. Without them, your business users may be going into contract creation blind, which can lead to mistakes and longer cycles that heavily rely on legal teams for even the simplest agreements.
In fact, it’s not enough to simply have templatized contracts. If your existing templates are outdated and not easily accessible to key business users, your team may still struggle to get their deals rolling. Therefore, the second most crucial step to optimize contract management workflow is to templatize your contracts, and to ensure that these templates are up-to-date and easily accessible to ensure your business runs smoothly and efficiently. Not only does this make contract creation more efficient, but it also empowers business users to handle contracts without needing to depend heavily on legal or procurement teams.
A key challenge for businesses today is a long list of outdated contract templates based on their legacy contracts, these may have multiple versions, even duplicates and archaic legal terms and clauses. Making them a labyrinth to navigate and impossible to use.
The latest CLM solutions on the market like Zycus’ can help rationalize and standardize your template libraries, making them easier to use. You can wield CLM tools and repositories, take help of AI driven analytics to identify, categorize and clean the contract template data and bring it all up on a single, centralized contract repository.
Make Collaboration Easy
Contracts involve multiple stakeholders, and it’s crucial to ensure everyone is on the same page. Map out everyone involved in the contract process, including any external parties. Ensure they have access to the most current versions of the contract and keep a record of all changes and comments. By making collaboration easy, you can reduce the time it takes to get contracts signed and minimize the risk of errors or misunderstandings.
The best-of-breed CLM solutions available today allow all stakeholders to collaborate on the contract in real time, regardless of their location. Users can leave comments and suggestions and track changes to the document as they occur, ensuring transparency and accountability throughout the process.
By keeping a record of all changes and comments, you can quickly identify any issues and ensure that they are resolved promptly. Thus, removing pesky bottlenecks and delays from your contract workflows.
Here’s a helpful blog on how contract authoring tools are helping empower businesses today
Streamline Approvals with CLM Technology
Delays in contract processing often stem from lengthy and intricate review cycles. To avoid bottlenecks, it is crucial to streamline the approval process with the help of appropriate technology. There are several ways to achieve this, such as enabling parallel reviews, redline-based routing etc.
With the help of modern authoring tools, you can make sure all reviewers have access to the most updated version of all contracts with all edits incorporated. This makes it easy to enable parallel reviews where different people can review different parts of the contract at the same time.
With the help of contract lifecycle management (CLM) systems, you can accurately track the duration of each stage in your contract approval workflow. This lets you know exactly how much time a contract sits with a particular reviewer.
Automate Wherever Possible
To ensure an efficient contract workflow, automating as much of the process as possible is essential. This includes organizing matter intake from various teams. In addition, by utilizing pre-approved templates and clauses stored in a central library, the contract creation process can be sped up significantly while also ensuring consistency across similar contracts.
At an advanced level of automation, a contract lifecycle management (CLM) system can use AI-based parsing and metadata extraction to quickly and accurately author contracts. This not only saves time but also ensures that the resulting contracts are of high quality and meet all necessary requirements.
Here is another blog that talks about how you can unlock efficiencies in your contract lifecycle by leveraging automation – Achieve Speed and Control with Artificial Intelligence Driven Contract Management
In conclusion, optimizing contract management workflow is crucial for businesses to improve their efficiency and reduce costs associated with handling contracts. Reviewing existing workflows and identifying points of friction and delays is the first step to improving the process.
Empowering business users through the templatization of frequently used contracts is the second most important step. Making collaboration easy, streamlining approvals with CLM technology, and automating wherever possible are the other strategies that can help reduce delays and increase efficiency. By implementing these 5 strategies, businesses can minimize risks, save time, and improve their overall contract management process.
Request a demo today to learn how our CLM software can improve your business processes. Our experts will show you the features and benefits of our software and streamline your contract management workflow. Schedule your demo now!