The business world is quickly changing; and in today’s modern economy, it relies on contract management now more than ever before.
Whether managing all-star partnerships with athletes or crucial contracts with customers, all businesses hinge on powerful agreements that ensure compliance and mitigate risk.
If you’re in any of those businesses and you want to manage your agreements efficiently (as you certainly should), then it’s time to invest in a contract management tool (CMT), from a trusted provider like Ironclad. In this article, we’re going to look at what those tools do, how they work, and why they might be a good investment for your business.
What Is a CMT?
A contract administration tool is a digital solution. It handles different parts of contract management. Like any tool, it makes the job easier; in this case, it assists humans in managing contracts better.
Overall, it helps businesses make fewer manual errors, act more efficiently, and stay in closer touch with operations that must comply with legal and regulatory requirements. These CLM solutions range from basic digital to advanced analytical tools.
Key Features of a CMT
- Contract Creation and Templates: Provides templates and clauses that have received prior approval to ensure consistency and compliance.
- Automated workflows: Increases efficiency in the approval process by directing contracts to the correct stakeholders.
- Electronic Signatures: Secure digital platforms are legally binding, allowing one to create signatures that are as good as gold.
- Centralized Repository: Contract management tools keep documents maintained in a secure, searchable database, which allows for easy access and retrieval.
- Compliance and Risk Management: Alerts companies to renewals, expirations, and compliance issues that are about to arise.
- Analytic and Reporting: Provides comprehension of how contracts are executing, what obligations are being satisfied, and what risks are being undertaken.
- Collaborating with Other Systems: Collaborates with CRM, ERP, and other enterprise tools for integrated operations.
Why Does Your Business Need a CMT?
Managing contracts often involves an inefficient process filled with tasks that consume time and that are prone to errors. The performance drain that these tasks cause can sap the energy and resources of an organization.
One way to overcome this problem is to implement a tool that aids in the management of contracts. A contract management tool can furnish a number of benefits to an organization, and those benefits include:
Increased Efficiency and Productivity
CMTs automate the menial tasks that require too much of an employee’s time and routine. They make processing contracts faster, with departments across an organization achieving greater productivity.
However, this greater productivity can only be realized if the tools are utilized. Contract management software varies greatly in sophistication.
Enhanced Compliance and Risk Mitigation
Compliance is ensured when contracts are managed well. A contract management system assures compliance with legal requirements, company policies, and industry regulations. It significantly reduces the risk of compliance problems you might miss until the next audit, like these:
- Failing to meet deadlines
- Overlooking key clauses that change the meaning of a contract
- Making changes to a contract without proper authorization
Centralized Storage and Easy Access
A digital contract repository located in a central space allows for rapid access and tidy arrangement. There’s no anguish over a misplaced contract and no stress over an obsolete version.
Improved Collaboration
A contract management tool enables collaboration among a range of stakeholders; legal teams, sales representatives, procurement officers, and finance professionals, all who work in different parts of an organization.
They need to communicate and coordinate if they’re to work efficiently. They must be able to see and understand the changes made in a contract over time. And they also need to understand the terms of a contract in order to negotiate effectively.
Cost Savings
The expensive errors that result from poor contract management may cost penalties and even make you miss golden opportunities to make the best use of your contracts. Automating the contract management process can help reduce legal costs, cut unnecessary delays, and maximize the value of the contracts themselves.
Better Decision-Making with Data Insights
In contemporary contract management, tools exist that help obtain the all-important metrics, enable businesses to track performance, and allow for the crucial act of making decisions based on solid data and analytics. Surprisingly, many organizations still carry out the acts of managing contracts and keeping track of contract-related metrics manually.
This not only makes it exceptionally hard to keep all contracts in order and to know where each contract is at any given time, but also makes it exceedingly hard to see what key performance indicators (KPIs) are telling a business about the kind of contracting processes it has in place and whether those processes could use improvement.
Scalability and Adaptability
When companies grow, managing a vast number of contracts becomes a challenge. Contract management software can grow with your organization, accommodating not just a larger number of contracts but also more complex contracts and situations that demand efficiency.
Choosing the Right CMT
When businesses are selecting a contract management platform, the following factors should be considered:
- Ease of Use: The tool must have an interface that is easily comprehensible, with characteristics that require no special knowledge to employ.
- Customization Options: Find a solution that allows you to adapt it to your business needs.
- Integration Capabilities: Ensure that it integrates with current enterprise systems.
- Security Measures: Make sure that the tool has robust security features, such as encryption and access controls.
- Vendor Assistance and Instruction: Check to see if the vendor provides enough help and guidance for using the product.
- Cost and ROI: Evaluate the pricing scheme and the potential return on investment.
Upgrading Your Business Dealings with a Contract Management Tool
To become more modern and for reasons of efficiency, risk reduction, and compliance enhancement, businesses need to invest in the tools of contract management. Contract management systems are not simply a “better way” to manage contracts.
They can be a foundational business investment that saves time and money, improves compliance, and (arguably most important) gives a business the insights necessary to have real contract-related discussions and decisions-making.