In every sector, contracts and legal agreements are an integral part of conducting business. While the words "contract" and "challenge" may not be synonymous, challenges are inherent to the realm of contracts. But there is a way to conquer these obstacles and turn your contracting process into a competitive advantage. One solution is that organizations need a robust Contract Lifecycle Management (CLM) solution. Implementing comprehensive CLM software across all stages of the contract lifecycle is essential for overcoming contract management hurdles and enhancing contracting efficiency.
Top 4 challenges in contract management
The first step in improving contracting efficiency is understanding the contract management challenges that you currently face. Here are the top 4 challenges affecting effective contract management, and ways to solve them using ConvergePoint software.
Contracts that are not found or misplaced
One of the obstacles that businesses encounter in contract management is the occurrence of missing contracts, which is more prevalent than commonly assumed. The IACCM reports that a typical business employing 1000 individuals incurs costs ranging from $2.5 million to $3.5 million solely on searching for and recreating lost documents.
Contracts hold significant importance as they establish the rights and obligations of the parties involved in a business transaction, and losing track of contracts is highly undesirable, given their critical nature. It is a common practice for businesses to sign contracts and store them haphazardly until a dispute arises.
However, this approach becomes problematic when contracts cannot be readily located. Nonetheless, contract execution is just one phase within the contract lifecycle. In the ConvergePoint software, the contracts can be actively managed and monitored to ensure adherence to the agreed-upon terms by all parties.
Inadequate monitoring of metrics
Improving the contracting process now relies on data-driven approaches rather than guesswork. Previously, tracking contracts involved tedious spreadsheet work and countless hours of gathering information, leading to slow, inefficient, and error-prone processes. Unfortunately, some organizations still rely on this outdated method for tracking contract metrics.
As mentioned earlier, it is crucial to track contract data throughout all stages of the contract lifecycle to understand and improve your organization's contracting process. Many legal teams aim to be more data-driven, and this begins with identifying the relevant metrics for each stage of the contract lifecycle, depending on your efficiency goals and organizational objectives.
Manually tracking contract metrics using spreadsheets is highly inefficient and prone to errors. So, what is the solution? The ConvergePoint CLM offers automated contract data tracking and effortless generation of visual reports.
For instance, the status of contracts can be easily monitored and visualized using Progress Bars. These graphical representations depict the progress of each contract as it navigates through the contracting process, providing a clear and real-time overview of each contract's stage and status throughout its lifecycle.
Revising standard agreements using redlining
Contract redlining plays a significant role in the negotiation of contracts. However, if your organization's standard agreements undergo frequent redlining, it undermines the fundamental purpose of using such agreements and serves as an indication that something is a miss.
Standard agreements, also referred to as standard form contracts, are contractual documents where the terms are typically not subject to negotiation. The contracting party either accepts or rejects the agreement as is. Standard agreements are commonly utilized in business-to-customer transactions, facilitating seamless and efficient transactions on a larger scale.
Examples of standard agreements include non-disclosure agreements (NDAs), non-compete agreements, terms of service, rental agreements, and employment contracts. These agreements exhibit minimal, if any, variation from one transaction to another. It is feasible to create a template for such agreements and make minor adjustments based on the specific transaction requirements.
Insufficient contract visibility
One challenge organizations face in contract management is the lack of contract visibility, particularly for non-legal departments. Ensuring access to contract data without compromising sensitive information is a delicate issue for legal departments. The importance of granting visibility to all departments cannot be overstated, as it enables effective contract management and compliance with terms and regulations.
Contract compliance affects multiple departments within an organization. Procurement departments need visibility to control spending, track performance, and comply with service-level agreements. Sales departments require up-to-date contract clauses and approved language in their agreements.
Legal teams must ensure adherence to company standards and regulatory requirements. Without contract visibility, these departments are unable to fulfill their responsibilities. Additionally, lack of visibility exposes organizations to breach of contract lawsuits and hinders monitoring of the parties' compliance.
The software also offers a means to seamlessly integrate contracts, including the management of breaches, into your everyday business operations. Learn more about How a breach of contract can impact business, and how should you manage it?
Hence, visibility into contracts is essential for meeting crucial deadlines related to performance, renewal, and termination. The ConvergePoint Software, for instance, provides you insights on the documents that are pending approval or if the contract is rejected. Facilitate contract visibility, safeguards sensitive information, and ensure compliance with data privacy regulations by utilizing the software.
Conclusion
The ConvergePoint software is specifically designed to address the challenges businesses encounter in contract management. Whether your organization struggles with missing contracts, redlining standard agreements, understanding the contracting process, contract visibility, inadequate metrics tracking, or any other issue, ConvergePoint’s CLM offers a solution.
With the software, you gain an all-in-one solution for managing both complex and routine contracts. It enables streamlined contract creation, effective collaboration with stakeholders, and seamless contract management.
