We all can relate to real life examples of "unwritten covenants" – you know, those responsibilities that friends and family place on you without you knowing if you ever agreed to it, like making a salad for a friend’s dinner party or babysitting your niece or nephew when your sibling decides they want to live a little. We don’t necessarily agree to these things, but they happen anyway and it’s understood that they need to happen to maintain a happy relationship.
While such harmless forms of informally "agreeing" to things are a standard part of social life, it can be shocking when work life operates the same way. Suppliers, customers, and employees all suddenly demand something from you, and you are not sure if anyone ever agreed to it.
What is contract lifecycle management?
Contract lifecycle management is a practice that an organization puts in place to assure that everything everyone does was clearly agreed upon. No hidden covenants, no secret agreements. Can you imagine the outrage if your supplier suddenly demands a penalty price because you are buying too little of his stock? Believe it or not, these kinds of situations happen and at an enterprise level, such practices can cause severe losses.
Implementing a contract lifecycle management system is critical, because without an organized system for creating, negotiating, approving, signing and storing contracts, your organization can lose track of important agreements. Here are some examples of risks an enterprise faces without such systems:
1. A potential business partner could withdraw from a deal because your company could not find the most critical contracts between you and your largest customers. You now risk losing a beneficial partnership, all because of failed contract governance and management.
2. You lose time onboarding new B2B customers, because you don't have a system for digital signatures or a standardized template for contracts. This means every contract is written from scratch, emailed out, printed, signed, and faxed, wasting many manhours on both sides. Lack of contract automation means wasted time and lost sales.
3. The European Union is investigating your organization for possible violations of the General Data Protection Regulation (GDPR) Act. Your enterprise and its management are completely innocent, but you are not able to find the B2B user data privacy agreements in time and are fined.
If you are looking for contract lifecycle management tools, you have to understand what a contract manager does. Basically, all of the following:
Capturing and tracking contracts
You have to find a way to ensure that all your paper contracts are scanned and traceable in a centrally visible place, and at the same time, no unauthorized user has access to those documents. The easiest way to do so is to get contract lifecycle management software that includes a cloud-based document management system, and also ensures there is a centralized point for changing permissions on documents. They should be accessible by the entire enterprise without any duplication of documents across departments.
Templafy's template management tools can ensure that all your contracts are managed on the cloud and employees can retrieve compliant and up-to-date documents with little effort. With its centralized administration system, only those who need access to certain contracts or contract templates will have such access.
Authoring and creating contracts
There needs to be a system to set up contract templates and clause libraries to allow employees in the enterprise to create new contracts in a fast but controlled fashion. Any enterprise will have many contracts being produced, from employment contracts to procurement contracts, and needs to assure that the contracts being produced are legally compliant and up-to-date. A good contract lifecycle management software should automate this without the need for manual intervention.
While the other steps in the process are definitely important, this is the area which requires serious attention. Contract lifecycle management best practices include automating the creation of enterprise-compliant contracts as quickly as possible.
Templafy can provide employees with access to consistent, up-to-date, on-brand and legally compliant contracts and templates for contracts. Additionally, Templafy’s Library and document automation features can give access to centrally managed text snippets to make it easier and quicker to create contracts that are consistent and follow the latest company standards.
Watch this short video to learn more about how this works:
Approving and negotiating contracts
Enterprises need an approval workflow process. All contracts should be reviewed and approved by the right people. When the contracts are passed around for comments, each of them makes a checklist of issues for each agreement. Contract lifecycle management tools should have a way of marking up the document to highlight how it’s different from the original or the last draft; and who made the changes. Solutions like those offered by iManage can save hassle and potentially very expensive misunderstandings.
As you can see from the outline of the contract lifecycle management process, dedicating some attention to contract lifecycle management can reduce legal risks, improve your sales cycle, and make sure you extract the most value out of each business deal you can without confusion on what has been agreed to. We at Templafy have several solutions to assist this with our cloud-based template and digital asset management system. Get in touch with us to learn more.