Efficient contract management workflow means more contracts signed, deals closed, suppliers paid, and more people hired.
Yet each stage, when done manually, can take considerable resources, not only time which can slow down business processes.
With the average price of a basic contract ranging from $6,900 and $49,000, it is business-critical to quicken the contract lifecycle workflow.
Speeding up your contract workflow process can bring the following benefits:
- Reduced errors and risk and thus increased compliance by 55%
- Improving the contract workflow process can save 20-30 days that otherwise, the company would spend creating, negotiating, and finalizing a contract doing it manually
- Fast contract workflow process means time spent on contract lifecycles is reduced by 25%-30%
So, how can you speed up the contract workflow process?
Let’s first examine the stages of contract management workflow.
What are the stages of contract management workflow?
Contracts are never only just creation and final signing — the contract’s lifecycle continues with auditing, post-signing, and amending; the management of the contract becomes part of an extended workflow known as contract lifecycle management.
What is contract lifecycle management (CLM)?
Contract lifecycle management (CLM) is a process for streamlining the various stages of creating and managing contracts. CLM covers more contract workflow stages such as contract data processing, oversight, analytics, and sharing with other systems and/or platforms.
CLM also covers the workflow after contracts have been signed, namely, reminders, renewals, storage and search, and auditing.
Although not all, most contract workflows follow the below stages.
Contracts are legally binding documents that signees should not approach lightly. It’s essential to be organized and prepared with the right resources.
Correctly identifying the needs, reasons, and ultimate goals that require a contract makes any decisions down the line much more manageable. Does your organization need to collect data across teams, clients, or both?
It could be that the contract’s goals are to ensure they meet specific compliance standards of governing jurisdictions. Maybe the need for the contract is merely to facilitate new business.
Obtaining additional legal advice through an in-house legal department or external lawyer is recommended when part of a contract is unclear or if you are uncertain.
Organizations with a legal team use pre-set templates they have drafted to ensure that all information is up-to-date, relevant, and all required clauses and terms are included automatically, such as EU GDPR.
Uncertainty can cause issues later on, so when drafting a contract, if there is any jargon or terms that are unclear, then it is best to clarify during this stage rather than leave anything ambiguous. For example, national and USA state laws vary from each other and may need to be considered.
Several companies require approval from other stakeholders before they can finalize and sign the contract.
For example, an organization may need to meet specific audit requirements or meet procurement policies before parties can approve the contract. Not obtaining the proper approvals can lead to significant delays in a contract’s being completed, or worse, not having the compliant information required to meet regulatory compliance levels within a country’s jurisdiction.
No matter how careful the planning and preparation are achieved in a contract, there will inevitably be a stage for contract negotiation between both parties.
Contract negotiations should always be transparent so both parties can mutually trust the other and create a solid business foundation.
Otherwise, when done manually and on paper, contract draft changes can contain several versions. The parties must repeatedly read the entire document to ensure that no other terms have been added or removed from the previous version.
The signing should be the most straightforward part of a contract. Both parties agree that the terms are accurate and agreed upon during the drafting and negotiating stage.
Now it is time to sign off on the document. However, getting the required signatures from all parties is not as easy as it may sound, mainly if several parties are located abroad or in different time zones.
The very nature of globalized business means that contracts are rarely signed person to person in one room; instead, they are read and signed across several places, and not all at once.
Contracts are rarely stagnant. Revisions and amendments are a standard part of the contract lifecycle. They require amending, specifically if the business collaboration scales up or down.
Most contract workflows need to track changes to monitor what was initially agreed upon and what is now relevant. Every edit and amendment should be recorded and tracked, so all parties can agree and remain fully aware of the latest changes impacting the business relationship.
Audits & renewals
Contracts do not end once the contract has been signed. All parties should perform regular audits to ensure compliance, meet obligations, and determine the value of the relationship between other parties.
For instance, when contracts are renewed and the expiry date is approaching, organizations will need reminders to notify parties of upcoming deadlines.
By doing this, increased trust and loyalty remain between all parties, but it also ensures the relationship is continued, lost revenue is avoided, and legal risks are minimized.
8 steps to optimize contract management workflow stages
1. Centralized document database and easy search
A centralized document database makes day-to-day contractual work more accessible and more organized for every involved party. Plus, both internal and external stakeholders can access contracts from any location, which can significantly speed up the process.
Furthermore, a searchable centralized document database ensures you never lose a contract or spend hours looking for one. A single lost contract can be a considerable risk for any company.
2. Create master standard templates for faster drafting
Drafting documents based on templates is common practice. Typically the template is created in a Word document where others repeatedly add or amend as they need.
However, each template is different for different industries and different use cases.
Creating master templates for each industry and use case saves time and keeps contracts uniform throughout the organization. Ensuring it is updated through automation means everyone uses the latest version. From there, you can amend according to the data required to be inserted in the contract.
Templates for contracts like those in Avokaado have been carefully created and serve as a good document database for your own business.
3. Self-serve contracts: Delegation or co-drafting
Self-serve contracts save time and increase the quality of the documents, enabling the delegation of low-value and high-volume contracts to the business, hence freeing legal teams or business owners from monotonous contractual work.
Concerning co-drafting, even novice staff can create professional documents themselves and delegate them to more senior staff to examine for final signing. Likewise, the same can be done if experienced team members want their junior staff to check their work.
4. Use an approval workflow
Another way to quicken document collaboration is to automate your approval processes. Automatic approvals shorten the cycle from initiation to a finalized agreement. They contribute toward a positive relationship by adding convenience to both parties.
Streamlining the contract approval workflow not only gives your company the advantage of receiving contracted goods and services sooner but also stimulates grasping business opportunities with relatively tight turnaround times.
With Avokaado, the approval process is automated. You can choose to give either approver or signer roles to your existing collaborators or invite new ones.
Furthermore, users can add an invite message to clarify possible details for existing and new collaborators. You can also determine the entire flow of approvers and signers and set the order of approvers before sending the document out.
5. Automate the signing process
Documents can be signed both digitally and automatically.
To avoid delays towards contract execution, a finalized agreement can be automatically signed once all parties have completed the terms of the deal.
To leverage contract lifecycle automation, ensure you can sign the documents where they were drafted. Thus, there is no need for additional contract signing software to send contracts via email. All can be collaborated on and automatically signed in one centralized database within Avokaado.
6. Data-driven document workflows management: automatic reminders and email notifications
Data-driven document workflows make your business more compliant since there’s a proven process that is followed each and every time.
The result is standard documents like employment contracts, supplier contracts, and amendments are the same every time.
Plus, when a contract needs renewing or updating, automated reminders will send a ping to the appropriate document collaborators.
Avokaado makes it easy to template documents with various scenarios and still keep all documents and files in one place. With meta-data and full-text search, SMBs can eliminate lost and misfiled documents cases.
7. Automated contract reporting
With automated contract reports, you will gain access to accurate data presented in the form of visual contract KPIs – information that benefits real-time decision-making. KPI metrics within contract reporting include:
- Contract efficiency
- Contract effectiveness
- Contract value
- Contract risk
Avokaado has a customizable dashboard that shows you the status and performance of all active contracts. Your Avokaado personal workspace has everything you need to manage data-driven document workflows. You can generate new documents, overview, and track their statuses. The workspace shows your deal statistics, displays your critical deadlines and reminders.
It is straightforward to set up and serve up real-time data that users can leverage with a glance and determine where organizations can improve their processes.
8. Integrated contracts through API
Contracts contain data that is managed throughout a business or organization in a database. When completing contracts, this data must be on every contract template. Using an API ensures that when data within a company is updated, the information is automatically updated accordingly.
Avokaado, with its open API, can integrate with all your favorite software. Under the Custom plan, whenever a client needs a specific integration, Avokaado can set up an integration for them, for instance, with their own tech stack, CRM, or a public registry.
Contract management workflow: ready to get started?
A contract lifecycle management system is used to create, negotiate, sign, renew and gather actionable data on legal contracts – covering every stage of contract workflow management.
Avokaado is one such contract lifecycle management software (CLM). A CLM is a digital system to handle all aspects of a contract.
Avokaado’s contract management and document workflow automation empower SMBs to manage all contracts and related workflows in one place – storing documents, creating, collaborating, and executing all forms of legal document management.
Avokaado is fully customizable to your organization’s needs.
Businesses that require high compliance or fast-growing companies need fast approval, and automated signing from several parties will find Avokaado invaluable.
The bottom line
By following these steps listed in this article, even small and medium-sized businesses can achieve effective, efficient, and fast contract management workflow. At the same time, they remain in control of the entire contract stages.
👉 If this sounds like your business is missing fast and efficient contract workflows. Why not try Avokaado CLM for free for 7 days? No credit card required.