Do you know how much it costs a business to prepare a simple contract?
The answer is $6,900.
If the contract is a little complicated, the price tag may rise to a staggering $49,000 (or even more) for one contract. Additionally, if your contract management practices are outdated, your business is likely losing 9% in revenues each year.
Now, ask yourself.
- What is the 9% of your annual revenue?
- And, how many contracts does your business create, prepare, and negotiate each year?
As the numbers will tell you, the cost keeps rising. Compared to traditional contract management models, cloud-based contract management systems offer agile, efficient, time-saving, affordable, and reliable solutions. However, not all contract management systems are created equal. Some will suit your business needs more than others.
So, what should you look for when choosing one contract management system over another? Or should you go for contract management lifecycle (CLM) software? And what’s the difference?
In this article, we will cover:
- What is Contract Management Software?
- What is Contract Lifecycle Management Software (CLM)?
- Contract Management vs. Contract Lifecycle Management
- The Must-Have Features Of A Contract Management System
Let’s explore!
What Is Contract Management Software?
Contract management software refers to creating, maintaining, and managing business and legal contracts to ensure the streamlined functioning of the business.
Contract management software helps teams manage routine contracts from a single platform. It makes negotiations, renewals, and contract actions easy and timely.
What Is Contract Lifecycle Management Software (CLM)?
Contract Lifecycle Management is a holistic approach to contract management but much broader. It refers to the stages of the contract process from creation to completion. It is a cycle that includes steps such as contract creation, collaboration, review, edit, and approvals.
The CLM software streamlines the process into a cohesive automated workflow to digitize, distribute, and deliver contracts through a single dashboard. It improves productivity, saves cost and time, reduces the risk of contract mishandling, and enables quick contract lifecycle management.
Contract Management vs. Contract Lifecycle Management: What’s the Difference?
Compared to the broader framework of contract lifecycle management, contract management alone gets you from point A to Z. On the other hand, contract lifecycle management capabilities include the whole alphabet, plus the rules of grammar and linguistics as well.
The Must-Have Features for a Contract Lifecycle Management System
Feature #1: Cloud or No Cloud
Having a central online database of all business and legal documents, including contracts, is perhaps the biggest pull for a company considering implementing a contract management system.
Cloud-based contract management software provides all relevant teams quick and easy access to important documents and all related data. Teams can view contracts, organize information, store contacts, start contract workflow, collaborate on the documents and track contract’s progress in a central location.
Feature #2: 360-Degree Automation and Customization
A business requires multiple types of contracts: sales, administrative, legal, NDAs, and others. The ability to automatically create and customize each contract to suit various business, legal, and administrative needs is essential for a contract management system.
Avokaado offers tons of automated contract templates to get you started in a few minutes.
With the help of such a contract automation feature, businesses can create standardized templates that they can edit and tweak according to their needs. These templates can also serve as parent formats and allow the creation of different but similar versions of them.
This ensures consistency and makes for a more streamlined process where contract creation is a time-efficient task with zero errors.
No single contract is exactly like another. Even similar versions perform different duties and fulfill different roles. Therefore, smart drafting is an intuitive process for creating contracts and documents that are suited for specific needs. Custom fields allow for the creation of documents that can be personalized and categorized.
You can add custom fields to gather precise information from your clients, add risk levels, or include metadata.
Feature #3: Implementation of Clauses Libraries
Clause libraries are central online repositories of standardized clauses that are created and approved by a company and its legal teams. For a contract to make absolute sense to all parties involved and fulfill its purpose, it has to have relevant clauses that spell out the specifics of the contracts and the risk level for everyone involved. Without the ability to intelligently apply relevant clauses to different contracts, a contract management system is not sophisticated enough to build contracts from smaller data points..
Therefore, look for programs that allow integration with clause library programs or have one built-in for even quicker access and flexibility.
Feature #4: Support For Key Document Formats
Since a contract usually has several different recipients, it’s important that a contract management system supports multiple ways to add and view contracts. These include popular document formats such as Word, PDF, and Excel, etc.
With the integration of these familiar apps, it becomes easier for teams to view, discuss, edit, and approve various contracts without any delays or glitches.
Feature #5: The Automated Approval Process
Getting proper approvals on each contract usually takes up a lot of time. The reason is that executives who have approval authorities usually have much more important tasks lined up that take precedence. Hence, contract approvals keep sitting on their desks. The delays not only cause bottlenecks but may also result in business losses and lagging orders.
The solution is automated approval processes. Automating the approval process ensures that each contract meets its approval timely and effectively. Reminders and alerts help executives remain mindful of pending signatures. Electronic signatures add further ease and speed to the approval process.
Feature #6: Scheduled Alerts And Reminders
The approval process is not the only thing that benefits from timely alerts and reminders – a basic feature of contract management software. The alert notifications also help teams remain updated when an important contract comes up for renewal or when it’s to renegotiate an old trade agreement.
This functionality helps the business remain proactive and in control of situations. It ensures that no one misses an important deadline and keeps the process running smoothly from pre- to post-execution.
Feature #7: Swift Contract Request And Intake
Leading contract management software makes it easy for teams to collaborate. When a contract needs review, editing, or revision, teams can send contract requests to each other and collaborate on documents.
The request management tool makes it easy for teams to create workflows and approval systems that flow from start to finish with a seamless authority. Using request features, you can choose to send contract requests based on request types, specific clients, and the purpose of the request.
Feature #8: Built-In Negotiation System
Few stages in the contract management lifecycle take up as much energy or time as negotiations do. It’s a constant back-and-forth of finding a middle ground where all parties can enjoy a mutual sense of success.Traditional contract processes – heavy contracts, delays in mails, and busy schedules of signing authorities, etc. – make negotiations even more cumbersome.
A swift contract management system makes this process quick, efficient, and easy. All teams can negotiate on the same system, with higher contract and clause visibility, resulting in quicker approvals and execution.
Feature #9: Centralized User Management & Collaboration
Contracts, by nature, are sensitive business documents. Not every member of the staff is privy to all business/legal contracts. Therefore, any contract management software worth its salt needs to have strict user permissions in place that allow for more intelligent user management.
While seamless collaboration is a given in most leading contract management software, it is user management that should be examined. Choose a program that enables you to manage users according to their roles, departments, and locations, thus making sure that your data is in secure hands.
Feature #10: Visible Tracking of Contract Changes
Every little edit and modification matters when you are dealing with important business or legal documents. Making sure that all the changes have been made accurately and by relevant authorities is an important stage of the contract lifecycle.
Every little mistake can cost hugely.
Therefore, when you are looking to subscribe to a contract management platform, look at one that offers transparent, live, and across-the-board visibility of tracking contract changes. Only through this can you make sure that your contracts are secure and their contents not meddled with.
Feature #11: Smart E-Signature Integration
Ease-of-use is an important feature of all SaaS applications, and contract management software is no exception. Whatever CLM you decide to choose, make sure that it must come with integration capabilities to e-sign applications, such as DocuSign or SignNow.
Having e-signature capabilities makes contract execution not only easy but also efficient. Team members, with no restrictions to geography, can view the contracts and sign them immediately. E-signature integrations allow contract management software to achieve holistic digitization.
Feature #12: Centralized Document Database
We talked about the benefits of a central repository of contracts from an access and editing point of view. Let’s talk about storage.
Not all contracts are always live. However, a need may arise that requires immediate access to old contract archives in pristine condition with all the necessary changes, signatures, and modifications accounted for. Teams can search for and retrieve important documents from a central location, revise inactive documents, and also review contract history and access points.
Therefore, a contract management program that allows you to store your documents in a central location not only increases efficiency but also aids in transparency.
Feature #13: Intuitive Search Functionality
A centralized document database is of no use if it is not supported with strong search functionalities. Therefore, ideal contract management software should come packed with the power of features like full-text search and OCR scanning. With such features in place, you can perform precise searches with exact phrases and get specific results.
Other advanced search functionalities such as global searches and counterparty searches, and using Boolean operators (And, Or, Greater than, and Less than, etc.) help you further refine your search results.
Feature #14: Document Workflows Management
All leading contract management software should come buzzing with the power of a smart dashboard that facilitates coherent and uninterrupted workflow management.
For one thing, dashboard functionality should be personalized and role-based. Not everyone who’ll use the software within a department is going to have similar roles or departmental clearances, and your contract management program should be mindful of that.
Secondly, it should be data-driven and must contain capabilities that allow it to monitor and display data summaries on contract status, milestones, workflows, and other routine tasks. This will ensure that your dashboard can truly work as the central location where you can take a glance and gain insight on what needs your immediate focus.
Feature #15: Integration With The Existing Technology Stack
Your contract management software must not work in isolation. The existing technology stack at your company represents important task management that helps run things smoothly. If a contract management platform does not provide frictionless integration with your existing tech stack, it’s time to switch to one that does.
Integration with the existing technology stack is critical for a contract management system as it removes duplication and brings efficiencies. A smooth integration network allows different apps and systems to run in synchronization and create effective business processes.
For example, Avokadoo integrates with public data registers through an open API to allow convenient access to data and automated workflow management with other applications.
Similarly, ContractBook integrates with 3000+ applications to ensure data-driven document automation across the board.
Feature #16: Pricing Per User
Contract management software that provides enterprise solutions must include a pricing-per-user model. While it is usual for businesses to buy SaaS subscriptions for the entire department, in actuality, only a handful of people need these services and work with them regularly.
Therefore, a flexible pricing model that takes the number of regular users into account and offers pricing features relevant to those is going to be much more attractive for different companies of varying sizes and varying goals.
If you are looking to switch to a digital contract management solution, make sure to see if what they are charging per user is the best offer you can get from the market.
👉 You can find more free contract management software options in this guide.
Feature #17: Onboarding Process
To ensure a smooth switch from one contract management software to another or from a manual system to a digital solution is going to require a fair bit of training and onboarding efforts.
Depending on the complexity level of the new system and your business and contract needs, you may require a more flexible approach to training. For others, a full-scale training project will be more suitable if they are going to use the contract management software for more complicated and legally sensitive projects.
Before you commit to a digital contract management solution, it is, therefore, necessary to book a demo and find out for yourself whether your team will require only a casual introduction to the system or a more detailed training plan to be able to use the platform fully and exhaustively.
Wrap up
So, this concludes our list of essential features that any major contract management software must include in its arsenal. Ultimately, it’ll come down to your business needs, goals, and priorities. So, if you are out on the hunt for the best contract management SaaS, bookmark this page and remember to consult it when you are making your final purchase decision.
👉 If you’d like to try out a contract management platform today for free, sign up for Avokaado’s 7–day free trial. Our software lets teams of all sizes manage contracts and related workflows in one central location. Get started today!