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2021 Guide to Contract Management Solutions

 

All business relationships start with a contract — and they might as well end there, if the contracts are managed badly. Companies that exhibit poor contract management risk losing 9.2% of revenue each year.

Goldman Sachs reports that an automated contract management solution could speed up negotiations by 50%, reduce payment errors by 75 to 90%, and cut annual costs by 20 to 50%. Basically, you can’t afford not to automate your contract management process.

If you’re unsure if — or which — contract management software can be useful to you, you’ve come to the right place.

In this article we line out the purpose and the biggest benefits of contract management solutions, the industries that most definitely should adopt an automated contract management system, and list the best contract management platforms available on the market.

 

What is contract management software?

In short, contract management software is a digital solution to manage and automate the contractual process. Contract management software creates a reliable digital workspace for all the documents, workflows and involved parties.

Simple contract management software may only allow users drafting and/or storing contracts. CLM (contract lifecycle management) systems function as a digital contract manager with advanced features such as monitoring and analysis included.

Top of the class contract management tools cover all phases throughout the contract lifecycle — from contracting workflow, e.g. creation, negotiations and signing, to post-execution, e.g. storage and deadline tracking.

Streamlining legal busywork makes the most out of legal professionals’ time and also supports the users with non-legal backgrounds. Contract management solution supports the whole contract lifecycle in a way that keeps the process and documents compliant with legal and organizational requirements throughout the contracting process.

While all contract management software differs a bit, the most important features include:

  • Smart drafting with custom fields
  • Possibility to automate and customize your templates
  • Automating the approval process
  • Automated alerts and reminders to keep the process running from pre- to post-execution
  • Tracking changes
  • E-signing
  • Document storage in a centralised document database

 

Contract management process with and without a CLM software

Historically, legal operations were mostly conducted manually. With the digital revolution affecting every industry, the legal sector took some time to pick up. The legal profession has always been perceived as a highly-skilled and personalized craft with little opportunity for automation. That’s why legal solutions first and foremost focus on automating the work process — to make legal professionals more efficient, not replace them.

Even though an efficient contract management process is so crucial to overall business success, surprisingly many companies still manage their contracts the old way. ‘The old way’ usually means a clumsy combination of emails, different file formats in different folders and sometimes even a good old paper-and-pen approach with printing and scanning involved, e.g. for signing and edits.

For drafting a new contract, they find an old document on broadly the same topic, copy and paste, and change the key information. Firstly, this poses a risk of manual copying errors and typos. Secondly, after a while you might have countless versions of the same contract, not to mention different versions of the same type of contract all used at the same time.

Modern contract management solutions organize contract workflows into logical stages and store all documents in a secure centralised document database.

Instead of shuffling documents around on paper with a million opportunities for errors and miscommunication, not to mention wasting time on physically organizing, monitoring and delivering paperwork, contract management software conducts it all in an instant and helps move the contract faster down the operational pipeline.

You can standardize the contract creation process by using a template library or creating your own templates. This way you only have to insert the personalized data and follow the guidelines. This also helps delegate drafting to other business units or partners.

👉 Check out Avokaado’s open-source library with automated templates for contracts. Pick any template and draft it for free.

Contract workflow automation helps you streamline your contract editing, approval and signing workflows and bring all parties to one place. The software gives you an overview of the entire contract life cycle process. You can keep an eye on hot deadlines, renewal terms, documents’ statuses and unfinished tasks. This way your lawyers can meet deadlines proactively and address any upcoming issues instantly.

 

7 reasons to use contract management software

You don’t need to be a billion-dollar corporation with thousands or even millions of complex contracts to handle. Even small organizations can handle hundreds of contracts in a month that can be hard hard to stay on top of.

Here are the main reasons why most businesses can greatly benefit from a contract management solution. 

  • Reducing risks — contracts can often have hidden risks in them, from unapproved terms to missed obligations. Contract management software mitigates a variety of those risks with pre-approved clauses, easier contract audits and a well-managed contract portfolio. Automated workflows and alerts help ensure compliance and keep on top of renewal deadlines. Contract management automation can improve compliance by 55%.
  • Saving time — have you ever thought, how much of your team’s time is spent doing non-specialist administrative work? 65% of legal professionals identify time lost on administrative tasks as their biggest pain point. Automating contract management cut contracting cycles in half according to an Aberdeen report. It’s also predicted that by 2024, manual effort for contract review will be reduced by 50%.
  • Saving costs — reducing time spent on reviewing and managing contracts significantly reduces costs, first and foremost labor costs. Based on the average salaries of the parties involved, the average cost of a simple contract is estimated to be around $6,900 and $49,000 for more complex agreements. According to Aberdeen Research automation can reduce contracts’ administrative costs by 25-30%.

  • Scalability — automation is the key to scalability, because it reduces the amount of personnel time and skill required for effective contract management. Contract lifecycle management software also lets you scale storage and other capabilities up or down, depending on your current business needs. With a flexible platform, you don’t have to worry about setting up expensive on-site systems you might not even fully need.
  • Security — storing documents in different shared folders is not only disorganized, it raises the risk of them ending up in the wrong hands. Centralizing your agreements in a password protected and cloud-based repository is the most important step towards secure contract management. Also, all involved parties can access your contracts from anywhere via the internet. Unlike mainstream cloud storage services, trusted contract management software offers heightened enterprise security.
  • Easier sharing, collaboration and searching — a centralized cloud-based contract repository makes day-to-day contractual work easier and more organized for all parties. Both internal and external stakeholders can access contracts at one time from any location, which can significantly speed up the process. According to Forrester and Aberdeen, using CLM software reduces contract approval time by an average of 82%. Also, a searchable centralized document repository makes sure you never lose a contract. The Journal of Contract Management estimates that 71% of businesses can’t locate at least 10% of their contracts. Even a single lost contract can be a huge risk for any company.
  • Integrations and customization — integrations connect business operations and help exchange data automatically and freely. This further eliminates unnecessary manual processes and makes sure your strategic architecture is able to scale. You can integrate your contract lifecycle management software with your most important systems to help legal, procurement, sales, and management teams collaborate more effectively. CLM integrations also improve accuracy and enhance visibility in ways that reduce risks and help to assure compliance.

 

Which industries should use contract management software?

The short answer is that everyone who wants to manage their contracts efficiently and with less risk. Yet there are many especially complex high-risk industries with higher compliance standards or fast-growth scaleups that face particular challenges in contract management.

Here are a few examples of key fields and industries that would most benefit from a contract management solution.

  • Healthcare — notorious for its loads of paperwork, healthcare is one of the most regulated industries with ever-evolving compliance requirements. This makes managing various contracts challenging and time-consuming for all hospitals, clinics and other healthcare providers. Healthcare contract management software streamlines and simplifies all complex service, vendor, and other agreements along with regulatory compliance standards.

👉 Learn more about how Avokaado helped a healthcare company manage and scale its employment process by automating HR contracts creation, workflow and document management.

  • Insurance — the sheer quantity and complexity of contracts makes it crucial for the insurance industry to adopt effective, powerful contract management solutions. Insurance contract management software helps manage contracts, policies, claims, and reinsurance, not to mention reduce risks and improve compliance with the complex industry regulations.
  • Procurement and supplier relationship management — good contract management is the foundation of strategic competitive procurement and supply chain management. Procurement and supplier contract management software gives procurement teams a real-time insight into supplier relationships, helps ensure compliance, speed up contracting and avoid overcharges. A KPMG survey of outsourcing suppliers found that without close contract governance, businesses stand to lose up to 40% of a contract’s value. Some procurement software have contract management capabilities already built in. However, for advanced contract management capabilities it’s worth investing in a specialized contract management software.
  • IT — the information technology sector faces growing regulatory scrutiny to ensure user privacy and cyber security. As the sector is growing exponentially and operational speed and time-to-market is a constant race, an advanced IT contract management software can cut contract turn-around time significantly and offer greater contract visibility. The latter is especially important in terms of Service Level Agreements (SLAs) that can otherwise negatively affect customer service and ultimately make or break the product or service.
  • Construction — this sector combines a number of legal nuances, from business law and insurance to public regulations and sub-contracting. Construction is an inherently demanding industry. With big amounts of money at stake, efficient and reliable contract management is first and foremost a question of risk management. Construction contract management software helps manage co-contractors and subcontractors, monitor work performance, handle project documentation and stay compliant with the various regulatory standards.
  • Real estate — real estate professionals from brokers to building managers combat loads of data daily, on top of that, they always tend to be on the road. Real estate contract management software stores all that data in centralized storage with 24/7 access from anywhere with the internet connection. This speeds up drafting, improves insight, ensures compliance and helps store and manage all ongoing documents, e.g. leases or health and safety guidelines. All in all, it empowers the employees, improves business results and enhances client servicing.

5 best contract management software for 2021

There are a number of options on the market, but as previously said, advanced contract management solutions should always include the key capabilities. For this comparison, we chose a diverse group of contract lifecycle management software — for all business types and sizes, not to mention budgets.

Here are 5 market leaders and their features, pricing and suitability to help you choose the best contract management solution for your business needs.

 

1. Avokaado

Avokaado covers the entire contract lifecycle process — from smart drafting through to final approval and e-signature. It lets you create contracts easily and collaborate on one central platform.

Key features

  • An intuitive, easy-to-use, no-code contract automation functionality with the library of automated templates and a clause library to create complex documents quickly
  • A suite of advanced collaboration tools including document sharing, in-document discussion, reminders and dynamic approval processes
  • API-integrations to seamlessly integrate with existing tech stack: a data register, CRM, or your own software
  • Data-driven document management with meta-data and full-text search

 

Avokaado is your next-generation workspace for contract lifecycle management

 

Pricing

Avokaado has a number of options for all business needs. It gives you enterprise quality for SMB pricing — the plans are dependent on the number of users and can be paid on a monthly or annual (-20%) basis.

  • Freemium: 0€ — one user and access to 100+ free pre-lawyered templates
  • Starter: 29€ — one user can draft, sign and manage documents
  • Standard: 49€ — up to 15 users with all Starter features plus collaborative drafting and user roles
  • Premium: 60€ — automation and personalization for teams with a legal department (minimum of 10 users)
  • Custom: fully customizable plans for large teams and API users.

Best suited for

Businesses operating in heavily regulated industries or fast-growth scaleups that use different agreements with high levels of scrutiny, need quick approval and signatures from many parties, as well as managing documents post-signing. Suitable for organizations both with or without an in-house lawyer.

Integrated eSignature functionality means you don’t need to pay for external digital signature providers

Getting to know the many features and opportunities might take some time. Luckily, Avokaado’s Contract Clinic and the team of legal engineers are available for support.

Pros

Cons

Global open-source pre-lawyered template ecosystem

The automated template library is so comprehensive it can be overwhelming at first.

Customizable surprise-free pricing suitable for companies of all sizes

 

Free contract lifecycle management software with the Freemium option

2. ContractWorks

ContractWorks is an easy-to-use, affordable contract management platform for businesses who need a quick way to understand and manage contract obligations.

Key features

  • Automates contract processes using configurable workflows based on your dynamic business rules and compliance requirements
  • Holistic view of every contract detail with stage, status and progress reporting
  • Quick and easy set-up with intuitive user interface and help from a dedicated implementation manager

Pricing

ContractWorks has three pricing schedules, each have unlimited users and feature a different number of allowed documents and electronic signature licenses (all billed annually):

  • Standard: $600/month — 2,500 documents, 5 electronic signature licenses
  • Professional: $800/month — 10,000 documents, 10 electronic signature licenses
  • Enterprise: $1000/month — unlimited documents, 20 electronic signature licenses

Best suited for

Quite high pricing makes it best suitable for a departmental solution in large enterprises. 

Pros

Cons

Built-in digital signing functionality for quick sign-off

No content creation or contract authoring

Smart Document Tagging for automatically identifying various parameters and getting data faster

A lack of in-built collaboration features make back and forth contract negotiation difficult

AI-capabilities to make the contract review process easier and more efficient

 

A single system of truth for contracts with unlimited document capacity

 

 

3. Ironclad

Ironclad’s contract management software tackles the complexity of clause-level collaboration and lets companies deploy their own contracts at speed.

Key features

  • Workflow Designer tool features a drag-and-drop user interface that lets users generate contract and approval processes in minutes
  • Ironclad Editor offers a DOCX-native experience and the ability to collaborate with colleagues on a shared platform
  • The Digital Contracting Platform brings in contracts from anywhere and enrich them with agreement metadata

Pricing

Prices start at $500 per month with a free trial available.

Best suited for

Developed for in-house Legal, Sales, Procurement, Marketing, Finance and HR teams.

Pros

Cons

Seamless integrations with different electronic signature systems and cloud storage services

Users have remarked that getting used to the software can be a struggle with a non-legal background

Centralized, auto-updating repository that gives visibility across all legacy and in-flight contracts

Limited search capabilities, you can only search by the workflow title

Enterprise-level security for all customers

 

 

4. Concord

Concord’s suite of applications and integrations for automating and connecting the entire agreement process.

Key features

  • Quick template creating for any contract type and approval automation 
  • Smart document approval workflows to guarantee compliance at all stages
  • Unlimited document storage and the ability to send signed documents to tools like Box, Dropbox or Google Drive

Pricing

Four pricing plans depending on your required functionality:

  • Free: $0 — create, edit and design documents in one location
  • Standard: $17/user/month — control access across your organization and bulk send documents for eSignature
  • Pro: $34/user/month — connect Salesforce and other applications, plus automate approvals and reporting
  • Enterprise: $TBC depending on requirements — boost efficiency with a clause library, subsidiary management, and SSO

Best suited for

Legal, Sales, Procurement and HR teams that mostly do simple adjustments to contracts. It might not be the best solution for ample editing and formatting.

Pros

Cons

Quick teams set-up and familiar inbox-like interface

Users have reported that after uploading documents, they’ve had formatting issues which have wasted time

Working with Word or even Google Docs

Challenging document management and overview if you have a lot of contacts within the software

Collaboration with anyone in your company and negotiation with any third party, saving time and ensuring compliance

 

 

5. Icertis

AI-powered Icertis Contract Intelligence (ICI) platform turns contracts from static documents into strategic advantage by structuring and connecting critical contract information.

Key features

  • Self-service contracts that have templating safeguards set by legal professionals
  • Intelligent negotiation and seamless contract execution, supported by powerful collaboration tools 
  • Enterprise-grade security and administration to manage highly sensitive confidential contracts

Pricing

Contact the vendor for a pricing request.

Best suited for

Companies in the automotive, banking, consulting, engineering, healthcare and technology industries.

Pros

Cons

Continuous monitoring and smart rules to drive compliance and minimize risk

Users noted that contract negotiations often have to happen outside of the software

Advanced analytics and real-time contract intelligence

Administrative burden, e.g. you can undo mistakenly executing a document only via helpdesk

Creating, approving, and collaborating on contracts within third-party software tools

Limited support and training for maximizing system capabilities

 

👉 Discover 16 best contract lifecycle management software platforms to see what other options you might consider.

To wrap it all up

As you’ve seen, contract management solutions are the key to effortless and efficient contract management. It doesn’t matter if you’re a small business or a big corporation, or if you have a lawyer in-house at all — there is the right contract management system out there for your specific business needs.

If you’ve been waiting for a sign to take the next step with automating your contract workflow process, this was it. Before you get started, just remember:

  • An advanced CLM software should allow you to manage all contracts and related workflows in one place — creating and storing documents, collaborating, executing, and monitoring
  • Aim for scalable solutions that can adapt and grow with your needs
  • For maximum efficiency, make sure you can integrate it with your other key business processes

 

Try out a contract management platform today

for free with Avokaado’s 7–day free trial

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