Not only do contracts provide legal protections to ensure businesses aren’t at risk, but they also outline the agreed-upon obligations of each party. Creating contracts effectively helps to set expectations for everyone involved in the arrangement.
What is contract creation?
Creating a contract effectively requires the right mix of legal requirements and business goals. These considerations need to be balanced so the agreement is favorable for all parties. Contract creation may involve several departments or individuals within the company depending on what’s at stake and what services are involved. More than one leader or manager may need to sign off on the terms before all is said and done.
However, because contract creation depends upon a few moving parts, a lot can get in the way of a smooth contract process. This guide will go over seven common hiccups that can strain contract creation and the entire contract lifecycle.
7 challenges in contract creation—and how to overcome them
A big part of successful contract creation management is building effective contract templates. Templates can be used again and again for similar contract types, so spending time upfront creating them helps you establish acceptable language and contract terms that must be included for every contract helps you save your energy in the long run.
When you’re starting from scratch, however, it’s hard to know where to begin and how to ensure the efficiency of the process. Let’s take a look at what might be holding up the contract templating process for your business:
1. Poor application of business rules
Policies, rules, and procedures need to be incorporated and followed when creating contracts. One department can’t suddenly agree to something prohibited in the past just to please a client, for example. Business rules must be applied regularly for contracts to be consistent and to ensure that all terms are reasonable and practical for the business.
2. Exposure to risk in agreements
It’s crucial that all contract language be evaluated to ensure that the business isn’t liable for anything unreasonable. Setting up templates can help employees avoid risk exposure when they go to draft a new contract in the future. Remember to consult with the legal department and other teams that may need to have a hand in the agreement being created and negotiated!
3. Manual contract approval processes
Getting approval manually can slow down contract creation and management. Traditionally, contracts were routed by hand, and business leaders physically signed off on contract documents and terms or provided edits and comments on paper. Technology like Lexion’s speeds up workflows and ensures that clients and vendors are never waiting around for terms to be finalized. This way, contracts can be accessed from anywhere, anytime.
4. No automatic contract compliance
You can automate contract creation to ensure you’re being compliant with terms—smart tools can even review contract terms to monitor for language that would make your business non-compliant. Automated “no-code” workflows can also help to streamline creation of frequently requested contracts, like NDAs, so business users are always compliant.
5. Incorrect language in key clauses
Drafting contracts takes close attention to detail to ensure that all legal language is accurate. Unfortunately, a few small typos can change the meaning or implications of a contract. With incorrect language in a contract, the relationship or exchange may be at risk. Automated tools can review language for grammatical errors in mere moments to help you quickly know what toflag, review, edit, or remove.
6. Protracted contract negotiations
Getting a contract just right takes time.A contract can’t be complete and effective until everyone is in agreement, and the document has been signed. Assess what’s getting in the way of negotiations. Is it a slow process in routing documents for review and comment? Is anyone having trouble accessing the contract document? Using contract creation software to help you manage contracts will speed up review, negotiations, approval, and signature.
7. Old-fashioned technology constraints
If you have technology constraints, it will be harder to create and execute contracts. Incorporating effective contract management software will help you streamline and improve your processes to get things done more efficiently — no more hunting for documents or printing out paper copies.
Speed up your contract creation process with CLM solutions
Essentially, software helps you and your legal team become more efficient. Make sure you’re not letting the above seven challenges get in the way of a smooth process by integrating the right technology and contract creation tool to help you streamline management and mitigate risks.
Integrating the right technology means you can:
- Increase visibility into contract status
- Speed up contract creation, review, and signature
- Ensure compliance with monitoring and tracking tools
- Mitigate risk by monitoring language, compliance, and expectations
- Manage expirations and renewals with automated alerts
- Coordinate between departments instantly
- Track the performance of internal contracts
- Send review and approval requests via email
- Improve contract organization
Using a tool like Lexion,you can gain visibility into and control over all stages of your contract creation and management processes. Clause libraries, searchable contract repositories, and instant contracts can help take repetitive, low-value tasks off your plate so you can dedicate more time to what really matters: getting deals done right.
Lexion helps you modernize your legal department and makes the contract creation process easier than ever. Learn more about how our tool can help you master the everyday responsibilities of an in-house attorney (like creating contracts!) by downloading our General Counsel Playbook, or rhttps://www.lexion.ai/request-demo.