Crafting contract is crucial to establishing a business relationship, exchange, or service delivery. Why are contracts so important?
Contracts provide legal protections to ensure the business isn’t at risk, and they outline the agreed-upon obligations of each party and all other contract details about what will happen. Contracts provide expectations for everyone involved in the arrangement.
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, as 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.
What’s Straining Your Contract Creation Process
A big part of successful contract creation management: building contract templates. Templates can be used again and again for similar contract types. Creating them helps you establish acceptable language and contract terms that must be included for every contract, while also saving time.
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 agreement 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 need to be applied consistently for contracts to also be consistent and to ensure that all terms are reasonable and practical for the business.
2. Exposure to Risk in Agreements
A major mistake that many companies make is exposing themselves to risk in contracts. 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. It’s also important to consult with the legal department and other teams that may need to have a hand in the agreement being created and negotiated.
3. A Manual Contract Approval Process
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. In today’s workplace, this outdated process can strain your contract management strategy. It takes a lot more time, especially if someone is out of the office or working remotely.
Instead, use contract lifecycle management software to create documents and route them for approval. Technology 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
Failure to utilize automation can also get in the way of smooth contract creation. Automation can help companies ensure they’re being compliant with contract terms, and smart tools can even review terms to monitor for language that would make them non-compliant.
Use automated tools that send out alerts if anything worrisome is detected when you’re drafting and reviewing a contract.
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.
Automated tools can also help with this problem. Language can be reviewed for grammatical errors in mere moments, and any incorrect language can be immediately flagged, reviewed, edited, or removed.
With incorrect language in a contract, the relationship or exchange may be at risk.
6. Protracted Contract Negotiations
Getting a contract just right takes time. But, the process is stalled even more when negotiations are going back and forth with no end in sight. 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. Basic Technology Constraints
As with any modern process in the workplace, the contract management process is made better when you incorporate technology. You don’t have to print out and route paper documents. Contracts can be located, reviewed, and edited in seconds. The documents will live on the platform, and updates can be viewed in real time. This makes it much easier to manage the different versions of a document; so, nothing is outdated.
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.
Use Contract Management Software to Improve Your Contract Workflow
So, what can contract management software do for your business? 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 in moments
- Track the performance of internal contracts
- Send review and approval requests via email
- Improve contract organization
Essentially, software helps you become more efficient. Make sure you’re not letting the above seven challenges get in the way of a smooth contract creation process. Integrate the right technology and contract creation software to help you streamline management and mitigate risks.
Using a tool like Lexion is a great place to start. You gain visibility into contract lifecycle management and can view the status of any contract, open or executed. You can set up alerts so that you never miss an upcoming expiration or renewal date. You can also use the new Instant Contracts feature to automate the manual and tedious work of preparing documents for signature.
You can easily search through complex contracts to find important terms, and gather analytics and insights about contract performance and contract creation metrics and timelines.
Lexion helps you modernize your legal department. Reach out to set up a demo today.