An effective contract management process involves many moving parts. You need clearly defined roles, the right technology, and efficient strategies to ensure that workflows aren’t being held up unnecessarily. Business goals should be defined so key contract terms are always in place. Also, negotiations shouldn’t be eating up too much time for the legal team.
Using outdated tactics like downloading documents to print and sign by hand can slow down processes. This is especially concerning when the business manages many contracts along with all their versions and related documents. There must be better workflows in place so that time isn’t being wasted sifting through documents to find the right ones and the review process isn’t being held up by one department or individual.
So, how do you improve your approach to contract management? Here is an overview of what a contract workflow is and tips to help you create more efficient contract workflows.
What Is Contract Workflow in Regards to Contract Lifecycle Management?
A contract workflow comprises the entire creation and execution of a contract. It starts with a draft of a basic agreement, goes through negotiations, contract reviews, and redlining, and ends with an executed legal document signed by all parties. Here is a brief look at the steps:
- Conditional contract requests come in to an in-house legal team from a business department.
- An agreement draft is created by one party.
- Feedback and redlines come in from internal stakeholders.
- Feedback and redlines come in from the external party (or parties).
- Approvals of final terms are given from all parties.
- Signatures and execution take place.
- Contracts are stored until they are needed again for renewals or questions.
Contract workflows sound pretty straightforward. There are, however, hiccups and roadblocks that can make these business processes lengthy and complex. The parties may see a lot of back and forth when trying to get the most favorable terms or to avoid contract risk. Collaborating on and sharing documents can be clunky with outdated processes. Any business can face holdups when workflows just aren’t as functional as they could be.
Tips to Optimize Your Contract Workflow and Save Time
There are lots of tools and tricks available to help you improve contract workflows. Let’s walk through some basic steps you can take to optimize your process:
Define Roles Within Your Legal Team
You need an outline of the tasks of every person involved in the contract workflow process. Identify who will be taking on which tasks. Determine the answers to the following questions to get started:
- Who will create the contract document?
- Where do you find and how do you create contract templates?
- What contract types are needed by each department?
- Which departments or individuals handle the review process before sending them to external parties?
- Who is in charge of negotiations?
- Who will coordinate signatures and document sharing?
- Who will sign the final contract?
Clearly outline each person’s role in the process so you know how the document will be passed around when the time comes. The clearer each person’s responsibilities, the better.
Use Contract Templates
Your business likely has similar relationships with clients, employees, or service providers repeated again and again. Instead of creating a brand new document for each agreement, draft a template you can pull and edit as needed. This practice can save the legal team much time.
Templates are also helpful because legal can draft accurate language that is always there when other teams need to send a contract. Contract management software like Lexion, allows you to create and store templates so all authorized users can access them when needed.
Develop a Standardized Contract Approval Process
When you're defining each person’s role in contract workflows, you should come up with a list of everyone who has to review and approve the contract. Then, put a process in place for routing documents to each person before they’re sent for signature or external party approval.
A standardized approval workflow will help you speed things up so that contracts never get stuck and it’s always clear who you’re waiting on to move forward. It will also set the basis for later optimization of your process that will show which stage or department is holding things up.
Use Electronic Signatures
It’s no longer necessary to send around physical contracts for signature, which takes up a lot of time and energy. Software makes it easy for all parties to sign electronically with just a few clicks. You simply enter in the names and emails of signatories and they receive a link to sign the document right in their inbox.
If your executive team has to sign hundreds of contracts each month, it’s much easier for them to be able to sign them all with one click. Some platforms, like Lexion, seamlessly integrate with the e-signature tool of your choice, such as DocuSign, HelloSign, or Adobe Acrobat Sign. Electronic signature helps you speed up contract workflows significantly.
Utilize Contract Lifecycle Management Software
A benefit of software with workflow management features is the full integration of all contract workflow tasks. You can create and edit documents in the platform, send contracts for review, redline contracts, track statuses, and coordinate signatures, all from one place.
A good contract lifecycle management system also gives you access to crucial metrics so you can see how long it takes for a contract to be executed from start to finish. Lexion’s metrics help you identify which touch points are holding things up so you can smooth out the kinks in your workflows.
When your contracts expire, you can also use a contract management solution to alert you of upcoming expiration dates. This helps you facilitate the contract renewal process with automation, which in turn leads to better client retention and trust. You’ll never miss an upcoming date and thus relationship renewals won’t get held up.
How You Can Implement Contract Management Solutions Into Your Workflow
Contract management software helps you through each stage of your contract workflows. Everything can be managed in the same dashboard, and all authorized team members can log in to collaborate, share documents, or set up automated alerts.
Use contract management software like Lexion, which includes a complete workflow tool to help you manage all legal tasks. Draft management features help you ensure that only the latest version is being used. Parties can view draft history for reference.
Lexion also shows you important workflow metrics and you can pull key performance indicator (KPI) reports in moments. This data helps you make better business decisions and identify areas of need within the contract process and legal team workflows.