5 Hidden Advantages of Automating Your Contract Workflow
Your responsibility of contractual management extends beyond designing the paperwork, as they demand exceptional attention to detail throughout their lifecycle. You have to manage, report, monitor, and update the paperwork regularly to streamline business operations.
All these tasks can be time-consuming and resource intensive. However, the good news is that technology has made it easier for businesses to automate their contract workflow. In addition to the obvious benefits like time-saving and increased efficiency, an automated contract management system also offers several hidden advantages.
Let’s dig deeper into some of those benefits in this article.
What is Contract Workflow?
Contract workflow is a set of repeated actions that an organization must implement for the creation and execution of legal paperwork. There are different workflows for each stage of contract lifecycle management, all the way through its creation to renewal or termination.
These workflows are crucial for multiple reasons. They streamline the contract management procedure to increase efficiency. When there is a clear and consistent process for managing contracts, errors will also be minimized.
Moreover, it helps keep all the stakeholders updated regarding the contract’s status. This has a huge role in avoiding disputes and ensuring everyone’s on the same page.
What Contract Management Workflow Automation?
Conventionally, the contract workflow processes were often managed manually by employees of a firm, which often resulted in a high probability of errors due to the complexity of the paperwork involved. However, the advancement in technology has now entirely transformed the way organizations handle their contract management lifecycle. But how?
All thanks to contract workflow automation that uses software for automatic creation, negotiation, approval, execution, monitoring, and renewal of contracts. Thus freeing up the legal and other teams, including sales, HR, and marketing, from the hassles of physically moving the papers from one department to another. So they can focus better on other things that enhance the business productivity and drive better outcomes.
Advantages of Automating Your Contract Workflow Process
Let’s explore the hidden advantages of automating the contract workflow:
1. Lowered Administrative and Labor Costs
Switching from manual contract processes to automated ones come with a plethora of financial benefits. Firstly, you’d save a lot of paper costs. Then, there will be a reduced need for human labor to handle the contract management lifecycle.
Due to this, it becomes easier to save the budget associated with salaries, bonuses, and other expenses related to hiring and managing employees.
Additionally, contract workflow automation streamlines the whole CLM, ensuring the project’s timely completion with minimum scope for errors. It also helps organizations comply profusely with legal requirements. All of this can save a lot of administrative costs that may arise due to inefficiencies, delays, or contract breaches.
2. Saved Time for Legal & Contract Stakeholders
Incorporating an automated contracting system can simplify the work of your firm’s legal team. The primary thing that it helps with is the quick generation of a contractual framework. Team members no longer have to go through the long processes of writing terms and conditions from scratch. Instead, they can use templates with legally approved clauses.
Besides this, automation of the contract workflow process provides visibility into the contracts’ real-time status. The legal team members can know which contracts are pending, approved, or awaiting the signature — all in one place. This will help them prioritize their workload and identify the bottlenecks that require quick assessment.
Almost 90% of legal professionals face challenges while locating individual contracts, which ultimately reduces their efficiency. An automated workflow can resolve this issue effectively. It centralizes all the business contracts into a repository, making it possible to search and retrieve the documents with a single click.
3. Reduced Legal Fees and Contract Dispute Costs
Contractual disputes can arise in case of failure to fulfill the deadlines. This eventually refers to a breach of contract, which can result in legal penalties ranging from $1,000 to millions of dollars. Hence, organizations need to ensure that everything related to the paperwork is streamlined according to the timeline.
While humans can definitely miss up on an important milestone, the contract workflow software wouldn’t. A CLM solution lets you set rule-based alerts about upcoming events. For example, it can timely remind your team members that they need to review the stock’s price volume.
The best part is that it sends reminders to your contractors as well. So they’d know when you’re expecting deliverables and ensure timely delivery.
4. Better Forecasting and Contracts Trends Analysis
Data analysis is an important contract workflow automation component that transforms an organization’s contractual performance into trends. Through this, team members can easily view and analyze several aspects of the CLM, including:
● Contract duration
● Renewal dates and costs
● Degree of compliance
● Negotiation data
● Contract value
● Combined financial data
● Performance-based incentive opportunities
The above performance metrics help identify areas for improvement so firms can take the right steps to optimize the contract workflow. Moreover, they can also leverage predictive modeling to forecast future performance by analyzing historical data trends. It is an efficient method that allows early anticipation of potential issues so they can be eliminated timely.
5. Smarter Business Decisions
Data plays a crucial role in helping organizations improve their operations by learning from past mistakes. However, employees can’t evaluate their shortcomings if they have to search through hundreds of paper bundles to view a particular contract.
That’s where the contract workflow software comes to the rescue. It offers a centralized repository for digitally storing all the previous contracts. This instantly accessible data can be used to find new opportunities for the business to flourish.
Moreover, it also helps spot the risks that must be avoided in future decision-making for more effective outcomes.
How to Automate Your Contract Workflow?
Automating contract workflow is followed by a few simple steps before you leave everything up to the software. Let’s briefly overview them:
● First of all, ensure that all your contracts are digitally stored in a centralized location.
● The next step is to establish a structured system for efficient contract workflow management of your business. This can range from utilizing basic tools like spreadsheets to employing more advanced solutions such as contract management software.
● Once it’s done, then you can begin setting up a custom workflow. For example, you can set up alerts regarding the contract’s expiry. Or use pre-approved templates to initiate the creation of a new contract.
Your choice of contract workflow management system matters a lot. It must be robust enough to streamline every CLM step and comply with legal demands effectively.
Top Contract Workflow Tools
There are several contract workflow tools to streamline your business’s CLM. Let’s briefly overview a few of them:
Automated document generator: It provides access to templates with standardized clauses, so your legal team can save time by not having to create contracts from scratch.
Automated contract workflow: Through this tool, you can streamline the process of routing contracts from one stakeholder to another based on predetermined flows. All the parties are then prompted automatically to take appropriate actions like reviewing or redlining the contract.
E-Signature: The electronic signature tool has reduced the timeline of contract approval. By delivering the contract directly to the other party’s inbox, you can obtain their digital signature and finalize the paperwork quickly.
Centralized contract repository: It serves as a central location for storing, managing, and accessing all of a firm’s contracts, making it easier to locate or retrieve any specific agreement as needed.
Summing Up
Investing in an automated contract management system is a strategic move that can benefit organizations long-term. While its basic advantages are well-known, many hidden benefits may come as a surprise. Now that you know them, we hope you will consider automating your contract workflow and moving closer to driving success and growth in your business.
