Is your organization struggling with the complexities of contract management? Are you finding it challenging to manage contract renewals using spreadsheets? Do you face challenges in coordinating multiple stakeholders within tight deadlines?
Accuracy and efficiency are essential to unlocking the full potential of your contracts. You’ll need a solution that streamlines the entire contract lifecycle management process—from drafting and reviewing to negotiating, approving, executing, and renewing contracts.
Research from Deloitte states that organizations adopting better contract management best practices help to achieve cost savings from 20 to 25 percent. The research states that following best contract management practices helps streamline the contracting process.
In this blog, we will discuss 12 best practices for contract management that can help you establish an effective process for contract administration.
Let’s begin.
12 best practices on contract management for your businesses
1. Centralize your contract repository
Managing contracts properly is only possible with a centralized repository. Contracts undergo multiple stages from negotiation to signing and approval.
Often contracts get handled by various departments, stored in disparate IT systems, or even kept in physical filing cabinets. These manual processes result in inefficiency and also pose security risks.
Having a centralized contract repository:
ensures all contract stakeholders are on the same page.
enables precise monitoring of amendments and updates, crucial for maintaining contract integrity.
helps maintain an organized and searchable archive of all contracts and related documents, reducing time spent on document retrieval.
incorporates a control system with intelligent filters and search capabilities, making it easy to quickly access specific contracts.
allows managers to update contract statuses in real-time and offers an overview of contract data.
Overall, a centralized contract repository helps improve efficiency and manage contracts.
2. Standardize templates for contract creation
Not having a standardized contract system results in human errors, risks, and a slow contract approval process.
Standardized contract templates streamline the contract initiation process. A template library avoids language inconsistency errors across all contracts.
CLM software solutions like HyperStart help you standardize contract creation with pre-approved templates and a clause library. Our software also allows you to create templates and add custom clauses according to governing laws and business requirements.
3. Customize the CLM solution to fit your specific requirement
Every business has unique processes, compliance requirements, and strategic goals. One-size-fits-all software may not address specific requirements such as unique workflow requirements, industry-specific requirements, or integration with other business software.
Organizations use multiple software such as CRM, ERP, and procurement software, and it can take time to ensure that these systems work well with CLM software.
On the other hand, each organization has a different or unique contract management process that standard CLM solutions cannot support.
Implementing CLM software that offers customization helps adjust functionalities to fit your business processes. This creates a frictionless data flow with a holistic view of contract-related activities.
Manage Your Contracts with HyperStart CLM 5x Faster
HyperStart CLM offers AI to auto-extract metadata from contracts and create contracts in just a few minutes. We have handled 1B+ documents so far.
4. Assemble a dedicated contract management team
Establishing a dedicated contract management team improves efficiency and consistency for larger organizations. The team helps with complex negotiations, compliance requirements, and ongoing management.
Contracts can be intricate and require a deep understanding to be appropriately managed. Mismanaged contracts can lead to issues such as:
Legal disputes
Financial loss
Reputational damage
So, forming a contract management team allows for more effective contract management on a large scale. This contract administration best practice allows an organization to improve operational efficiency and handle contractual obligations effectively.
5. Implement web-based CLM solutions
Web-based solutions offer accessibility and flexibility essential for today’s businesses. Web-based CLM platforms enable teams to access contracts and related data from anywhere.
Fragmented data across different departments leads to inefficiencies or errors. Additionally, a traditional on-premise contract management solution restricts access to office locations.
To resolve these challenges, web-based CLM software facilitates digital contract management by ensuring that contracts and related data are stored centrally and accessible anywhere and anytime.
6. Establish contract management KPIs
Implementing key performance indicators (KPIs) for contract management helps track performance and identify areas for improvement. For example, measuring the average time to sign a contract, the percentage of contracts renewed versus expired, and the rate of compliance with internal policies and external obligations.
KPIs are a bridge to ensure contracts align with business goals and objectives. Setting up KPIs should be directly linked to critical factors in contract management such as cost savings, faster TAT, and compliance rates.
A modern CLM solution tracks contract performance to identify improvements and provides contract managers with a 360-degree view of the contract’s lifecycle.
7. Enhance contract reporting and analytics
Does your organization need more visibility, the complexity of data interpretation, or contract management risks?
Implementing contract analytics and reporting within your CLM process mitigates risks, drives efficiency, and delivers contract value.
Using the data captured in your CLM solution to generate insightful reports and analytics. These insights include:
Contract expiration reports
Obligation tracking
Spend analysis
Risk assessment
Contract review time
Regular contract reporting and analysis can help you identify bottlenecks, risks, and opportunities to unlock business potential.
CLM solutions offer advanced reporting capabilities, dashboards, and data visualization features that help to gain actionable insights from contract data.
8. Automate the contract management process
When contracts are managed manually, there are chances of errors, inefficiencies, and financial repercussions. Contract automation software helps you enhance contracting efficiency and accuracy, eliminate manual work, free up resources from repetitive tasks, and allocate them to higher-order work.
Within your contract management lifecycle, look for opportunities to automate tasks such as:
Contract creation process
Approval workflows
Redlining & negotiations
Obligation & renewal tracking
Contract risk analysis
A CLM tool augmented with artificial intelligence technology for automated metadata extraction, redlining, and contract retrieval, you can find tremendous value at every contracting step.
9. Optimize your contract negotiation process
The manual redlining process involves excessive back-and-forth in negotiations and delays closures. AI-powered contract redlining replaces multiple email exchanges and calls so stakeholders can collaborate and review contracts 75% faster.
Contract lifecycle management software like HyperStart helps businesses redline, comment, and provide suggestions in real time quickly and faster in a single workspace.
10. Utilize electronic signatures for contracts
Traditionally, organizations relied on wet-ink signatures, which require physical presence and delayed closures. Today’s business environment calls for a more efficient solution.
To resolve these challenges, organizations are adopting electronic signatures. Digital signature solutions like eSign, AdobeSign, and DocuSign allow you to collect legally binding signatures faster. This digital process eliminates the need for paperwork and in-person meetings.
Adopting e-signatures speeds up and digitizes the signing step.
HyperStart CLM, for instance, integrates these electronic signature tools to digitize and automate electronic contract signing. It also offers hand-drawn, Aadhar, and OTP-based signing options. This approach allows businesses to accelerate contract execution and improve productivity while staying compliant.
11. Set up contract approval workflows
One of the CLM best practices is automating approval workflows.
Automating contract management approvals eliminates email communication and automates the follow-up process. No-code workflows with conditional logic, automated reminders, activity tracking, real-time editing, and e-sign integrations are handy solutions that help you agree contracts faster.
12. Establish better collaboration between all parties
Communicating via email can become tedious and overwhelming. When you are handling multiple contracts, chasing approvals, reviews, or signatures becomes especially cumbersome. Different parties involved may interpret messages differently, which leads to misunderstandings.
With a centralized system, scaling contract collaboration becomes simpler. This software solution helps all your teams stay on the same page without frequent context-switching.
How HyperStart can help with automating contract management
HyperStart CLM software allows you to create, find, track, and agree contracts 10x faster. Khatabook and LeadSquared are some recognized organizations that use our CLM software to align and automate all contract management processes.
HyperStart CLM helps you with every stage of contract lifecycle management, from drafting to signing to storing and tracking.
Here is a list of benefits you get from HyperStart CLM:
2
minute contract creation
2
second contract retrieval
80%
faster contract TAT
Store all your contracts in a single place
Never miss a renewal again
Execute contracts in just 2 clicks
Follow these best practices for contract management
In this blog, we discussed some time-tested contract lifecycle management best practices, such as centralizing contract data, using standardized templates, and automating workflows to streamline contract management. By implementing these contract management best practices, you can minimize risks, improve efficiency, and drive better outcomes from agreements.
HyperStart CLM software automates the entire contract management lifecycle. Get a first-cut review of the SLAs, MSAs, or other contract agreements with 99% accuracy within a few seconds with AI-powered redlining. Additionally, you can integrate HyperStart with Google Drive, Salesforce, and OneDrive. Book a free demo with HyperStart.
One of the best practices for contract management is automating contract workflows.
