Even though contracts touch almost every aspect of the business, when most people hear “contract” they think of legal. From sales to customer success and every department between, contracts govern some of the most crucial activities within a company. So if there’s a problem with contracts, there’s a problem within the business.
The same goes for contract storage. Poor contract storage opens up your business to all kinds of risk, from data breaches to breach of contract. These have long-term consequences and impact the way you conduct business in the future — as well as who will want to do business with you.
Here are five reasons improper contract storage is a business problem.
Hinders Access to Business Data
Contracts hold crucial data that businesses need to make strategic decisions. They also hold sensitive personal and financial data that you don’t want inthe wrong hands.
When contracts are stored improperly (i.e. in a non-secure, non-centralized location), it’s hard for your team to access the data that they need, like renewal dates, obligations, and regulation compliance. Poor storage also makes it impossible to search and aggregate data about potential upsell and cross-sell opportunities.
Improper contract storage means legal will spend most of its time trying to play catch up instead of leading the way.
Makes You Vulnerable to Compliance Risks
Poor contract storage gives cyber attackers a clear path to the valuable data inside your contracts.
Often, manual storage isn’t compliant with privacy regulations, making it easy for bad actors to find and access sensitive business data. It’s also likely that if your data is stored improperly, it’s not encrypted and therefore easily read by unauthorized individuals.
During a data breach, your compliance risks skyrocket when your contracts are scattered. Non-centralized storage makes it hard to conduct discovery and follow through on regulation requirements. Then, your business will be facing thousands — or millions — in fines, and potential clients stop seeing you as trustworthy.
Facilitates Poor Version Control
Knowing what version of your contract is active/live and when is important for being able to uphold it in court.
But when there’s no real system around contract storage, it becomes increasingly difficult to keep track of the latest version of a contract. Even worse, if you’re using those contracts to create new templates, you’re increasing your chances of sending out a contract that doesn’t have the most favorable terms. This can leave your business unprotected in the event of legal action.
Impedes Collaboration
The most successful businesses have a strong culture of collaboration. When your contracts are poorly stored, healthy and efficient collaboration across teams becomes difficult.
Not only will you run into the version control issues mentioned above where no one knows if the contract they’re working on is the most recent, but asynchronous redlining is a struggle to keep track of.
Scattered contracts make it hard to share real-time contracts with other stakeholders and cross-functional collaborators.
Makes Legal’s Job Much Harder
When there’s no system for finding contracts or central location for storing them, every stage of the contract execution process will be unwieldy.
And suddenly, in-house counsel is spending their time doing (and undoing) tedious admin work to find the right version of a contract. Instead of planning strategic initiatives, they’re spending valuable time putting out fires.
Takeaways
Contract storage can be an overlooked responsibility of the legal team. But it’s an important aspect of keeping the business alive and competitive.Learn how LinkSquares can help your whole business succeed with great contract storage. Request a demo.
