After you’ve agreed on terms, gotten final approval from stakeholders, and signed on the (virtual) dotted line, you’ve officially executed your contract. You might get so excited after closing the deal that you keep it stored in your inbox or just throw it in one of a few drive folders labeled “contracts.” But when it’s time to review your terms, understand your obligations, or compare contract data across contracts — that’s the contract management process, and it’s just as important as contract execution.
In a good contract management process, you not only know where your contracts are, but you can also analyze them and generate reports that aid in smarter decision-making. It also helps you improve compliance practices and mitigate risk before it becomes a full on crisis. If you want to improve your contract management process, read on to learn how to make the most of it.
Elements of the contract management process
A solid contract management process has three essential elements: centralized storage, data extraction, and reporting capabilities.
Centralized storage
Knowing where your contracts are after you’ve signed them is key to contract compliance and a healthy contract management process. With good contract management, legal, finance, and leadership teams can store agreements in a centralized location. This way, when someone needs or refers to a specific contract, you know where to find it.
Contract data extraction
Contracts are one of the richest sources of business data. So, being able to access and analyze that data gives your team greater insight into how the business is performing. A good contract management process allows you to extract contract data — e.g. termination date, clauses, renewal terms — and make data-driven decisions based on that information.
Data visualization
Data visualization is the aspect of the contract management process that empowers users to analyze contract data and present it to the team in a meaningful way. Using Contract Lifecycle Management (CLM) software, your team can generate and present reports to team leadership that are easily digestible.
Benefits of a good contract management process
In addition to reducing the stress of not being able to find your contracts, a good contract management process also helps your team boost productivity and efficiency.
Here are three benefits of contract management:
Increased contract visibility
The ability to find any contract at any time is a true legal superpower. It’s even better when finance can find agreements that are relevant to them without having to dig through every single contract. This ensures that your business is better able to enforce its terms, maintain compliance, and understand trends in contract data.
Better compliance
With a constantly shifting regulatory landscape, it’s crucial that in-house teams conduct regular audits to keep the finger on the pulse of their contracts. A centralized repository allows legal (and other risk-conscious teams) to quickly access contracts, filter by applicable law, and make required changes. This helps to make contract compliance a part of your contract management process.
Enhanced strategic thinking
Contract data is an excellent source of business data and can inform strategic decisions within the legal team and across the business. For example, contract metrics and KPIs reveal your legal team’s workload, the need for additional headcount, and whether or not you’re prioritizing legal matters that drive value.
Takeaways
A successful contract management process benefits more than the legal team — it benefits the entire system. With improved contract visibility, cross-functional collaboration, and contract analysis, businesses can realize more value and confidently make data-driven decisions.
See how LinkSquares Analyze can help your team build a solid contract management process. Contact us today.
