You’re not in business because you like signing contracts, you’re in business because you’re the best at what you do. If you’re like many small companies, you’re spending time and money trying to mitigate the risk of bad contracts. But there’s a better way to protect yourself.
I have compiled some tips on how to reduce your efforts wrangling contracts and while taking care of risk by using good contract management workflows.
Stop Circling Back and Move Contracts One Way
No business can afford to waste time going back and forth multiple times with internal approvals but for small businesses, the time spent circling back with internal teams is not only a waste but a potential liability. Every manual touch creates an opportunity for errors to creep in, and time delays for prospective customers can mean lost business or expensive time and discounts spent winning them back.
Here’s the standard contract management workflow and my suggested workflow tips for each stage:
Request
This stage is usually managed by the client representative. Their job is to find out what the prospective customer needs and to set expectations. A good client rep will set up workflows for themselves to ascertain customer needs, follow up, and input customer information into a central repository, like contract management software. If you have an online shop or purchasing portal, you can set up workflows to start the contract development process from an online request.
Drafting
Also started by the client representative, this stage involves the development of the contract that will cover the requested work. If they’re working in a CLM, they should have access to a clause library that they can draw on heavily for the contract draft. A clause library contains commonly used clauses that have already been approved by the legal team. Where the request contains clauses not currently in the library, you should set up a workflow to engage the legal team on the new requested language, ideally within the CLM so they can easily understand the contract in its entirety and the context of discussions so far.
Negotiation
This is the part where established workflows tend to break down. It’s not unheard of to have three, five, or even eight revision cycles as the customer redlines the contract. If the document is going back and forth by email attachment, it’s very easy to lose one or more important change – even more so if there is more than one customer representative making revisions.
What you need is a solid workflow that establishes which internal and external representatives are responsible for getting the contract finalized and the key steps to get there. Before your team approves the final, who is responsible for checking that all clauses have been signed off by legal? How will you manage version control? A CLM that can handle revisions and incorporates a clause library and workflow support will be a huge boon to this stage of the process, streamlining the process and reducing the risk that any party will sign a contract that has old or incorrect information.
Approval
This is the part most small businesses think about when they think about contracts – the magical time when the contract comes back with a signature that says a customer owes you money. But beware: Despite the amount of effort you’ve put in before now, you can still lose business at this stage. Speed the signing process by choosing a user-friendly tool to collect signatures and key details.
The benefit of having the approval stage as part of your CLM tool is that you can set up workflows to automatically trigger notifications and other fulfillment requirements. Before the customer representative has even opened their email, your CLM software could already have filed the final contract in the customer’s account and triggered workflows for your inventory or fabrication departments.
Execution and Obligations
If you build workflows that cross applications, you can ensure that nothing will get dropped as you move from your contract process to fulfillment applications. I recommend a CLM that integrates with your existing tools so your contract management workflows can be seamless, or even automated!
Compliance
Good workflows earlier in the process can save compliance from being a major headache. Develop a single repository for all contracts that can record and report all relevant contextual information, fulfillment status, the final signed contract as well as all relevant correspondence. Are you confident that your management system will give you reliable information during an audit? If not, it’s time to rethink your tools.
Renewal
Set up workflows for the end of the process, too. Being able to proactively reach out to a customer to re-up your offer or make a new one will create opportunities for new business development or at least, useful information gathering while you wind down the relationship. If your initial contract management workflows were solid, there is no need to run a renewal through the legal team again, which should speed time to acceptance!
Your Legal Team is Expensive. Don’t Make Them Look at a Contract Twice
No one knows your contracts like your legal team does, which is just as well since they are often the only people standing between your business and potential disaster. However, legal advice is expensive and it’s paramount that you use their time wisely.
Workflows should lead to the legal team as few times as possible, ideally once. That’s why it’s so important to maintain a good clause library: It empowers non-legal staff to know what they can offer clients in response to their needs. The legal team approves each clause and its use only once, so they’re not constantly engaged looking over legal language they have already seen.
Smart Tagging Supports Even Smarter Workflow
When looking at a CLM tool, make sure it has OCR features that can manage smart metadata tagging at the contract intake stage. This breakthrough technology allows you to instantly upload a signed contract and have key data recognized and tagged for search. Set up workflows based on the tags so as soon as the document is uploaded, new workflows are triggered.
A CLM Tool that Supports the Contract Management Workflows You Want
Smart workflows are an important part of mitigating risk and streamlining the contract management process. You deserve a tool that can manage the contract workflows that make sense for your business while saving you time, money, and heartache. Most CLM solutions are only built for one part of the business – legal, finance, or sales and marketing.
With Anapact, the entire business can operate with seamless workflows, not just during the contract management process but beyond, with integrations that reach into the other tools you need to take care of business. Get a demo today.
