What contract management can do for your business.

What is contract management?

Contract management is a digital tool that helps businesses govern their contracts throughout the contract’s lifecycle. It is designed to streamline the contract management process, making it easier for companies to create, negotiate, execute, and monitor contracts across your organization.

Contract management solutions can typically store all contract-related information in one place, such as contract terms, parties involved, payment terms, and important dates and clauses. It can also provide features such as automated alerts, reporting, and analytics to help users stay on top of their contracts and ensure compliance.

In short: contract management removes manual steps from your business’s contract management processes, making it faster and easier to get things done.

Here are the top ways contract solutions can increase efficiency:

Create a centralized, easy access point for all your contracts.

Contract management enables your business to centralize all contracts in a single location for easy access, sharing, and collaboration across departments, teams, and stakeholders. Creating a centralized repository ensures that all of your organization’s contracts are easy to locate, simplifying contract management and renewals. 

Having one place for all your contracts helps avoid the frustration of not being able to find the most recently edited document you could have sworn was saved on your desktop.

Streamline contract collaboration.

Contract management solutions allow you to collaborate seamlessly with internal and external stakeholders on contracts. You can share contract documents and data, assign tasks, and receive feedback in real time. With contract management solutions, you can see—in one quick glance—which documents still have to be signed and by whom, helping avoid panic over a missed deadline or an overlooked task. This improved collaboration increases transparency and enables teams to work together more efficiently.

Speed up the contract management lifecycle processes.

The best contract management solutions allow you to draft, redline, approve, eSign, report on, and renew contracts all in one easy-to-use platform. This eliminates multistepped processes that slow down negotiation times, saving you time, headaches, and money.

With a contract management lifecycle (CLM) solution, you can:

• Accelerate presignature and content creation. Instead of lawyers having to draft new contracts for every vendor, the best digital contract management solutions provide templates, standard clauses, and other tools that make it easier to draft and customize contracts. Not only does this take away some of the tedious parts of the work, it also helps ensure that contracts are consistent and comply with legal and regulatory requirements as well as company values.

• Facilitate the negotiation process. The best CLM tools help speed up contract negotiations by facilitating collaboration between parties during the negotiation process and allowing real-time editing and comments on documents. No longer do you have to rely on email to wait for edits to come in. Instead, contract management solutions facilitate negotiations by allowing parties to discuss and make changes to the contract simultaneously.

• Keep track of edits and redlines. Contract management solutions can track changes made to the document, which can help parties keep track of the negotiation process. Version control can also help parties identify and address any discrepancies that arise during negotiations. Having a record of changes also ensures all stakeholders have a holistic view of any modifications that were made during the negotiation process.

• Provide automated approval workflows. Anyone who has ever sat waiting on a final contract signature knows time matters. The best CLM solutions automate the signing and execution of contracts, including electronic signatures and automated workflows, getting you to execution quicker and reducing the risk of errors.

• Get notification of contract renewal deadlines. When it comes time to renewals, it’s important to have as much time as possible to look over the terms and clauses and negotiate the best deals possible with vendors. Contract management solutions can help streamline the process by providing reminders, alerts, and automated workflows to initiate renewal discussions and negotiations. 

• Generate advanced reports and analytics. Knowledge is power when it comes to your contract data. Contract management solutions enable you to generate advanced reports and analytics on contract performance, such as contract duration, renewal rates, and compliance levels. These insights help you make informed decisions and improve CLM processes continually.

• Enhance security and compliance. Of major concern is that older executed contracts might not be in compliance with updated laws. Contract management solutions help enhance security and compliance by providing robust access controls, audit trails, and encryption. These features help protect your confidential contract data and ensure that your business complies with relevant regulations and standards and organizational values.

Why is software-based contract management important?

Contract management solutions are essential for maintaining efficient and effective negotiation processes. A well-managed contract minimizes legal, financial, and brand risks for any organization. Poorly managed contracts, often without contract software, can result in missed renewal and expiration dates, broken obligations, lack of compliance, unauthorized data access, as well as unhappy partners, suppliers, and customers.

Additionally, 92% of the time spent on contracts is spent on processes because of inefficient manual contracting—the IACCM found this to be true. When there is disorganization among contracts, there may be friction among team members that will hinder their efficiency. Key dates can be missed due to poor lifecycle management, resulting in costly renewals. This can be avoided by implementing records through software-based contract management solutions.

Benefits of contract management solutions.

• Visibility. Contract management solutions provide increased visibility and 24/7 access to contracts. In comparison to the traditional, manual contract lifecycle, CLM solutions significantly increase visibility and monitoring of legal contracts.

• Organization. Contract management solutions assist companies in organizing their legal contracts, which is crucial to success. With this software, any contract can be found and viewed based on its date, type, sector, and so on. This is a huge benefit since any contract can be viewed with just a few clicks. 

• Efficiency. Contract management solutions allow users to automate workflows and prevent illegal changes. A company that deals with contracts every day will see exponential results from the reduction in labor hours and increased efficiency overall.

• Negotiation. There is no need for back-and-forth in-person negotiations. Instead, all parties are notified of the tasks they need to complete. The review of contracts can now be done from all various locations simultaneously, eliminating the need for long meetings. Contract management solutions allow users to update contract versions, monitor changes, make comments, discuss, and share.

Types of contracts covered by contract management solutions.

• Cost-reimbursement contract. This is used when there is uncertainty in the requirements and in the development process. This is a method of new research and development that involves increasing innovation without guaranteeing the outcome. This contract is based on the idea that the seller will provide work for a fixed period and then increase the bill after the work has been completed. Due to the lack of discussion prior to the agreement, the other party does not know the amount of the raise.

• Time and material contract. Within a reasonable limit, one party agrees to pay the other for the time and materials used. When the customer agrees to pay all real and legitimate expenses, the costs can be reimbursed. Alternatively, the customer can set the limit, similar to an FP. It is important to select a vendor who possesses the necessary capabilities and experience, as well as the required resources and manpower. Supply costs are negotiated and paid according to how much resources are consumed or purchased. To avoid massive cost overruns, the contract is fairly simple and convenient for both parties.

• Unit-price contract. It ensures that each hour that its members spend on the overall software development process will be paid at a specified hourly rate by the party engaged in the development process. This sole advantage is the main reason why it is attractive to freelance workers.

Contract management software challenges.

• Compatibility. It is difficult to share documents with other parties due to compatibility issues between different versions of Microsoft Word and Adobe PDF. It may be easier to implement a contract software solution that is web-based (HTML) and can be used by anyone, regardless of what device or operating system you are using, from Windows to Apple.

• Space limitation. It is difficult for some users to find enough space in order to store all of their contracts online as well as share this information conveniently with other parties (as opposed to a single user having difficulty uploading dozens of documents). 

• Difficult navigation of content. In collaboration sessions with colleagues, it may be difficult to access certain words, lines, or pages when working on multiple contracts simultaneously. By using tools that allow for better categorization of content by departments, this can be solved.

Contract management solutions are designed to overcome these challenges and deliver the benefits of faster, smarter impact on the business. What follows is an overview of key functions, features, and techniques that you can find in an industry-leading contract management solution.

What does it mean for a contract management system to be AI-powered?

AI-powered contract management systems utilize AI and machine learning to automate and streamline the content management process. The system uses algorithms, statistical models, and optical character recognition to extract key data points from contracts, such as contracts terms, obligations, and deadlines.

With AI-powered CLM solutions, the systems have been pretrained to recognize dozens of common clauses based on real-world examples. The most accurate AI-powered systems have been trained on millions of contracts. 

Just as with human learning, the more time a system spends understanding and learning a subject and the more data points they have to refer to, the better they perform.

What this means in practical terms.

While the most basic contract management systems operate mainly as storage systems and organizational tools, AI can transform your static contract documents into dynamic, searchable data.

Read on about what AI-powered contract management solutions can do vs. a basic contract management system:

Analyze large amounts of data quickly.

It’s important that your business understands the content of your contracts. When you’re using a basic contract management system—not powered by AI—employees or outside counsel must go through all your contracts manually in order to amass information on things such as deadlines, payment terms, and anomalies.  

The best AI-powered contract management systems, by contrast, can accurately scan and analyze thousands of pages of contract data in minutes, providing you with a fully indexed, searchable digital portfolio of your commitments, expiration dates, and risk exposures.

Help you make more strategic, data-informed business decisions.

AI-powered contract management systems use predictive algorithms to analyze past data and identify trends and patterns that can inform future decisions for your business. 

For example, they can predict which clauses are likely to cause disputes and suggest changes to reduce risk. AI-powered CLM solutions also provide you with increased visibility into your data by making information previously locked away in static documents searchable. With this accessible contract repository at their fingertips, stakeholders are able to make more strategic decisions. 

For instance, with AI-powered contract management solutions, chief financial officers can see in real time how much revenue is tied up and make changes based on the cash position. Procurement professionals can use AI-powered contract solutions to enrich visibility into supplier obligation and improve compliance.

Help you scale up.

As companies grow, and contracts start numbering in the thousands, smaller departments require a more seamless way to keep up with contracting demands at scale.

Unlike basic contract management systems, AI-powered contract solutions automates the process of creating, negotiating, and managing contracts. As contracts come in, AI-powered CLM solutions can automatically review contracts, pull in relevant data points, and flag potential issues.

When teams are drafting new contracts, AI-powered contract management solutions provide access to a variety of templates and clause libraries that can be used as starting points for drafting contracts. The best AI-powered contract management solutions can be customized to your specific needs and integrate with existing tools, which saves time and helps ensure consistency across contracts.

Beef up your security.

Today, fines for not adhering to updated compliance and data privacy laws can cost your company millions of dollars. Unlike basic contract management systems, AI-powered solutions can monitor contracts in real time and provide alerts when there are changes or updates to regulations or policies that impact the contract, helping organizations stay compliant with regulatory data privacy and compliance requirements and avoid penalties.

Why Workday?

Workday Contract Lifecycle Management, powered by Evisort AI, is the industry leader in contract intelligence. Our platform offers an end-to-end contract management solution built around a best-in-class AI-powered core architecture.

Our proprietary AI is fast, accurate, and easy to use, allowing you to process 450,000 documents in only 1 day and providing you with a single source of truth for connected contract data. New Gen AI capabilities make it even easier for users to draft and redline contracts based on the preferred language and existing contracts unique to their organization.

We have pretrained our AI on millions of contract samples and billions of data points and combined it with other smart features such as built-in approval workflows, document synchronization with external storage, and advanced searching options. We deliver a best-in-class contract management platform with unparalleled accuracy.

The best part? You can launch in only 30 days.

Learn more about how Workday is helping businesses like yours accelerate innovation, streamline operations, and grow their business.