No matter what the specialty of your business is, you probably enter a number of contracts every day. These contracts could bind suppliers and purchases or create legal bonds. The greater the number of active contracts you have, the more revenue you generate. But, are you managing these contracts in a way that achieves this?
On average, organizations lose 9.2% of revenue due to poor contract management.
There are several reasons why contracts are difficult to manage:
- They can take significant time to copy, file and store
- Improper tracking of price and payments can create revenue holes
- Approval delays can dissatisfy your customers and make you less productive
- Fragmented management can result in inaccurate information or overlook policy compliance
Here are some ways in which the use of automation software can improve contract lifecycle management (CLM) and benefit your business:
1. Standardize the Process From Start to Finish
To understand how to manage a contract well, you must first understand what the various steps in a contract’s lifecycle are. For example, the contract lifecycle of a sales operation might involve the following five steps:
- First, you generate a quote using a Customer Relationship Management system (CRM)
- Then, you send over an e-sign document to bind the contract
- Next, you carry out the operation of making the sale and supplying the product
- After that, you store your contract in a database
- Finally, you book the contract using Enterprise Resource Planning (ERP) and keep track of your contracts from there
Instead of having to deal with multiple applications to manage the same contract, such as a separate CRM and separate ERP software, a CLM system streamlines all contracts based on the business’s operations. This way, you manage all steps of all contracts in one single program, making collaboration faster and tasks easier to track. You also don’t miss deadlines and are able to access information from any part of the process through a few clicks.
2. Reduce the Need for Manual Tasks
Most importantly, a CLM system has capabilities that allow you to manage a contract’s front end and back end experience without the need for custom code. With the status-quo of contract management being hyper-manual, tasks often exhaust more time and productivity than needed.
Consider the five steps in the lifecycle of sales operation contract again. Usually, businesses use a CRM software for customer relations, and ERP software for booking. However, businesses carry out the steps in between these two first and last steps manually.
By using a CLM software, you can streamline your process in a number of ways:
- Send the customer an auto-generated contract to sign based on the quote you select
- Send approval and renewal notifications to the right people and applications in charge of moving the contract along after a task is complete
- Auto-update and store the contract in your database once the customer signs it
Using a CLM system makes sure you miss no steps in the contract’s lifecycle and run through the entire sales process without needing to focus on manual tasks.
3. Automate What Happens Before and After a Contract
Although the above steps define the entire process of managing a contract, most businesses need to take care of a number of little details before and after that first and last step.
For example, before you send your customer a quote, you need to access your business’s pricing document to find a category that fits your customer profile. You also need to look at your discount matrix and find if the customer might be eligible for a special pricing model.
Then, after the sale and the final step of booking is complete, you need to activate the benefits associated with a contract. This requires linking the final agreement to the appropriate benefits package. If the agreement meets a number higher than “X”, then you might have to activate a benefits package at high value (for example, a special Service Level Agreement or Success Resource) but if it meets a number lower than “X”, then you might have to activate it at low value (such as limited online and email support).
A CLM system automatically takes care of the details that need attention before and after a contract. In fact, it does not matter what platform these details function in, CLM software can access them from anywhere. For example, if after booking a contract you need to activate a customer’s special benefit to an external subscription such as Adobe, CLM can do this automatically.
4. Simplify the Process of Personalizing Contracts
Speaking of details, since we understand that contracts are a bond between two parties, they should be easy to navigate. You want to be sure that the various details are always accurate and up-to-date so that you don’t waste your own time, or a customer’s time, during negotiations.
You can use a CLM system to create and manage multiple drafts of a contract, as well as access and edit this information whenever you need.
By allowing easy tracking of changes, a CLM software allows:
- Transparency: No matter who drafts the contract, the details remain easy to track so the contract manager doesn’t need to keep going back and forth.
- Efficiency: Both parties are alerted to changes and know which draft is the most current so that they don’t waste time working on the wrong one.
- Accuracy: The contract manager can track all manual changes made to a document and all previous versions are automatically stored.
5. Measure the Success of Your Contract
You can also measure the success of your contracts using analytic tools that come with CLM software, such as Nintex Hawkeye. As a best practice, it is important to review how your contract is moving through a cycle, especially if this is one of your most commonly entered contracts.
With analytic software, you might find that a certain step in a process is taking too long to be approved, requiring permanent changes in a pricing model or approved customer profile. Similarly, you might find that customers always want to alter a certain section of your e-sign document, indicating that you need to change the original draft you always send out.
With CLM software, you can measure the very heartbeat of your business agreements and make necessary changes in a contract’s lifecycle early on. This helps you determine if the contract is helping your business reach your end goal so you can determine if it needs improvement or is even worth keeping. This is especially useful when managing a large number of intricate contracts.
Learn how to improve contract management by scheduling a free Nintex demo!