Within the modern business model, the complexity of contracts, contract terms and contract conditions is growing. The number of contracts requiring proper management is also increasing.
Managing contracts manually is a huge burden on an organization and can result in higher risk and costs. Even if your company is out of the Dark Ages of paper-based contract management—using email to send contracts back and forth between editors, reviewers, and designated signatories is an efficiency killer.
This means that organizations need to change the way they manage contracts. The first step is recognizing where there is room for improvement. Here are 5 critical mistakes many organizations make when it comes to managing their contracts:
If contract writers begin each new contract with a blank slate, each creator is likely to use a different structure, format, and/or style. The inconsistency between contracts can be frustrating and confusing to signing parties, both inside and outside of the organization.
When contracts live in multiple locations, it can get difficult to track down the latest version of each one. Access to each drive might be available to some and not others. Who controls each drive? How are permissions managed? Storing contracts on a shared drive is step up from email, but it is important to think about access and security. Searching for a specific contract within multiple shared drives can also quickly become a very difficult and daunting process.
When a contract requires action from a client or signatory, how does your current contract management system handle it? If your contract manager is manually keeping track of obligations with a calendar or post-it notes, required action can be missed and deadlines come and go.
When contracts are revised, it is important that contract administrators are able to quickly get the latest version out to reviewers and approvers. But how does contract administration know which is the latest version? Are all changes and comments collected in one place in the event there is an audit?