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How Can Businesses Adapt Contract Management Workflow for Success?
Every business needs to optimize its contract management workflow. According to a study by World Commerce and Contracting, approx. 9.2% of businesses lose their due to poor contract processes.
However, many business owners are unaware of the right workflow streamlining techniques that can make a difference. Making improvements requires understanding your current ways of working, identifying gaps, and understanding what teams need to improve their daily handling of contracts.
What is Contract Workflow?
In simple terms, contract workflow is all about creating, negotiating, approving, executing, and managing contracts efficiently. It involves phases and actions essential to drafting, reviewing, and finalizing contracts.
The term workflow refers to coordination across stakeholders, including legal, sales, procurement, and finance teams, for efficient contract lifecycle management.
What are the Components of an Effective Contract Management Workflow?
1. Contract drafting
The first component of contract workflow begins with creating and negotiating the contract terms. It is a process of:
- Identifying the parties involved.
- Specifying the scope of work.
- Outlining payment terms.
- Detailing terms and conditions.
You can also use existing templates to draft contracts rather than creating them from scratch.
2. Contract approval
The second component is getting contract approval from all parties involved, including legal, finance, and leadership teams.
3. Contract execution
This is the second component where the actual signing and execution of the contract happens. It is critical to ensure that the contract terms legally bind all parties.
4. Contract monitoring and management
The fourth step of the process involves constantly monitoring and managing a contract to ensure that both parties meet their obligations and that any changes or issues are addressed promptly.
5. Contract renewal or termination
The last stage is all about contract renewal and termination, depending on the terms and conditions defined in the agreement.
What are the Strategies to optimize your Contract Workflow?
Centralize a database for easy search
Businesses should create a centralized document database for easy search. It makes day-to-day contractual work more accessible and organized for involved parties. Moreover, internal and external stakeholders can access contracts from any location, significantly speeding up the process.
Also, a searchable centralized document database ensures you never lose a contract or spend hours searching. A company cannot risk losing a single document. Therefore, an effective contract management system should be in place.
Create a standard template to draft quickly
Drafting documents based on templates is common. Typically, businesses create a template using Word documents where others can add or modify the template as needed. However, the template varies for different industries and use cases.
Therefore, creating master templates for each industry and use case can save you time and keep contracts uniform throughout the business.
Self-serve contract workflow approach
Self-serve contract is a robust approach that can save time and increase the quality of the documents. With this contract workflow strategy, businesses can delegate low-value and high-volume. Businesses can reclaim this time for core activities rather than monotonous contractual work.
Set an approval workflow for contracts
Another way to streamline your contract management is to automate your approval processes. Automatic approvals reduce the contract lifecycle management from initiation to a finalized agreement. It will help you contribute toward a positive relationship by adding convenience to both parties.
A streamlined contract approval workflow not only gives you a competitive edge in receiving contracted goods and services sooner but also facilitates business opportunities within strict turnaround times.
Data-driven contract workflow analysis
Data-driven contract workflows make your business more compliant since a stringent process is followed every time. As a result, standard documents like supplier contracts, employment contracts, and amendments are the same.
Also, automated reminders will notify the right document collaborators when a contract needs renewal or updating.
What are the Benefits of Contract Management Workflow?
Do you know an effective contract workflow can enable your business to manage contracts systematically? A streamlined contract management process reduces the risk of errors, miscommunications, and misinterpretations in the long run. Moreover, optimizing workflow can ensure that you execute contracts quickly and accurately.
Let’s dive into the benefits of an efficient contract workflow for your business:
1. Improves turnaround for sale contracts
When you implement an efficient contract workflow, businesses like yours can reduce the time it takes to prepare, review, and approve contracts. Ultimately, your sales teams can close deals at pace and increase your client base.
A systematic workflow enables you to request contracts quickly to share with the right stakeholders for review and approval. It reduces the time to complete each step of the process efficiently. Additionally, leveraging eSignatures can streamline the process, allowing agreements to be signed and executed in minutes rather than days or weeks.
2. Replace the manual process with automation
An automated contract workflow can dramatically improve your business’ efficiency and productivity by streamlining the entire process from contract creation to execution.
Say goodbye to manually tracking your contracts because every party involved will be able to understand their unique responsibilities. It helps reduce delays and errors, enhancing productivity and allowing your business to focus on core tasks.
3. Stay compliant at every step
Contract management workflows ensure that contracts comply with state legal and regulatory requirements. A contract workflow will help all the parties know their obligations and responsibilities under the contract that require any necessary approvals. Therefore, businesses maintain contract compliance and reduce the risk of legal disputes.
A contract workflow can help your business efficiently manage costs and reduce the risk of breach. Moreover, if you need help with the right technology that can help you automate the process, we can help you.
At Cogneesol, our team of contract management experts is at your disposal. We have been serving contract management lifecycle services to businesses, legal firms, and solo practitioners since 2008 globally. Get in touch with us at [email protected] or Call +1 833 313 3143
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