5 Major Benefits Of Contract Management Software
Most companies rely on contracts, from service agreements with clients to employment contracts with staff members. These business contracts require a great deal of time and effort to draft, negotiate, sign, and keep secure, and a software tool can support your team through the contract lifecycle process. Understanding the benefits of contract management software helps you figure out what kind of tool you’re looking for and how your team can make the most of it.
Whether you’re running a small startup or a global enterprise, your contracts need to be handled with care in compliance with relevant laws and regulations. You might not have a complete legal team, so using contract lifecycle management (CLM) software can help make sure every stage of the process is meeting the highest standards. Even if you do have a big team handling your contracts, a software solution can reduce their manual workload and streamline their contract management process.
Keep reading for an overview of the 5 main benefits of CLM software and why each one is important and impactful for your organization.
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5 Key Benefits of Contract Management Software
Here’s a breakdown of the top benefits that contract lifecycle management software can have for your business.
1. Quicker Contract Creation
Many contract management software solutions have tools like customizable contract templates, clause libraries, and auto-populated fields. These features help to speed up the drafting process and repurpose existing documents to create new and revised versions. Real-time collaboration and automated approval flows also support faster contract authoring.
Getting a new contract written quickly benefits not only your team’s productivity, but also your contract counterpart. The faster you get a contract out to a new client or new hire, the faster they can review it and sign or come back to you with amendments. Producing a contract promptly shows the other party that they’re a priority to your team and company.
2. Reduced Manual Workloads
SaaS solutions generally offer automation features that help to alleviate your team’s manual processes. With contract management software, your team members can build automated workflows that include signing orders and contract activity notifications. These features make for a smoother contract lifecycle process with fewer back-and-forths and less administrative work.
Automating data entry in contract development is a big time saver. These software solutions can automatically populate contact and company information, renewal dates, and other key data points in contracts through integrations with your CRM and other databases. It might sound like a small task, but it piles up quickly: in a recent Zapier study of 1000 knowledge workers, 76% of respondents said they spend 1-3 hours a day simply moving data from one place to another.
3. Reduced Risk and Assured Compliance
Let’s not forget that contracts are legal documents and thereby subject to regulatory compliance standards. Whether it’s an NDA or a procurement contract, you need to make sure it’s meeting the legal requirements for your region. Contract compliance is no joke, and your business can be subject to non-compliance penalties if you fail to meet the necessary standards.
Ensure your agreements hold weight. See what can invalidate a contract.
Many CLM software have compliance management features like access permissions, audit trails, and end-to-end encryption. The e-signature capabilities of these tools meet legal standards, too, ensuring that every contract that’s produced and managed through the software is up to code. This helps reduce overall risk for your business and can even eliminate the need for an in-house legal team.
4. Organized Document Storage
Without a cloud-based solution, your document management system can start to look like the case files room in a crime procedural TV show. Okay, it might not be that bad — but a filing cabinet isn’t just old school in appearance, it’s usually pretty dysfunctional, too. Proper storage will save your team a lot of headaches and time. According to the same study by Zapier, 73% of workers reported spending 1-3 hours a day just trying to find information or a particular document.
Most CLM software have a searchable contract repository that keeps documents organized, centralized, and secure. Users can search and filter through contracts in the central repository based on their contents rather than just file names. Some tools even have built-in naming conventions and version histories to reduce duplicate files and make it easier to find the exact contract you’re looking for.
5. Contract Management System Insights
Your CLM software is just one piece of your company’s broader contract management system. This greater system comprises the business processes and other factors involved in how you manage contracts, like your contract review process, contract approval flows, invoicing, and key stakeholders. Just like with other areas of your business, it’s important to monitor your contract system’s performance metrics.
These software solutions have dashboards, reporting, and analytics features that help you track your contract process efficiency and spot opportunities for improvement. You can gain insights into factors like average approval time, contract renewal cycles, and workflow bottlenecks. All of this data can fuel your contract strategy and help you support your team members and recognize their hard work.
6. Bonus: Improved Employee Happiness and Retention
There are many practical benefits to using contract management software, but what about the less tangible effects? Implementing automation doesn’t just improve efficiency and productivity — it can also have a real impact on employee happiness and engagement. In fact, automation can even make the difference in whether people choose to stay with your company or seek greener pastures.
In another report from Zapier, 14% of respondents who use automation at work reported that they’d considered leaving their jobs, compared to a whopping 42% of those who don't use automation.
Employee turnover can be incredibly costly, and in the wake of the Great Resignation employers need to be doing everything they can to keep their team members engaged and motivated at work. Battling dysfunctional business processes day in and day out can become incredibly taxing. And while software can come with its own learning curve, the payoff is worth it — for both your bottom line and for your people.
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Finding the Best Contract Management Software
With a clear understanding of how a CLM software can benefit your business, you might be wondering how to choose the best contract management software for your company. Factors like pricing, features, and integrations will all play a role. For more tips on choosing the best tool, you can read my article on what to look for in contract management software.
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