Every business uses contracts. In fact, every department of every business uses contracts. Yet, too many businesses continue to perform essential contracting processes using a bevy of old-fashioned methods: with an expensive team of lawyers, with boilerplate templates, or with inexperienced professionals and bungling word processors. If only computers could offer a better way!
The truth is that contract management systems have existed for more than a decade. In fact, software dedicated to enhancing contracts has become incredibly powerful, addressing most of the headaches associated with every aspect of the process. Instead of spending too much on solutions that aren’t efficient, businesses should seriously consider investing in the following four contract software tools:
1. Contract Generation
For centuries, the only way to create contracts was manually, and many businesses continue to labor over contract generation even today. There are few benefits to manual contract generation; for those untrained in contract law, contract creation requires abundant time and effort, and though a business may feel more certain about the terms they manually insert, there is a dramatic increase in the likelihood of minor and major mistakes. Worse, a successful business needs to produce more contracts faster, further increasing potential errors.
There is an alternative: automated contract generation software. This contract tool balances efficiency and risk in the creation of contracts, ensuring businesses have the contracts they need without the ruinous oversights. Though different software providers offer different features and functions, generally businesses produce contracts by answering a series of dynamic questions. This ensures that each contract is customized and compliant from the beginning.
2. Contract Comparison
Often, businesses that produce a glut of contracts need a way to compare them quickly and efficiently. Document comparison is important because it ensures that contracts do what businesses intend. Often a contract will undergo several revisions before being signed, and a comparison of the different versions will elucidate all parties’ changes. Additionally, a comparison between contracts with different parties will inform businesses about differing terms. This makes the contract management process much simpler.
Document comparison software provides greater ease and greater insight into the similarities and differences within contracts. Unlike manual comparisons, software tools can evaluate and compare more than 5,000 pages in a single session. Often, comparison tools will reveal overlooked, underlying issues within a contract, saving businesses extensive amounts of money. Even a trained contract lawyer cannot compare contracts as quickly and thoroughly as a computer program, so this software is well worth the investment.
3. Contract Analysis
Contracts are full of critical data. At the very least, a business’s contracts include information about their rights, obligations, and risks associated with their relationships to other parties. Having this data on hand is essential for developing short- and long-term business strategies. Unfortunately, because contracts are rarely simple, manually picking through a business’s contract library to identify, analyze, and apply that data tends to be time-consuming and expensive.
Software for contract analysis uses artificial intelligence to capture relevant data with speed and accuracy. The best contract analysis tools will not be hampered by the format of the contract or its complexity and style; as long as the software has access to the documents — i.e., as long as there are digital copies of the pertinent contracts — businesses should be able to extract critical data quickly and move onto efforts of analysis and reporting.
4. Contract Lifecycle Management
Businesses should know that the contract process isn’t complete after the contract is generated; the process might not even be complete after all parties meet the contract’s terms. Every contract has a unique lifecycle — and managing all those discrete lifecycles typically proves to be a significant challenge for businesses.
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Usually, a contract’s lifecycle contains nine phases: request, creation, approval, negotiation, signing, capture, compliance, management, and optimization. Contract lifecycle management software tracks each contract’s movement through the phases, alerting a business when it must take certain actions to preserve or terminate the contract. This allows businesses to feel greater certainty throughout the contract process, improving relationships, reducing costs, and increasing contract value.
The Bottom Line:
No business can survive long without contracts, but inefficient contracts also tend to slow progress and inhibit growth. The right software makes the entire contract process simpler, faster, and less expensive, so businesses can refocus on their business goals.