Writer: NORMAN KRETZMER, the founder and CEO of Contract Understanding
Most businesses don’t have formal processes and systems in place for post-signature contract management.
Once a contract is signed, it’s usually locked up in a filing cabinet or scanned and saved as a PDF on a server or a cloud platform.
Yet signing a contract isn’t the end of the associated business relationship – it’s just the beginning.
Once the contract is signed, it creates binding legal and commercial responsibilities for all parties to the agreement.
There are benefits and obligations such as discounts, incentives, penalties, and service level agreements that need to be managed on an ongoing basis. Plus, the contract lifecycle will usually give rise to a range of deadlines for notifications, renewals, price adjustments and cancellations.
Staying on top of these activities can be a significant burden when a company has dozens or even hundreds of contracts in force across different parts of its business. This lack of visibility, along with a reliance on manual processes, causes a range of headaches for companies.
These include not having the actual documentation at hand when the team needs to review it, missing deadlines to renew, renegotiate or cancel term-based contracts, failing to capitalise on benefits such as incentives or discounts due under a contract, or incurring penalties for breaching terms and conditions such as deadlines or service level agreements.
This is where post-signature contract management software has an invaluable role to play. These solutions enable companies to automate processes associated with post-signature contracts to minimise risk and maximise efficiency.
Contract management solutions used to be complex and expensive to implement, but today’s software-as-a-service solutions are affordable and accessible to businesses of all sizes.
Here are some ways technology streamlines post-signature contract management in your business:
Document capture: The first step in streamlining contract management is digitising your contracts and storing them in a secure, central repository.
The software will typically use optical character recognition (OCR) combined with artificial intelligence (AI) and machine learning (ML) to extract and repurpose text from scanned or emailed PDF documents. By leveraging AI and ML it will extract the key fields and clauses from the contracts you upload.
Contract visibility: The AI and ML technology will identify critical data points like involved parties, obligations, and deadlines from every contract.
This will give you at-a-glance insight into key dates, milestones, and obligations mentioned in each contract. Functions such as HR, finance and procurement will be able to track tasks and deadlines associated with contracts.
They can, for example, monitor whether suppliers are meeting their deliverables, performance agreements, and other contractual terms.
On the other side, you can ensure that you are meeting your client service level agreements and other conditions. Reminders and notifications may be set up to prompt relevant parties.
Workflow: Contract management software enables you to set up and trigger workflows for expected events such as renewals, terminations, and price escalations as well as for less routine events like force majeure, cancellation, and breach. Each stage of a workflow is tracked and automatically escalated if necessary.
All documentation generated during the completion is stored for easy reference.
Elevating efficiency and improving compliance
AI-powered contract management systems can enable nearly any business to save time and use its people’s time more efficiently by automating admin-intensive tasks.
It improves real-time visibility into contract management, helping you to mitigate risk and optimise business outcomes.
Given the central role of contracts in most businesses’ operations, an investment in post-signature contract management can deliver a significant ROI.
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