Effective contract management can result in shorter sales cycles, increased revenue, and more time to focus on higher-value tasks.
But what does effective contract management actually look like in practice? And which best practices should you be bringing into 2023? Find out in this guide.
7 contract management best practices for 2023
When thinking about best practices for contract management, it’s worth identifying the bottlenecks in your current workflow and working through them. For some businesses, it could be that contracts are becoming an administrative burden for legal teams. For others, it could be that missed renewals are becoming costly.
Let’s run through some of the most common problems and best practices together now.
1. Allocate clear roles and responsibilities
It’s important to allocate clear roles and responsibilities throughout a contract’s lifecycle. This means deciding who is responsible for creating, reviewing, approving, sending, signing and tracking a contract.
This sounds obvious but you’d be surprised how often contracts are stuck in certain phases simply because nobody knows who’s doing what. Contracts are often sent to stakeholders via email where they sit in an inbox until you chase them. Not only is this inefficient, but these bottlenecks can quickly result in drawn out sales cycles, or even lost revenue.
One solution is to clearly assign roles to individuals in a team using contract management software. For example, Juro users can set up signatories and approvers for contracts. This can be done individually or at a template-level.
When you assign these roles, the individuals chosen are notified automatically. This removes the need for constant back and forth over email to chase contract stakeholders.
2. Standardize simple contracts using templates
Another contract management best practice is to standardize your contracts using contract templates.
There are a few benefits of this. Firstly, consistency in the contracts you create can reduce contractual risk. This is because you’re reducing the variables and keeping things simple. Secondly, using contract templates can enable your commercial teams to self-serve on contracts with ease.
This is especially true when you use automated contract templates. Automating your contract templates using a tool like Juro enables legal teams to choose which clauses appear in contracts when certain conditions are met.
This means that, even if sales teams do need to vary simple contracts, these variations will have been pre-defined by legal and can be applied automatically without any guesswork.
3. Find opportunities to automate routine admin tasks
But it isn’t just templating you should automate. You should also automate any routine admin tasks which become a drain on legal’s time.
One example of this is data extraction. Extracting contract data can be a painful task since it involves going through individual contracts and manually extracting any contract values. These are often entered into a contract management spreadsheet of some sort where they’re updated manually too.
Using a CLM tool that captures all of this data automatically allows your legal team to ditch the contract admin tasks and return to higher value work.
4. Streamline your contract negotiations
Another contract management best practice is to streamline your contract negotiation process.
When negotiating a contract, versions are typically redlined in Word with additional requests shared via email. But jumping back and forth between multiple different tools means it’s hard to track which changes have been made and identify friction points. It also slows down the sales cycle.
This can be solved by moving the entire negotiation process into one platform. Redlining software enables you to do this with ease.
For example, Juro’s browser-based redlining enables parties to redline contracts, add comments and suggest changes in real-time, all in one workspace.
5. Sign contracts electronically
Another way to speed up your contract lifecycle is to focus on getting contracts signed faster.
While many businesses are already moving away from wet ink signatures, most still aren’t getting agreements signed as quickly as they’d like. Some businesses are still using scanned signatures, and others are trying to sign contracts in editors that weren’t designed for contract creation and signing.
One best practice for contract management is to adopt electronic signatures instead. This could be a separate eSigning tool like DocuSign or Adobe Sign. Or it could be an all-in-one contract automation tool like Juro that offers legally binding native eSignature functionality.
6. Implement smart storage for contracts
Where you keep your contracts matters. It ensures they’re stored securely, kept confidential, and that you’re getting the most value from them.
Yet, it’s common for businesses to scatter executed contracts across shared drives, or in filing cabinets, where they’re never looked at again.
Not only does this make contracts difficult to find, but it also means the data within them becomes buried. This data could otherwise be used to inform strategic decisions and track success against legal KPIs.
By implementing a smart storage solution for your contracts, like a contract repository, you can:
- Store your contracts securely in one place
- Control who has access to which contracts
- Capture useful contract data (e.g contract value, contract duration)
- Query your contracts with ease using OCR
- Gain visibility into your contract portfolio using customizable contract dashboards
7. Tracking upcoming contract deadlines
Another best practice for contract management is tracking your upcoming contract deadlines.
As your contract volumes grow, it becomes increasingly difficult to remember and record these dates manually. This leads to missed contract renewal dates and in some cases, a breach of contract - both of which can have a significant impact on your business’ finances.
Luckily, it can be avoided easily using contract reminder software or an all-in-one contract solution like Juro. These tools automatically capture important dates within contracts and allow you to set automated reminders for upcoming renewals, end dates and contractual obligations.
That way, you’ll never miss important contract milestones and you can track the progress of your contracts at all times.
Want to improve your contract management processes?
Contract management software is one of the most effective ways to improve your contract management processes. To find out more about how a tool like Juro could help your business to manage contracts more efficiently, fill in the form below.