Contracts are the backbone of any organization, and any error in the contract can jeopardize the business relationship causing negative consequences. Therefore, when engaging in a business relationship, the contract should be well-defined and describe the roles and obligations clearly.
One of the biggest mistakes an organization can make is storing paper documents in a physical form instead of using software. The contract management software acts as a repository that could be accessed from anywhere in the world and uses strong encryption to secure the documents. Most mistakes can be avoided by using contract management software that uses AI, ML, and is automated and data-driven.
What Is the Process of Creating a Contract?
There are multiple steps involved in creating a contract and usually creating a contract takes weeks in the absence of contract management software. But with the help of the software, most industries began experiencing a boost in creating contracts.
Usually, companies’ contract creation process looks something like this:
- Drafting the contract
- Negotiation and Feedback
- Signing the contract
Click here to read Why is Contract Management Important To Your Business
Drafting the contract
Before the contract management software, most contracts were made using word documents or similar software. A single staff member creates the draft of the contract which is prone to error as it is not transparent and is not an open platform for other members to join in and drop suggestions. With the help of the software, the contract can be created by all the authorized users who can join in real-time and share their suggestions. If any changes need to be made, users can add a comment.
Using the software helps all the authorized users to come together and make the contract briefer, and clearly define all the responsibilities.
Common mistakes that occur:
Creating contracts manually can come at a price, such as spelling errors, mistakenly adding incorrect clauses, missing out on information, and more. The main reason for this is a lack of team collaboration.
With the help of the contract management software, the involved parties can join in and help assist in the creation process of the contract in real-time.
Negotiation and Feedback
Usually, this is time-consuming and mentally draining. You have to be on the phone with the internal legal department to suggest changes to improvise the contract, going back and forth, which is all draining. Once the draft has been finalized, it is mailed to the business party you are engaging in business, for approval. You then would have to wait to hear back from them. If the business associates suggest improvements, the whole process is again repeated.
The software streamlines the process by enabling the team to collaborate in real-time. Once the draft has been created and finalized, it could be sent to the legal time by tagging them. Once it has been approved by the legal team, it could be shared with the second party using the same software by tagging them. Or they could choose to also be a part of the contract creation process from the start.
Click here to read Key Performance Indicators for Contract Management
Common mistakes that occur:
Keeping track of the status of your contracts that you submitted for internal review can often be challenging and hard to keep. But with the help of contract management lifecycle software, this is no more a point of concern or worry.
The contract management tool helps the team to cohesively work together, expediting the entire contract creation process, which helps the companies to avoid dragging the process and losing time and money in creating it. This has been the biggest flaw for most organizations because they cannot move ahead without contracts and are bound to wait. But the software speeds up the entire process and helps secure the approval at a much faster pace.
Signing the Contract
Once the draft is approved, the contract is signed. The contract is UPS or FedEx mailed, which adds to the cost of the contract creation process. With the contract lifecycle management software, both parties can execute the contract with e-sign even if someone is on vacation.
Click here to read Critical Factors to Consider Before Signing a Contract
Common mistakes that occur:
Before, when companies created contracts manually, they would mail the confidential information (contracts) in mail. At times, these get lost in transit, which can be accessed by anyone if found. This is the most risky thing that the lifecycle contract management software helps to overcome and achieve.
Contract lifecycle management tools help in streamlining the process of creating and managing contracts. Businesses of all scales can leverage the solution in accelerating their contract-related processes. DocuCollab is one of the top contract management software for industries of all types with an array of features and benefits.Click here to learn more.
