What You Need to Know Before Automating Your Contracts

Are you considering automating your contracts? While the benefits of automation are clear, there are some important things to consider before jumping in. From selecting the right software to understanding the implications of a fully automated system, it’s important to do your research before making any major changes to your contracting process. Here’s what you need to know before automating your contracts.

Benefits of Automated Contract Management

Automated contract management comes with several benefits that can increase efficiency and streamline business operations. Here are some of the key advantages:

• Saves time: Manual contract management can be time-consuming, but with automation, businesses can save time and reduce the risk of human errors.
• Reduces risks: Automated contract management systems can help businesses to mitigate risks by ensuring that contracts are up to date and compliant. Additionally, automation can reduce the risk of errors, such as missing a step or omitting critical information.
• Increases productivity: By streamlining the contract management process, businesses can achieve greater productivity and focus on other aspects of operations.
• Enhances collaboration: Automated contract management systems offer an easy way for teams to collaborate and work on the same document in real-time, irrespective of their location.
• Improves compliance: Contract management automation systems can help businesses stay up-to-date with new regulations, laws, or changes in the industry.
• Enables faster approvals: Automated systems can speed up the approval process and help businesses to quickly close deals.
• Cost-effective: Contract management automation can reduce staffing costs, thereby saving businesses money that can be invested in other areas of operations.

Potential Risks of Automated Contract Management

Automated contract management comes with potential risks. Among the risks that arise from automated contract management is the possibility of errors caused by incorrect data input. Failure to ensure that the data used for automation is accurate can lead to consequences such as legal liabilities and financial losses.

Moreover, automated contracts may lack sensitivity to the unique circumstances surrounding a given contract preparation process. This could result in the loss of a personal touch that is needed to maintain positive relationships between the parties involved.

Effective contract management requires attention to detail, and automation doesn't replace that attentiveness. Those looking to implement automated contract management should take the time to assess the level of risk this poses to their organization and determine if it is worth it.

It is also critical that anyone using automated contract management regularly monitor and evaluate the system for errors and issues. By taking into account the risks associated with automated contract management, companies can make an informed decision and take the necessary steps to minimize risk and maximize the benefits.

Ensure Your Contract Management System is Up to Date

When it comes to automating contracts, ensuring that your contract management system is up to date is crucial. An outdated system may not be able to keep up with the complexity of today's contracts, which could result in errors or inaccuracies. This could lead to confusion or even legal issues.

Keeping your system up to date means regularly reviewing and updating contracts to ensure they accurately reflect your current needs and priorities. It also means staying current with technology and any changes to industry regulations or standards that may affect your contracts.

If you are using an older system, it may be time to consider upgrading to a more modern cloud-based solution that is designed for automated contract management. This will not only provide greater efficiency and accuracy but also reduce the risk of errors or data loss.

Remember that your contract management system is the foundation of your automated contract processes. By taking the time to ensure it is up to date and working optimally, you can be confident in your contracts and the benefits that automation can provide.

Prioritize and Standardize Your Contract Terms

When it comes to automating contracts, prioritizing and standardizing your contract terms is crucial. Here's how to do it:

1. Start by identifying key terms that are commonly used in your organization's contracts.
2. Once you have these key terms, determine their order of importance. This will help you focus your automation efforts on the most important terms.
3. Standardize the language and formatting of your key terms. This ensures consistency across all your contracts, making them easier to manage and automate.
4. Create templates for your contracts, using your key terms and standardized language. This will expedite the process of generating contracts and ensure accuracy.
5. Finally, keep your key terms and templates updated as needed. As your organization evolves, so too will your contracts. Keeping them up-to-date ensures your automated system is always accurate and reflects your current business needs.

Conduct Thorough Testing Before Deployment

Before deploying an automated contract management system, it is crucial to conduct thorough testing to ensure that the system functions correctly and without errors. Testing should include multiple scenarios to evaluate all aspects of the system, such as data validation, error handling, and performance.

Ideally, testing should involve individuals who have not been involved in the development of the system to provide an objective perspective. Issues found during testing should be recorded and addressed to ensure they do not occur again.

Conducting thorough testing before system deployment can prevent costly errors and ensure that the system meets business requirements. Overlooking testing can result in losses due to inaccurate data or other critical errors that may cause delays in contract execution or worse, lead to legal disputes.

Determine Who Will Manage the System

When you decide to automate your contract management system, it is crucial to determine who will manage the system. This is an important step that should not be overlooked as it can have a significant impact on the success of your system. By appointing someone to manage the system, you can ensure that your contract management system operates effectively and efficiently.

The person responsible for managing the system should have the necessary skills and knowledge to oversee the system's operation. This includes understanding how the system works, how to upload, access, and retrieve contracts, and how to troubleshoot any issues that may arise. They should also be able to train other employees who will use the system.

It is important to define clear roles and responsibilities for the person managing the system. This includes outlining the tasks they will be responsible for, such as monitoring contract statuses, overseeing contract authoring and review processes, and maintaining the system's security.

Additionally, it is essential to empower the person managing the system with the necessary authority to carry out their responsibilities. This includes setting up appropriate access controls that protect confidential information and ensure compliance with data privacy regulations.

Lastly, it is important to regularly review the management of the system and assess its performance. This allows for continuous improvement of the system and ensures that it is meeting the needs of the organization.

Develop a Plan for Monitoring and Updating the System

Developing a plan for monitoring and updating the system is crucial to ensure that automated contract management is efficient. You need to identify the processes and areas in the contract management system that require monitoring. This enables you to track the progress of your automated contracts and identify any issues that require attention.

It is important to establish the frequency of monitoring so that potential problems can be detected and resolved promptly. Establish responsible personnel and develop tools to manage performance and identify critical components. It is also crucial to have a plan in place to deal with contract variations and potential disputes.

You should also develop an update strategy to ensure your automated contract management system remains up to date. This involves having a well-planned roadmap for system enhancement, including features that need to be added, outdated components, and the frequency of upgrades. Upgrades will aid in ensuring efficiency and enhancing user experience when using the system.

Key takeaways

Automating contracts can help businesses save time and improve efficiency, but it requires careful consideration before implementation. Before automating contracts, businesses should evaluate the available technology and determine if it meets their needs and budget.

Additionally, it's important to involve key stakeholders early in the process and have a clear plan for implementation. It's also crucial to consider the legal implications of automated contracts and ensure that they comply with relevant laws and regulations.

Finally, businesses should establish clear communication channels and processes to ensure that all parties involved are informed and understand the automated contract process.