Contracts are the backbone of every organizational relationship, whether with internal teams, clients, or vendors. They protect interests, specify expectations, and ensure everyone stays on the same page.
But here’s the catch: when the contract management process is disorganized or inefficient, it doesn’t just cause delays; it quietly eats your profits. In fact, research from World Commerce and Contracting (WCC) reveals that poor management can shrink a company’s bottom line by as much as 9%.
With such a significant impact on your bottom line, it’s clear that businesses can’t afford a disorganized contract process. That’s why having a well-structured system is crucial not just for keeping documents in order, but for moving faster, cutting costs, staying compliant, and reducing risks.
So, how do you do that? Let’s break it down:
- Assessing your existing contract process
Before implementing improvements, thoroughly evaluate your current contract management process. Determine the key stakeholders, the tools in use, and the points where delays or inefficiencies arise. Understanding how contracts move through their lifecycle, from initial drafting to execution, compliance, and renewal, helps businesses pinpoint problems, reduce risks, and improve efficiency. This clarity enables you to detect restrictions and take focused action to streamline your process.
Most contracts progress through six fundamental stages: inception, collaboration, signing, tracking, amendment, and renewal. By clearly understanding these stages, businesses can make informed decisions that drive better outcomes and enhance overall contract performance.
- Setting clear goals for efficiency
Prior to diving into contract lifecycle improvements, take a step back and think about what you’re trying to accomplish. Are you looking to speed up the contract approval process, gain better insights into contract statuses, or ensure your contracts meet compliance standards? You may have several goals in mind, but it’s important to prioritize them from the start. Clearly defining your top objectives early on gives your efforts direction, makes it easier to measure progress, and helps demonstrate the value of the CLM integration over time.
- Pick the right technology
The success of your contract management process largely depends on the tool you choose. A robust CLM system like smartContract CLM goes far beyond automating repetitive tasks; it streamlines the entire contract lifecycle, from creation and collaboration to compliance and renewal, using built-in workflows, intelligent alerts, and AI-powered insights to boost speed, accuracy, and decision-making.
To ensure you choose the right tool, consider how easy it is to use, whether your team can adopt it without much hassle, and if it can help your business grow over time. Also, look into the security measures it offers to safeguard your data, and lastly, check if it can smoothly integrate with the other systems your company already depends on.
- Identify standardization opportunities
Managing contracts can get messy when each team or department follows a different process. That’s why standardizing your contract workflow is so important. You create a smoother, more reliable system by using pre-approved templates for common contract types and setting up clear steps for drafting, reviewing, approving, and renewing contracts.
Standardization reduces the risk of errors and saves time. A recent report showed that automating these processes can cut negotiation time by up to as 50% and reduce inaccurate payments by as much as 70-90%, helping your business avoid costly financial risks.
- Upskill your team for better execution
The true power of any system lies in how well the team uses it. Training your team ensures they adopt and use the tool to its full potential. Ensure everyone handling contracts has a clear understanding of their roles and becomes familiar with the new tools and processes. When your team is well-prepared, they’re more likely to accept the change, work efficiently, and maximize the system’s capabilities.
- Create a centralized contract repository
One of the most familiar challenges in contract management is the inability to swiftly locate essential contracts when needed. In order to avoid this, you should implement a centralized contract repository, i.e., a single, organized location where all contracts are stored and easily accessible. This repository should have features like advanced search, alerts for key dates such as renewals and expirations, and tools to monitor performance.
Without a centralized system, important agreements can easily slip through the cracks. A recent CLM digest shows that 71% of companies cannot locate at least 10% of their contracts. This lack of visibility can lead to missing a key renewal on a high-value vendor contract, which could result in increased fees or service disruption.
- Continuously monitor and evaluate performance
Once your contract management process is up and running, tracking how contracts perform consistently against your goals is essential. Analyzing this data helps you spot areas for improvement, make necessary adjustments, and better prepare for future negotiations or renewals. Remember, contract management isn’t a one-time task; it’s a continuous process with room for improvement. Regularly reviewing your processes and tools ensures they remain effective, align with your business needs, and stay aligned with evolving business needs and market dynamics.
Make contracts work for you, not against you
A strong contract management process does more than just organizing documents; it helps your business move faster, reduce errors, and stay in control of every agreement. When your processes are up to date and your team has the right tools, you gain better visibility, minimize risks, and improve how things run overall. With the right contract management solution in place, you can unlock greater efficiency, stronger compliance, and long-term business growth. Want to bring these benefits to your business? Let’s talk about how we can make it happen.
