How Automation will cure your Contract Management woes

How automation will cure your contract management woes

I have a confession. Admittedly, telling someone to automate X element of their life is a pretty easy sell. Whilst some truly enjoy days of hard graft and getting stuck in, we would all appreciate the odd-helping hand every time every now and then.

In fact, we already sign up to this view in our daily lives. Automatic motion sensors turn off our bathroom lights so we don’t forget to leave them on. Dishwashers clean our cutlery so we don’t have to. We even automated the two-minute circular movement of brushing teeth through the electric toothbrush.

In the business world, the last 50 years has seen a boom of automation, to the point where there are apps for automating the most mundane of email campaigns to the most complex of tax returns.

But what about contract management? Interestingly, this is a task which has seen huge improvements in the automation movement, yet is still done manually be the majority of businesses.

Contracts can be a real pain point. They normally require a lawyer to draft, multiple stakeholders to approve, and a decent poker face when quizzed on the linguistic meaning of a clause that would be better suited to a 16th Century playwright than modern-day English.

And that is only pre-execution.

Once that contract is signed, it has to be organised and easily accessible until the end of its lifetime. A job which ultimately takes time away from your main business, yet remains vitally important to to track.

In other words, a job best suited to automation.

Why is this bad?

When you deal with your contract management manually, you open the door to increased human error, lost productivity, and inconsistency.

Human Error: This can manifest in unlimited ways. For instance, a contract manager can misread a date in the contract which carries an important significance (like a renewal notice deadline). This human error then leads to undesirable consequences such as penalties. These single instances can have knock-on effects, where other related contractual obligations are affected. If left unchecked, these errors are often near impossible to prevent until the point at which it is already too late.

Lost productivity: Your time is valuable. Nothing derails that precious time like doing repetitive and mundane tasks. With contract management, there is the added stress of legal backlash if this task is not regularly reviewed.

Inconsistency: When you manually manage your contracts, the process for their management will largely be dictated by the preferences of the individual. Some contract managers may prefer to document all the key points down in a spreadsheet, others may rely more on their memory. This leads to an inconsistent approach across a company, which in turn creates friction between teams.

So what’s the solution? How do I introduce automation into my contract management?

Due to these problems, more companies are starting to take advantage of automation.

At its most basic level, automation solves human error, lost productivity and inconsistency by taking the workload away from the individual, and using algorithmic-based software that takes the same approach to all contracts.

Luckily, automation can be applied across every stage in the contract management lifecycle!

At the pre-execution stage, contract managers should focus on automating the following management tasks:

1. Replace manual redlining with a collaboration software. Currently, most contract managers will need to review, redline and re-draft documents multiple times before curating the final version. This often means multiple cycles of downloading draft documents onto a local computer, redlining manually and then emailing back to other stakeholders. This process can be streamlined by using a collaborative tool where all drafters can view the in-progress contract from one central point.
2. Replace bespoke contracts with templates. Whilst it’s important to get contract wording accurate for each relationship, there will inevitably be situations where the need for a bespoke contract is minimal i.e. with company-standard confidentiality agreements. In these cases, not only would utilising a standard template significantly reduce the drafting timeframe, but it would also reduce inconsistencies between similar contractual relationships. There are plenty of tools online that offer templates for standard contracts, with some examples including LawInsider, Jotform and Thomson Reuters.
3. Utilise a digital signature service. On a similar thread to manual redlining, manual contract signature can create unnecessary friction between yourself and the counterparty. With flexible, remote working now becoming the default mode for many companies, the friction caused by requiring parties to manually sign and scan contracts can be easily made a thing of the past by using an automated digital signature tool like DocuSign.

At the post-execution stage, contract managers should focus on automating the following management tasks:

1. Capturing key contractual data. At Nomio, we often hear from our customers that this was the most time-intensive part of their contract management. Typically, this task revolves around one individual manually reading through contracts to find all the important information, and then recording these on a spreadsheet. Automating this through a platform like Nomio can save contract managers significant amounts of time.
2. Linking data to a single source of truth. When managers go through the process for recording key data on a spreadsheet, 9/10 times this means removing the data from the single source of truth: the contract. At Nomio, the single source of truth is stored alongside the key data - with the press of a button taking you to where the data was captured in the contract. This not only reduces the time spent reviewing the accuracy of your contractual data, but also creates a piece of mind knowing that all of your data points can be evidenced within 3 seconds or less (unlike having to pour through contracts to find relevant clauses).
3. Creating a central place for all contracts. This is a significant task to automate when you have multiple team members owning and storing contracts. Normal practice at larger companies is to utilise a shared drive or CRM software, where individuals are responsible for uploading and organising documents properly. At Nomio, we streamline the entire process with a central repository that automatically orders your contracts into organised segments and permissions.

Bottom line

People are often put off by automation because its seen to result in a lower-quality end product (think factory-made vs hand-made).

This is the wrong view. What people really mean is that for products where they are looking for a human element - i.e. clothing, food etc - the uniqueness and inconsistencies of manual work is appreciated more.

This is not what contract managers look for. Better accuracy, better visibility and less time-spent are the direct benefits that automated contract management offer.

So... why wait to make the switch?