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Contracts are easily one of the most essential parts of any business. Thus, managing thousands of contracts can become complex, challenging, and time constraining. Organizations often run into the same common issues that slow down the entire contracting process. It is the contract manager’s job to ensure compliance with what’s written in the contract, manage further obligations and meet the correct deadlines. Hence a clear, comprehensive and enforceable draft is necessary in order to successfully execute any contract. Not having the perfect contract management and drafting practices, leads to loss of assets and potential business.

Yet managing contracts doesn’t have to be this way—it can be simple, easy and streamlined. With a fast, easy and reliable contract management platform, companies can solidify processes that will help avoid pitfalls altogether. Some of the major issues faced by contract management users are mentioned below:

Lack of Involvement and Clarity

One of the biggest pitfalls in contract management is the lack of clarity and scope of the goals and agreements among the involved parties. Without clear objectives, contracts become daunting and both parties are at risk of signing a contract without being entirely sure of the agreement they are entering into. It is always advisable to brainstorm some of the known issues that may occur in the lifecycle of a contract and negotiate thoroughly before embarking on the implementation process. It usually becomes difficult for the involved parties to meet often to discuss certain points and issues which are then overlooks and in turn affects the lifecycle of the contract. But with the perfect contract management system you can overcome this, like smartContract provides options to present the draft to involved parties either through email or through an online portal called party portal and negotiate contracts easily and on real time basis. You can also avoid security issues as the emails sent containing the contracts can be password protected, thus giving you a better communication and negotiation system.

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CONTRACT LIEFCYCLE MANAGEMENT SOFTWARE: 6 QUESTIONS YOU NEED TO ASK

Contracts are the veins of a company. Statistically speaking, contractual agreements account for 60% to 80% of modern business transactions. Only 16% of organizations have developed a CLM system while the rest are still following the equivalent of old-school contracting, where there is no concrete contracting strategy and limited visibility of key contract issues. Without proper functioning and maintenance of contracts one can suffer business and revenue losses on a substantial level. For every business, managing contracts and obligations have now become a critical task. Paper based contracts make one’s job frustrating and difficult. With the age of digitization what once was done in an hour can be resolved in minutes, and so contract management softwares came into being.

Contract Lifecycle Management Solutions like smartContract are now getting popular by the day. They have become a savior in this world of chaos, with streamlined workflows, dynamic dashboards and obligation management modules. A Contract Lifecycle Management (CLM) software can give you an insight into contract data, ability to collaborate, time and cost savings and better decision making ability through low risks. The utility of a CLM solution depends on how business information from those contracts are extracted, analyzed, distributed and queried by the people who actually have to administer and monitor the signed contracts. Maximizing their utility means transforming contract language into concise, easy to understand information that helps decision makers not only increase productivity but also provide better results.

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As the need for automation is increasing, the demand for Contract Lifecycle Management solutions is also growing. According to a study by IACCM, more than 70% of the international corporations considered contract management as a “major or significant source of operational weakness” and that improvement in the field can lead to better risk management and prevent revenue leakages. People are after faster and more streamlined workflows while maintaining the integrity of the results. Like faulty pipes lead to leakage of water and causing mayhem, similarly faulty organizational processes and inefficiencies can result in revenue leakage, which may amount to a hefty sum of money.

Studies show that organizations on average lose an estimated 9% of annual revenue due to their inability to manage contracts. The most common causes of revenue leakage nowadays are due to missed deadlines, contract plotholes, skipped renewal and inconsistent workflows. A revenue leak may go unnoticed until it has reached a 5% impact on the overall bottom line of the organization. But, all leaks eventually add up and can create a havoc; even a leak as small as 2% means a revenue loss of $1M for an organization earning $50M annually! These reasons are major contributors as to why your revenue-producing initiatives falling through the cracks.

While the specific causes of revenue leakage vary from an enterprise to another, they are commonly rooted in a lack of transparency, automation, and accountability for tasks and projects that have financial impact on an organization.

Contract Storage and Authoring: Costly mistakes occur newly agreed upon drafts and agreements get lost in old cabinets and drawer. Incorrect data can lead to expensive invoicing, pricing, and renewal errors, and increases compliance risk. These risks increase when only one person is responsible for the drafting.READ MORE>>>

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In today’s world, businesses rely heavily on contracts. Especially in B2B relationships, doing business on the basis of a verbal agreement and a handshake doesn’t work when business relationships are now fully electronic and digital. CLM vendors have improved their products’ usability with an average rating of 4.14 for administrator usability and for end user usability, rising from an average of 3.68 in 2016 to 4.12 in 2018, according to a report by Andrew Bartels, Forrester Research Group VP and Principal Analyst.

The improved versatility of hosted solutions and affordable cloud-based services has led to many companies pursue a complete digital transformation of their business model. This change is especially prevalent in legal organizations which need newer and more innovative ways to manage their contracts. Forrester expects contract lifecycle management software market “to grow by 18% in 2018 to more than $1 billion in revenues,” with Cloud the dominant deployment model (Cloud deployments are increasing at a rate of 30% year-over-year).

Two critical factors that have led to the sudden spike:

Cloud Computing

Internet of Customers

Traditionally, the software would generally be purchased outright and loaded onto a device as an on-premise solution. This led to the lagging of speed and maneuverability which became necessary to match the constantly changing business and legal needs of most enterprises. The inability to meet customer needs and a dependency on IT to keep the solution afloat made CLM a source of frustration and complexity. A second stimulant pulling enterprises towards adopting contract management solutions is a changing relationship between customers and companies; which has now become highly personalized and interactive two-way relationship.

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THE NEW AGE CONTRACT LIFECYCLE MANAGEMENT SOLUTION!

Organizations nowadays are striving towards digitalization and getting rid of massive stacks of paper, endless rows of filing cabinets, and clunky, ineffective ways of managing. Everyday a company deals in stacks of contracts and traditionally the management of these documents has been disjointed at best. Contract Lifecycle Management comes in to rescue with systematically & efficiently managing the contract creation, negotiation, execution and analysis for maximizing operational and financial performance.

According to a recent survey this need for streamlining workflows is expected to expand from a $1086 million to $3167 million industry — more than tripling in value — within the next six years. The compound annual growth rate for the contract management solutions industry is predicted to be a healthy 16.65%.

We present to you smartContract – the complete CLM solution! It is an intuitive Contract Lifecycle Management Solution from SR Tekbox, which helps you automate your contract management processes. smartContract enables organizations to create, store, edit and manage any type of business to ensure transaction compliance for the terms agreed to in those contracts.READ MORE>>>

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NEED FOR CLM IN BFSI SECTOR

Over the last decade, the Banking, financial services, and insurance (BFSI) sector has taken steps to improve customer service through efficient, easily accessible and digitally advanced products and services. This has happened through digital transformation. Remember the time when for anything and everything, you had to run to your bank and wait in endless queues. The banking industry has undergone a complete digital transformation enabling us, to complete all transactions quickly & swiftly. In fact, we are discouraged from visiting our banks anymore and everything can be done through mobile apps/ net banking. The speed with which technological changes have been implemented by BFSI industry is commendable.

However, considering the dynamic environment in which BFSI sector has to sustain and keep on their toes to meet the ever changing statutory compliances, it is surprising to note that they are lagging behind in their lifecycle management of the contract processes.

Contracts are the foundations of any business. They govern all business operations from standard rental agreements to complicated hedging contracts & consortium contracts. Contracts are also vital for regulatory compliance and risk management; as they provide visibility into every aspect of an organization’s operations; like where it is doing business, with whom, under what terms, and for what purpose. And the lack of attention of risk & compliance can give unwanted invitations of heavy penalties. Yet, it is sad to note that the majority of the BFSI sector continues to manage contracts in separate repositories  – with contracts sitting in silos- either by geography, business function or contract type.

Contract Management Technology enables organizations to automate and streamline all aspects of the Contract Life Cycle to increase visibility, compliance and contracting velocity. Enterprises approach to contract lifecycle management also mitigates the risks of losing revenue due to lost time, money or potentially damaged reputation.READ MORE>>>

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WHY YOUR CONTRACTS NEED YOUR ATTENTION

The contracts dictate how we do business. They define our relationship with our customers, vendors and all other partners. They outline the terms and conditions – price, service levels, performance parameters, and the business and regulatory obligations.

The contracts are the blueprint for the business transactions and they are generally complex in nature. The changing market dynamics, globalisation, new regulations, cost pressures, the need to maximize financial performance, and many such factors have further increased the volume and the complexities of the contracts. Unless we diligently control the contract generation, and regularly monitor and manage the performance of the contracts, the contracts expose us to legal, financial, statutory, and reputational risks.

A number of market studies show that most of the businesses don’t have a focus on managing their contracts well. They manage their contracts manually using spreadsheets, file cabinets, shared drives, or a document management system. Their legal teams depend on Email and MS office for drafting, review and negotiations of the contracts. And businesses fail to see the inherent flaws of this approach. It not only increases the business risks but also poses the following challenges:

Ad-hoc and Inconsistent Contract Processes:

The way contracts are managed, it doesn’t allow businesses to have a formalized and standard process for the generation and execution of the contracts. Even if the business has documented and formalized the process, there is no easy way to ensure compliance to the process. This leads to weak accountability towards the business commitments.READ MORE......

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Collaboration is Key to Contract Risk Management

Risks are inherent in any contract. Risk management is all about working within the acceptable levels of risk and proactively managing the accepted risk exposures.

Making the Legal team solely responsible for minimizing risks is not an effective risk management practice. A contract can create many types of risks – delivery, quality, financial, reputational, legal, statutory, and others. At the most basic level, the risk management requires a multi-functional approach with all stakeholders participating in the contracting process. They must collaborate during drafting and negotiations to identify, evaluate, and minimize risks in their respective domains.

But unfortunately traditional contract review tools don’t make this collaboration easy. Let’s take an example – a sales manager receives the draft from the customer and requires delivery, finance, legal, taxation, and IT team to review it.  The Sales manager emails the contract to all the stakeholders. Every stakeholder goes through the contract, finds the relevant sections, puts their edits/ comments and emails the edited draft back to the sales manager. With every review, a new version of the draft is created and very soon multiple versions of the same contract start floating in the emails. The sales manager is required to collate all the comments and edits of the stakeholders and prepare a working draft to take back to the customer.

Reflecting over the above example, it’s not difficult to see the limitations of this approach but it’s quite clear that with this approach you not only requires a lot of manual efforts to drive the collaboration, but it’s also very easy to miss the complex edits by a stakeholder. A wrong version can be accidentally picked up, and there are fair chances of completely missing the key recommendations by one or more stakeholders.

So when you struggle with the challenges of manual approach (which is obviously prone to errors), here comes the savior i.e. Technology. Most of the Contract LifeCycle Management (CLM) solutions provide the workflow capabilities that make such collaboration possible. We at smartContract understand the importance of collaboration in the contracting process and have made the ease of collaboration a central theme of our product. Here are some of the examples of how smartContract can help multiple stakeholders work together and facilitate a disciplined approach for Contract Risk Management.

smartContract comes with a powerful workflow engine that establishes the clear responsibilities in the contract review process. It ensures that the right contract reaches the right stakeholder at right time during the review and negotiation process.

Specific clauses can be marked for review and assigned to the respective stakeholders – thus bringing focused approach to the review process.

Multiple stakeholders can review the draft in parallel and thus reducing the overall review time. The system automatically collates all the edits by the stakeholders and creates the next working draft thus eliminating the need for manually collating the comments/edits.

Every edit is duly captured in an audit trail. The draft versions are maintained and the system ensures that only the latest version of the contract is used at every stage of the process.

With a summarized view of the edits and a complete trail of the changes, the system makes it easy to understand how a certain clause or contractual position was negotiated – thus bringing a complete transparency into the contracting process.

Collaboration is key to the risk management in contracts but without the right technology the effective collaboration is not easy. To learn more about smartContract’s collaboration capabilities and how it can help with the contract risk management process, visit us on smartContract.co.in.

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They’re also expected to run their departments efficiently and effectively, leveraging cutting-edge technology and process improvements.

“This evolution, and the advent of organizations like the Corporate Legal Operations Consortium (CLOC), have led to the centralization and strategic focus on legal operations and innovation,” Kaur says.

Diversity of charter and skill

Kaur’s team supports the Juniper legal organization—“JLO” as it’s called—a 106-person diverse and global team working under Senior Vice President, General Counsel and Corporate Secretary Brian Martin.

“Our mandate is clear—to support Brian’s vision of JLO being a competitive advantage and business enabler,” Kaur says.

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We are probably stating the obvious here, but this is a challenging time for every business. Businesses are finding it hard to carry out their operations as the global lockdown has confined most of their workforce to their houses. The businesses are consistently taking the help of various technology solutions for making their remote teams run the business as usual. These experiences are not only making them realize the critical role the technology can play in their business continuity plans, but it will probably also prompt businesses to reassess their digital transformation strategies and push the digital transformation initiatives forward with a greater sense of urgency.

At smartContract we have been closely monitoring the impact of the current situation on the legal operations. Businesses run on contracts and contracts are simply a piece of paper until they are validated with signatures. In India, where an ink signature is common and prevalent practice, suddenly signing of contracts has gone beyond our reach. We are facing a big question of how to execute contracts in these circumstances of lockdown and social distancing.

smartContract has always been focusing on the digital transformation of the contracting processes. To help customers in these unprecedented times, we have now integrated smartContract with the leading Digital Signature platforms that are legally enforceable as per the Indian IT Act and Indian Evidence Act. Our customers can now execute contracts from remote locations and without requiring the physical presence of the signing authorities. While the digital signature may be very relevant today, it is also possible that the current circumstances may push companies to adopt these practices for the want of an alternative, but we strongly feel that digital signatures will play a big role in digital transformation and will help companies to streamline their signature processes even in the post-COVID era.

With Digital Signature delivering the obvious benefits of ease of use, instant execution, 100% security with global reach, we see this as an opportunity for the businesses to replace paper-based workflows to not just navigate through these times but also to start using digital signatures for saving cost and closing the deals quicker.READ MORE........