In your company’s early days, you may think it’s easy enough to manage contracts with emails and spreadsheets simply. While this can work at a small scale, chances are, you’ll need to start using a CLM software sooner than you think—or you may have benefited from using one a long time ago. Here’s how a CLM can help small businesses, signs that the software can scale with your business, and how to tell if it’s time to get a CLM for your small business.
How CLMs Empower Small Businesses
Although getting software for processes you currently take care of manually may seem like an unnecessary expense, it’s likely to save you money even if you aren’t managing a large quantity of contracts. When you consider the labor hours that go into sending emails, checking for updates, drafting documents, and more tasks that are part of each and every contract, it’s easy to see how that math works out in favor of a software that can automate the more monotonous parts of each step.
Another way that the right CLM could empower your small business is by reducing your contract lifecycle duration, speeding up the process between intake and execution. Especially for small businesses, finances can become stressful when you’re waiting on a large payment, so speeding this process up can help ensure that you have revenue coming in as quickly as possible.
Using a CRM can also help to shield you from compliance issues, which are among the most expensive contract management mistakes a business can make. Legal jargon that seems superfluous to the untrained eye may be there to limit your liability, ensure that a contract is enforceable, and otherwise protect you from excessive risks that come with contracts that aren’t set up well. A CRM can help with a library of important compliance clauses that you can add to each contract by default, as well as automated reminders of upcoming deadlines that can keep your team on track.
How To Tell If A CLM Can Scale with Your Business
One thing that holds small business owners back from investing in a CLM early on is feeling like, as their contract processes and goals change, the CLM that serves them well today may not be able to keep up with them tomorrow. While not every solution is made to scale, there are some straightforward ways to see if a software will be able to successfully scale with you as your needs shift.
Use of AI
Over the last few years, artificial intelligence has gone from an emerging trend to an essential staple in many companies’ contract management. From summarizing documents to checking for essential clauses, AI tools that are native to CLM software can help to dramatically reduce the time-consuming tasks involved in your contract lifecycle. While you are evaluating a CLM’s AI solutions, look into user reviews as well. AI tools are not all created equal, and in their excitement to launch the next big thing, some software companies have launched their features too early, leading to frustration or even errors.
If a software has successfully integrated AI into its solutions and continues to add new use cases for it, that’s a good sign that they are keeping up with industry trends and will continue to add features that will make your work even easier.
Integration with Other Tools
No person is an island, and neither are the tools in your tech stack. That’s why it’s important to choose a software that has versatile integration options for CRMs, marketing management hubs, and more. Whether you already have tools you know you’ll want a CLM to integrate with or you aren’t sure which solutions are right for your business, a platform that plays well with other software solutions will save you a lot of time and frustration down the line.
Storage Capacity
It’s easy to overlook this early on, but as your business scales, so will your contracts—in volume and likely in complexity as well. You may need to manage more types of contracts than you did before, necessitating new templates and clauses to keep on hand. Review the storage limits for each CLM you evaluate with your potential future needs in mind and try to avoid any with a relatively low capacity, as it will be easier for you to migrate a few things now to a solution that can scale with you than trying to transition a large contract library later on.
Signs It’s Time for a CLM
Don’t wait until you experience growing pains like missed deadlines or compliance issues. Keep an eye out for these signs that it’s time for your business to make the move to CLM software:
- Data Entry Errors: Mistakes happen, but when it comes to contracts, even relatively minor typos can make a big difference in how contracts are negotiated and executed. A CLM can help reduce your risk with automated data entry and real-time alerts about changes to your documents.
- Missing or Delayed Reports: Manually reporting on contracts can get pushed to the back burner quickly because of how time-consuming it is. However, reporting on KPIs like your contract volume and average contract value is an important way to see if you’re achieving your goals. Software can generate these reports automatically, streamlining the process and making sure you can always get a birdseye view of your contract team’s work.
- Lack of Transparency: Whether your system is partially digitized with files and emails or you’re still fully using pen and paper, lack of transparency can pop up as a significant issue when there are multiple versions of the same contract floating around. With a CLM, you can ensure that everyone is working with the same document and that key stakeholders get notifications any time changes are made, from start to finish.
Beyond these warning signs, you know how quickly the cost of labor adds up, especially for highly educated professionals like lawyers. If the main thing holding you back from setting up a CLM is the upfront cost, it’s a good idea to estimate how much using that software will save you in labor hours each month. Often, they practically pay for themselves, but only you can make that evaluation for your business’s bottom line.
Pick the Right CLM for Your Business’s Growth
Deciding it’s time to get a CLM for your business is just the first in a string of decisions about what software to try, how to implement it, and where you will be using it first. It’s easy to feel overwhelmed at the amount of options—but there’s where our team comes in. Koho Consulting is a group of long-time contract management professionals that are dedicated to finding, building, and maintaining a CLM that will serve your business now and well into the future. We can also help train your team on how to use each tool, making it easier than ever to get team buy-in and ensure everyone is on the same page from day 1.
If you’re ready to get help with your contract management needs, get in touch with us today and we’ll help you hit the ground running.
