On the surface, contracts may seem like a formality to most business relationships, nothing more than an agreement to sign and file away. However, every contract represents a detailed look into the business relationship between your company and another party, whether it be customers, vendors, contractors, or even employees. These relationships are the tools that build your company’s revenue and reputation. For this reason, you need to make sure that each and every contract produced by your organization is up to a high quality standard, meets the necessary terms for the agreement on both sides, and uses clear, uniform language, all while managing any possible risks involved with the relationship.
All that may sound impossible or even tedious, but contract authoring is one of the foundational steps in the contract lifecycle and requires the necessary attention to ensure it’s done right. However, there are ways to speed up your contract authoring process and take some of the weight off employees. Read on to find out more about contract authoring and how a contract lifecycle management (CLM) software can help you generate contracts faster.
Why Is Contract Authoring Important?
Before we start examining why a good contract authoring process is a necessity, let’s first nail down exactly what contract authoring entails. This stage of the contract management cycle is also known as contract writing, and it involves all parties in the business relationship working together to generate a written agreement that details important contract data, such as terms, conditions, possible risks and how to manage them, pricing information, key dates, milestones, etc. Laying out contract data in a way that is easy to understand while still adhering to the unique needs on both sides of the agreement is essential to creating a good business relationship and customer experience. Not to mention, writing one contract well now can ease the process in the future by allowing for the use of working contracts as templates for similar transactions.
Here are a few examples of how bad or inefficient contract authoring practices can hinder your organization’s productivity and workflow:
- Poor version tracking: Have you ever wasted valuable time making edits to a version of a document that was outdated and had since been fixed up with new clauses? Losing track of the various versions of a contract floating around during negotiations can quickly lead to a slew of miscommunications and mixed up clauses that will ultimately slow down the contract lifecycle. A disorganized authoring process may also cause more mistakes and lead employees to spend time figuring out what went wrong rather than focusing on more pressing matters.
- Lack of unification between contracts: For many companies, contracts may begin to fall into certain categories. Each business relationship is unique, of course, and may require special changes to be made to the contract throughout negotiation, but overall there are lots of contracts that can benefit from a standardized template to use as a base. Templates help keep the language of your contracts unified while also providing easy solutions to issues that arise throughout negotiation in the form of standard clauses which can be inserted in place of others. Without centralized language across all your contracts, the possibility for errors increases along with the time it takes to draft up a contract in the first place.
- Frequent mistakes: Human error is a natural part of any writing process, including contracts. Mistakes may occur from multiple parties as well as various teams involved in the drafting of the document, resulting in missing or misplaced clauses throughout. Missing clauses are especially dangerous, as they can result in the demands of one party not being met or even litigation if they were meant to account for potential risks. Mistakes and miscommunications take time to fix and slow down the writing process, possibly having a negative effect on the final product and overall customer experience.
Enhancing Contracts with CLM Software
The goal of contract lifecycle management (CLM) is to oversee each step in the contracting process in a way that maximizes efficiency by eliminating extraneous procedures and automating the more mundane tasks that do not require much hands-on attention. Oftentimes, your company’s success depends on how well you manage your contracts. An efficient contract management plan will increase revenue, cut down on wasted time for both employees and third parties, and improve your overall client experience. Since contract authoring is a foundational step in the overall contract process, it’s important to pay attention to how your organization carries out its contract writing in order to figure out the best ways to improve that process and the subsequent steps that follow.
One of the best ways to streamline your contract management process is to implement CLM software. Advanced legal-tech tools like these make managing the contract lifecycle easier by eliminating the need for hands-on intervention in miscellaneous tasks and using the power of AI to stay on top of important dates and deadlines. In terms of contract authoring in particular, a CLM tool has the ability to automate certain reminders and steps in the contract authoring process while also generating a centralized library of clauses to make the drafting and negotiation of each contract much smoother and more efficient.
Below, we have detailed a few of the ways legal-tech tools like CLM software can help make your contract authoring process more accurate and efficient:
- Centralized clause library: Contract authoring tools allow you to generate a centralized clause library for your organization based on past contracts and templates. You can then pull clauses from this library in the creation of new contracts or simply inject them into existing contracts in order to quickly solve hiccups in the negotiation process or fix a common mistake that occurred across various documents. A clause library is an invaluable tool for both speeding up the drafting process and lowering the potential for unnecessary risks and mistakes.
- Better version tracking: Having a centralized space where all versions of a contract exist at once eliminates the possibility of losing versions in email chains or wasting time making corrections to an outdated version of a document. It also supplies your company with more contract data, allowing you to easily compare past and present copies of documents in order to see what worked and what didn’t work in the past versions of a contract. You can then apply these changes in the future when drafting new versions of that particular contract.
- Alerts and remote access: Many contract authoring tools come with alerts that ensure you never miss an important deadline or milestone throughout the drafting process. Overlooking key dates can hinder the contract lifecycle significantly and negatively affect the customer experience as well. Remote access to all versions of the contracts also makes it much easier for multiple parties to communicate and edit the document simultaneously from different locations around the world without having to worry about email chains or the slow process of mailing physical copies back and forth.