What is Contract Automation?

Contract automation refers to the utilization of software to streamline and simplify the execution and management of contracts, reducing the routine administrative work associated with contract management.

The contract automation tool digitizes the entire contract lifecycle management process, automating tasks such as contract generation, management, negotiation, execution, and storage. Creating contract workflows that incorporate automated steps eradicates manual tasks, ensuring a streamlined process followed by fewer cycles and errors.

This transformative approach empowers businesses to establish and execute repetitive contract workflows with minimal manual intervention, allowing teams to expedite contract execution and revenue generation.

Aspects of Contract Workflows Suitable for Contract Automation

In the field of contract management, various routine processes undergo seamless automated transformations. From the meticulous entry of contract data to the creation, tracking, and approval stages, along with timely reminders for renewals and expirations and efficient storage and reporting each elements of CLM is meticulously addressed.

Routine processes in traditional contract management involve:

  • Entering contract data
  • Creating contracts
  • Tracking reviews
  • Approving contracts
  • Sending renewal/expiration reminders
  • Managing contract storage
  • Generating contract reports and beyond

Pain Points in Manually Managing Contracts

In the ever-evolving landscape of modern business operations, manual contract management persists as a laborious and resource-intensive practice for many organizations, impacting annual revenue significantly. Contract automation addresses various challenges that in-house legal teams commonly encounter, providing solutions to streamline processes and enhance efficiency. Specifically, contract automation software enables businesses to tackle the following issues:

  • Redundant Efforts – Traditional contract management involves repetitive tasks across multiple touchpoints, leading to version control issues and avoidable errors.
  • Lack of Standardization – Contracts are often created in silos, using non-standard templates and outdated legalese, introducing the risk of non-compliance with current company policies.
  • Limited Visibility – Manual processes and rudimentary tools fail to provide the desired level of visibility. The lack of search and retrieval capabilities in decentralized storage systems, such as file servers, hampers quick access and review of contracts.
  • Delayed Processes – Eliminates manual and time-consuming processes like printing, scanning, and posting, enabling quicker deal closures and faster offer deployments.
  • Real-time Collaboration Challenges External stakeholders receive erroneous or duplicate drafts due to a lack of real-time communication. Internally, collaborators resort to lengthy email chains to direct and facilitate necessary changes.
  • Inefficient Tracking Managing a high volume of contracts poses challenges in tracking and ensuring vendors fulfill their obligations, leading to increased difficulty in contract management.

How Contract Automation Benefits Organizations?

According to a report from Gartner, “Predicts 2024: CPOs Adjust to Technology’s Impact on Procurement”, by 2024, emerging technologies will cut manual contract review and drafting efforts by 50%.

Contract workflow software harnesses the transformative potential of streamlined processes for contract management, enhanced compliance, and organizational efficiency and effectiveness.

  • Efficiency Improvement – By automating contract creation, approval, and management processes, organizations can significantly reduce the time and effort invested in these tasks, leading to improved efficiency and faster completion of workflows.
  • Enhanced Compliance – Contract automation standardizes contract templates, ensuring that each document aligns with business strategies and complies with company policies and legal requirements, enhancing overall compliance.
  • Mitigated Risks and Errors –The automated contract generation and approval processes in contract automation minimize the risk of human errors in contract documents. This reduction in errors contributes to increased accuracy and reliability in contractual agreements.
  • Faster Turnaround Time – Contract automation expedites the creation and signing of contracts, leading to faster deal closures. This accelerated turnaround time positively impacts revenue capture and allows organizations to capitalize on opportunities promptly.
  • Improved Collaboration – Real-time online collaboration among stakeholders is facilitated through contract automation. It reduces miscommunication, promotes effective collaboration, and ensures that all parties involved are on the same page throughout the contract lifecycle.
  • Centralized Visibility – Contract automation provides a centralized platform with advanced search and retrieval capabilities. This centralized visibility enhances the organization’s ability to track the status and details of contracts efficiently, improving overall contract management.
  • Cost and Time Savings – Contract automation reduces operational costs associated with manual contract handling, including tasks such as printing, scanning, and posting, leading to cost and time savings and more efficient resource utilization.
  • Scalability – Organizations can handle growing contract volumes without proportional increases in resources with contract automation. This scalability ensures that the system remains effective and adaptable as the organization expands its operations.

How to Automate Contracts?

Contract Lifecycle Management (CLM) software empowers businesses with a suite of automation tools. These tools streamline the contract process, from creation and negotiation to execution and management, helping organizations extract maximum value from every contract.

    • Contract Templates: Businesses can create a library of pre-approved, standardized contract templates and clauses to accommodate the various types of contracts the organization uses. This ensures consistency and reduces the time spent drafting new contracts from scratch.
    • Pre-Defined Approval Workflows: Business teams can set up efficient hierarchical approval workflows to automatically route contracts for approvals from stakeholders. This eliminates manual routing, prevents contracts from getting stuck waiting for approval, and accelerates the entire contract lifecycle.
    • Automated Notifications and Reminders: Configuring the CLM system to send reminders for key dates, such as approval deadlines, renewal dates, and expiration dates, keeps everyone on track and ensures deadlines are met. Automated notifications for contract signing prevent delays and ensure the timely completion of contract-related tasks.
    • eStamping and eSignature Integrations: Digital stamping and eSignatures facilitate the secure and legal execution of contracts. Contracts can be stamped and signed electronically, eliminating the need for printing and shipping and enabling remote agreement execution.
    • Bulk Actions: Bulk actions allow teams to perform operations on multiple contracts simultaneously, saving time and reducing repetitive tasks. They can use bulk actions for common tasks such as uploading legacy contracts, applying changes to contract terms, or renewing contracts en masse.
    • Track Changes and Version Control: With this contract automation feature, stakeholders can track all edits and revisions made to a contract. This allows them to see the history of changes and revert to previous versions if necessary, minimizing confusion and disputes.
    • Central Dashboard and Repository: Businesses can store and manage all their contracts in a secure online repository. This provides easy access and search functionality for all authorized users. A central dashboard provides a real-time overview of the entire contract portfolio, including contract status and expiration dates, to facilitate better contract management and strategic decision-making.

Who Can Benefit from Contract Automation Across Industries?

Contract automation focuses on expanding contract volumes and legal resources. Contract automation extends its benefits beyond legal professionals to various stakeholders across the business spectrum. It fosters collaboration across various business teams, including procurement, finance, and sales, on a unified platform for efficient contract creation and management.

      • Legal Professionals – They can streamline contract creation and management processes while enhancing compliance and reducing the risk of errors in legal documentation.
      • Sales Teams –The contract automation tool expedites the signing of sales agreements, shortening negotiation cycles through the automation of repetitive tasks in the contract workflow.
      • Human Resources and Talent Teams – With a contract automation tool, HR teams can swiftly generate job offer letters, employment contracts, and other HR-related documents, reducing time-to-hire through the automation of the contract creation and signing processes.
      • Procurement Departments – They can standardize and automate procurement contracts to improve efficiency, ensure compliance, and streamline negotiations with suppliers.
      • Finance Departments – Finance teams can automate contract processes related to financial agreements, reducing manual efforts and simultaneously improving financial accuracy and compliance through standardized contract practices.
      • Operations Teams – They can streamline contracts related to service agreements and operational processes, simultaneously improving visibility and tracking of contract status for enhanced operational efficiency.

How Contract Automation Software Facilitates Contract Lifecycle Management

Contract automation technology adopts a step-by-step workflow covering all stages of a contract’s lifecycle, typically using the following process:

      1. Initiation – This represents the primary phase in the contract lifecycle, where business stakeholders converse about vital contract details, renewals, etc. It is important to note the difference between an agreement and a contract during this phase. A formal request is then made to the legal department by a business professional for contract drafting, triggering subsequent actions.
      2. Contract Creation – After collecting the necessary information and comprehending business needs, stakeholders proceed with automated contract drafting, mentioning terms and conditions. This stage is streamlined in contract lifecycle management through the use of templates, library clauses, and an AI-powered wizard suggesting key clauses for efficient drafting.
      3. Collaboration & Negotiation –Contract automation software enables multiple parties and cross-functional teams to collaboratively outline the contract’s terms and conditions. Users can collaborate online and work on a single contract simultaneously, simplifying the negotiation process.
      4. Approval – After reviewing and aligning with contract conditions, standards, obligations, milestones, and special terms, the document undergoes approval. Through contract automation software, stakeholders can monitor contract changes, offering clarity on edits and assigned roles in the contracting process.
      5. eSigning and eStamping – Parties review and formally sign the contract, confirming its contents. The contract automation tool streamlines this process with integrated electronic signature and digital stamping solutions, enabling parties to eSign and eStamp contracts online, eliminating the need for physical transport. With integrated solutions, they can efficiently sign multiple contracts, pay stamp duty, and save considerable time.
      6. Contract Tracking – A contract tracking system within the contract automation software allows businesses to track and evaluate contract performance, extracting insights and actionable data for informed decision-making.
      7. Contract Updates & Renewal – The automated contract drafting system sends reminders and alerts for critical updates such as contract expiration, payment status, and renewal information, ensuring businesses stay informed and reducing the risk of missed deadlines.

Innovative Features Redefining Contract Management

Contract management software incorporates a range of cutting-edge features designed to streamline and enhance document management for businesses. These advanced features collectively redefine the landscape of contract management, providing businesses with a sophisticated and efficient way to handle their document-centric processes.

      • Customizable Workflows – Tailor contract processes to specific business needs with customizable contract workflow automation. The ability to configure workflows using a low code automation approach allows organizations to adapt to changing requirements and ensure efficient contract management.
      • Online Negotiation – Facilitate swift and efficient negotiation and collaboration through an online platform. Stakeholders can collaboratively discuss and finalize contract terms in real time, reducing negotiation cycles and turnaround time.
      • Template and Clause Libraries – Access an extensive repository of contract templates and predefined clauses. This feature expedites the contract creation process by providing a foundation that aligns with industry standards and organizational requirements.
      • Integrated eStamp & eSign Tool – Seamlessly authenticate contracts with integrated eStamping and electronic signature functionalities. This not only ensures the legality of the document but also streamlines the signing process for all involved parties.
      • Cloud Storage – Utilize secure cloud storage for centralized and accessible document management. This feature enhances visibility and accessibility, with the added benefits of clause meta-data tagging, scalability, and easy retrieval through advanced search functionalities.
      • Audit Trail –Maintain a detailed audit trail of all contract activities. This feature provides transparency by recording changes, edits, and approvals throughout the contract lifecycle, ensuring accountability and compliance.

Unlock Efficiency in Contract Management with SignDesk’s Contract Automation Software

With SignDesk’s comprehensive legal contract management software –CONTR.ACT – swiftly draft contracts and engage in real-time negotiations. Integrated with effortless eSignature and eStamping capabilities, CONTR.ACT ensures secure and prompt contract execution, whether you need to create an addendum or amendment to existing agreements. Streamline bulk contracts, healthcare document automation enhance workflow efficiency, and reduce TAT by 90%. The automated contract drafting processes have delivered substantial cost savings for clients across diverse contract types, Including entertainment industry contracts.

Connect with our sales professionals for an in-depth understanding of our contract automation tool through a complimentary demo.