Which Parts of the Contracting Process Should you Digitise?

Once you have established a need for contract software and identified where to start, it’s important to dig further into the contracting process to understand which parts need to be modernised most.

While you are likely an expert in the processes you deal with every day, you likely haven’t given much thought to the processes that support how your business runs, like contracting.

Maybe you’re on the sales side and you have expertise in identifying opportunities, getting meetings, making a pitch, pricing and more. To close any deal, the contract needs to be customised, negotiated, approved (the most common obstacle that stalls contracts), signed, executed, connected to billing systems and more. Some of these steps may be more of an issue than others. For each step, there are multiple contracting tools that can be useful.

To be confident in any technology choice you make, it’s important to analyse the details of your organisation’s contracting processes and determine specific areas of focus.

Examine each stage of the contracting process

Prioritisation should primarily be based on where the pain is greatest and where the impact of technology can be the greatest. Normally pain will be strongest when there is significant manual effort, complexity, delay or regulation. Note that if your business process (sales, hiring, vendor management, etc.) is more mature, you’ll likely have an understanding of where issues in the underlying contracting process are.

Contracting process stages:

• Generation: Creating a contract often requires customisation for a specific situation. When data is manually entered, it can lead to inefficiencies and errors. According to a Forrester study commissioned by Docusign, more than 90% of companies prepare their contracts manually. If generating contracts is an issue, a contract lifecycle management (CLM) tool can automate this step by combining data from systems of record with a library of legal-approved clauses to address specific situations.

• Negotiation and redlining: Contracts often require negotiation and legal review before final approval. When done via Word and email, this process is slow (over 25 hours on average), has no audit trail and minimises visibility. If your process has these challenges, CLM is one category to consider. CLM centralises review with full tracking to ensure a fast, transparent negotiation. Modern contract tools also use artificial intelligence (AI) to do a first review of contracts, making recommendations for simple changes so only the high-risk copy sections need full legal review.

• Approval workflows: Getting approval for any nonstandard part of a contract can create bottlenecks. Frequently, this involves emailing Word documents and spreadsheets back and forth. When the approval chain involves several layers, this makes it more challenging. E-signature tools generally improve this workflow and can ensure that the most up-to-date contract is presented to the right approvers in the right order to avoid version control issues. It also provides full visibility into where the contract is at all times so nothing gets hung up for too long.

• Sign and execute: The process of signing a contract can also be problematic. When done manually, this is a terrible experience that gets even more tedious and time-consuming when multiple signers are involved. An e-signature solution digitises the process, allowing each signer to sign any time from any device with a simple click of a button. There’s no need to download, print or scan the document.

• Manage obligations: Customer relationships don’t end with the sale. Post-sale workflows, including service activation, notification, billing initiation and document routing, must be maintained. If these workflows are manual, it’s easy to miss a step, damaging your organisation’s relationships with any counterparty and inviting risk. CLM workflows can be customised to automate these events.

• Central storage: As your contract volume grows, so does your need to maintain and store that paperwork. File cabinets or digital drives in various locations become inefficient at any serious scale. A CLM repository allows you to keep contracts and other documents in one secure place with deep search capabilities.

• Analysis: Contracts are data, and your organisation can use this data to identify risks and opportunities to drive smarter business decisions. Analysing this data can be impossible if contracts aren’t centralised. Using an AI-based analytics solution can automate the ability to identify and act on risks, obligations and opportunities across the entire contract portfolio.

Use our checklist to determine which stages of the contracting process should be your focus and which solutions should be considered.

How three companies addressed specific contracting steps with different solutions

In the rail and freight industry, many ancillary agreements need to be completed as part of a contract package. For OmniTRAX, one of North America’s largest private railroad and transportation management companies, crafting these documents and getting them out for customer review took 14-40 days.

To improve that process, the company deployed a CLM solution with a cloud-based repository, robust search capabilities and automated workflows. The ability to create contract templates and clause libraries enabled the company to shorten the time it takes to get contract packages to customers. Customers can also redline and authorise contracts more quickly. 

The CLM solution is creating savings by increasing employee efficiency and removing paper contracts from a storage space, which will save $50,000 in physical and electronic storage fees annually. 

Tipalti, producer of a leading global payables automation platform, was operating with an order form that required each salesperson to complete 35 steps. The company needed a faster and more efficient way to manage this process without forcing reps to leave the CRM system they were already using. 

Tipalti turned to a lightweight CLM tool for contract generation that worked seamlessly with that CRM, using automation at every step. With the solution’s conditional content functionality, administrators can create rules that automatically customise the order form content.

As a result, the number of steps required for creating an order form has decreased by 70% and deals are closing faster. Salespeople have eliminated hours of administrative work and now focus on closing more deals. 

Another company, an enterprise industrial manufacturer, implemented a CLM solution to automate contract workflows. Now inbound PDFs are seamlessly converted to Word documents and routed to appropriate groups to review, redline and approve. Smart rules make it easy to trigger the right next step based on a conditional event, such as receiving a purchase order or onboarding a vendor.

The company’s negotiation process is also streamlined. Contract AI automatically generates detailed risk scorecards for inbound agreements based on the company’s legal and business policies. This gives the legal team a head start on contract review and allows sales to work more self-sufficiently, reserving valuable resources for larger, more complex deals.

The results have been dramatic: Contract turnaround times are reduced 40% and the $4,000-per-contract review costs have been cut in half.

Figure out what’s right for your organisation

By taking the time to review each stage of your contracting process, you can identify what needs to be fixed most and which solutions should be evaluated. This ensures nothing is overlooked and unnecessary tools are not included in your search. This information should help guide your research and give you confidence in your evaluation and ultimate vendor selection. 

Use this checklist to determine which stages of the contracting process should be your focus and which solutions should be considered.

This is the final post in a five-part series to help determine if you should deploy an agreement/contracting solution. Each post covers questions you should consider before contacting a vendor to explore your software options to ensure your company gets maximum value from the implementation.

• Read Part 1

• Read Part 2

• Read Part 3

• Read Part 4