Contracts serve as the backbone of any successful business, shaping relationships, defining responsibilities, and safeguarding interests. However, the true power of contracts lies not just in their existence but in the meticulous management that accompanies them. 

The effectiveness of contract management processes plays a pivotal role in determining whether your contracts pose predominant risk factors or serve as catalysts for business growth. Enhancing contracting efficiency is a top priority for many legal teams, and implementing contract management best practices is a key step in achieving this goal.

If you're seeking ways to elevate your organization's contracting efficiency, your search ends here. In this blog post, we'll delve into the world of contract management and explore five essential practices that can significantly enhance business value.

Contract Management Best Practices:

1. Centralized Contract Repository:

Traditionally, signed contracts are dispersed across various IT systems within an enterprise software stack or, in more outdated scenarios, stored in physical filing cabinets. These isolated and static storage methods pose challenges in terms of management and hinder the extraction of valuable insights. Locating a specific contract when needed becomes a labor-intensive task, driving up overhead costs and potentially resulting in business disruptions, missed deadlines, third-party breaches, and non-compliance with contractual obligations. 

By transitioning to a centralized, cloud-based contract repository, you enable users to access contracts at any time and from any location, while also facilitating easy analysis for valuable insights. Cloud-based solutions, such as contract management platforms, offer a secure and organized environment for contract storage. This centralized approach promotes collaboration, mitigates the risk of misplacing or losing contracts, and streamlines decision-making processes for increased efficiency.
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2. Standardization and Templates:

Traditionally, contracts are independently generated by different business units, lacking insights into existing contractual relationships or risk factors. When crafting contracts, a common yet suboptimal practice involves using outdated templates and making only basic metadata adjustments before finalizing the document. 

This approach exposes enterprises to significant risks in the long run. To address this issue, it is essential to establish standardization throughout the contract creation process. Contract managers within the legal, procurement, and sales departments can easily choose appropriate templates and legal language from designated libraries to create new contracts. 

By adhering to a standardized template, contracts become more manageable to edit and review, focusing only on transaction-specific terms. This streamlined process helps eliminate friction points, accelerates new contract negotiations, and facilitates prompt resolution of disputes.

3. Automate Legal Review Processes:

As per Gartner, the integration of AI-powered solutions is projected to slash manual contract review efforts by 50% by 2024. Businesses can harness the power of AI today by implementing contract lifecycle management software, thereby enhancing productivity in their legal departments, reducing the necessity for manual corrections, and expediting the contract review and redlining process.

An added advantage of automated legal review lies in improved risk management. By employing Contract Lifecycle Management (CLM) software, businesses can facilitate AI-led legal reviews, effectively minimizing risk exposure and accelerating the pace of contract negotiations.

This streamlined approach simplifies legal oversight. With more precise assessments of risks against specific criteria, businesses can swiftly pinpoint areas of concern, such as missing clauses and deviations from specified clauses.

4. Establish Contract Management Key Performance Indicators (KPIs):

Ensuring the success of contract management is pivotal for realizing the full value of contracts. A key component in achieving this success is the establishment of Contract Management Key Performance Indicators (KPIs). Defining and monitoring these KPIs with the appropriate Contract Lifecycle Management (CLM) tool is instrumental in taking proactive measures to develop an efficient contract management program.

Consideration of the following metrics is essential:

• Contract Initiation & Creation Cycle Times: Measures the "time-to-contract" and evaluates the efficiency of the contract drafting process.
• Process Compliance: Ensures adherence to a standardized and approved contracting process, promoting consistency and reliability.
• Contract Risk: Mitigates risk exposure by addressing non-compliance with contract terms, policies, statutory guidelines, and regulatory requirements.
• Contract Deviations & Missing Clauses: AI-driven CLMs can automatically identify deviating and missing clauses and terms, enhancing contract accuracy and completeness.
• Obligation Management: Evaluates performance against contractual obligations to ensure the timely fulfillment of deliverables.
• Disputes and Issues: Tracks the number of contract claims, issues, and disputes by contract and supplier, enabling the identification of trends and the resolution of recurring problems.

5. Effective Contract Tracking:

As the volume of your contracts expands, the manual tracking of dates becomes progressively challenging. This increases the risk of overlooking contract renewal dates and, in certain instances, may result in a breach of contract—potentially impacting your business's financial well-being.

To optimize business value through contract management, regular audits, and performance tracking are crucial. Fortunately, the solution is readily available through contract reminder software or comprehensive contract solutions like SpeedLegal. These tools automatically capture critical dates within contracts and enable you to establish automated reminders for upcoming renewals, end dates, and contractual obligations, mitigating the risks associated with manual oversight.

Embrace SpeedLegal for Advanced Contract Management

At SpeedLegal, we are committed to revolutionizing the landscape of contract management. Bid farewell to the arduous and intricate agreements that consume your time and resources. Through our state-of-the-art AI-based contract review and management services, we present a transparent and succinct overview of your contracts, sparing you from the laborious task of deciphering the dense legal language and shielding you from suboptimal contracting.

With SpeedLegal's contract review, experience a straightforward analysis highlighting all clauses with relevant keywords. Additionally, our innovative Contract Nutrition Label™ breaks down complex contracts into plain and simple language, offering a comprehensive review that ensures clarity without headaches or confusion.

But that's not the end of the story! Elevating contract analysis, our Red Flag Table™ compares your contract against prevailing market standards, pinpointing even the slightest risks. Here's the game-changer: Our AI-powered suggested fixes guide you toward optimal solutions, empowering you to navigate the negotiation process with confidence.

Immerse yourself in the convenience of our smart folder-based storage, establishing a centralized contract repository for all your agreements. No more scattered documents or endless searches. With SpeedLegal, your crucial files are securely organized and easily accessible. Moreover, our automatic reminders assist you in contract performance tracking and evaluation, providing complete control over your contracts. 

Experience the efficiency and ease of SpeedLegal for a seamless contract management journey.