Are you overwhelmed by spending precious business hours on reading and managing tons of contracts than getting real-work done? Let’s automate contracts.
In a formal setting, every business transaction is followed by a contract, an average enterprise generates thousands of contracts quarterly and more as it grows. At an early stage of a business, the companies are unaware of the need for contract automation. It can save them up humongous costs associated with strategic deals, was estimated by World Commerce and Contracting costs businesses, an average of 9% in their yearly expense. This includes, but is not limited to lengthy paperwork, and hours of stressful document reviews, careful vetting of standard contracts. And meeting short deadlines are difficult to manage by a business, that prefers outsourcing legal services or hiring contract managers that ends up draining hard-earned financial resources of a business, as well as compromising the security of the confidential information, contained in contracts. In exchange for the passing of contracts for reviews, approvals, and agreement signoffs, eventually exhaust resources and time of both the parties. Hence, making a simple process tedious, and lengthy.
Lawyers in private practice to General counsels of the companies are overwhelmed with tons of other legal issues of their clients, and additionally shouldered with other professional responsibilities, naturally leaves them a room for making errors often creating a point of contention amongst the parties, which cost both time and money for fixing mistakes.
In a digitalized world, businesses are restricting their dependency on manual handling of contracts by switching over rather to a new process that facilitates contracts with the help of digital tools powered by Artificial Intelligence (AI). Legal tech software employing the use of artificial intelligence in contract automation has reduced the paperwork headaches. Goldman Sachs estimated, companies employing the use of contract automation software, cut down their annual contract management cost by 20- 25%, which is an addition to 5% of their revenue spent to keep track of the agreements after their signing. Such massive expenses can be brought to zero by relying on efficient, yet reliable tools of Legal tech.
For beginners, we present a detailed guide explaining all that you need to know about contract automation, and how it is impacting the work efficiency of clients, regardless of their legal background.
What is contract automation?
Contract automation is about leveraging technology to develop, manage, and store legal contracts online to minimize time and utilization of resources, thereby accelerating turnaround times and reduced reliance on legal experts.
In contrast to the norm, contract automation is as important for a non-legal team, as its for independent attorneys, and in-house counsels. For instance, a newly established marketing enterprise’s sales team with the help of contract automation can create self-serving agreements by leveraging attorney’s pre-approved contract templates. Employing digital legal aid tools, such as contract automation reduces the burden of back-and-forth emails, as it eliminates the need for lawyer’s reviews for your standard clauses and provisions in contracts.
Who should employ the contract automation process?
Contract automation is designed to cater to the need of every team in a company dealing with drafting, reviewing, or storing a contract. In practice, they are mainly used by the in-house legal counsel, equipped with the knowledge and legal expertise of setting up automation processes for contracts.
As always, dealing and storing contracts, such as Non-Disclosure agreements containing highly sensitive information about the company’s operating mechanism, establish a confidential relationship between the signing parties. In the early stages, therefore businesses not having in-house counsels are often advised to have the authority of contract automation lie with the founder or with a trusted director of a business.
Following teams of different areas are extensively utilizing the services of contract automation software for a sustainable solution to deal with monotonous, and tedious contract work:
- Legal (private legal practitioners, General counsels, Legal operators, Contract Analyst)
- Human resource
- Procurement/Sourcing managers
- Real estate
What are the benefits of contract automation?
The key benefits of contract automation are numerous, as it has digitalized manual contracting practices, which drives down the cost and time negatively impacting your business. Amongst other key benefits, the most identified ones are mentioned below:
- Enhance work efficiency and output
- Increase profitability
- Work transparency
- Full Ownership of contracts and centralized database
Enhance work efficiency and output
With the help of a pre-approved lawyer’s template, you can start drafting at a faster pace by 83%. It wasn’t easier to track reviews, amendments, negotiations, and follow-up communication with a second party, until the advent of this legal tech software, allowing the happening at one shared place only. Now, clients are no more required to waste their time, and resources for traveling long distances to sign contracts physically. E-signatures have made it easy to execute contracts, without any need for printing, scanning, and emailing back the documents. Additionally, spending less time on back-and-forth email communication can help the department to focus on its key responsibilities and accomplish its function efficiently, and timely. Contract automation software eliminates the need for manual marking of contract renewal dates, and it intelligently creates automatic follow-ups.
Do you know that the average cost incurred by a business to process and review a basic day-to-day contract has swelled to $6900? This makes up $49K for advanced agreements. The only solution left is switch over to contract management automation, which can help sign up agreements up to six times faster, along with saving extra money spent on legal services.
Employing contract automation strengthens and ensures higher accountability in the work process by permitting teams to keep up with contract updates, and trace impediments quickly when a contract is stuck at a stage. This mechanism encouraged contract stakeholders to have confidence in one another leading to a process of improvement.
Full ownership of contracts and centralized database
Having a sense of ownership, allows a team to work independently and efficiently, without the interference of a third party, or the need for a legal expert. With contract automation tools, marketing or finance teams can now use their custom contracts without having to engage another team in contractual processes. Also, a key feature of this Legal Tech software provides a centralized database of contracts, which saves not only the valuable time of the concerned parties but of other teams as well.
There are several Contract Management Software available in the market to overcome inefficient and time-consuming manual contracting processes. Providing contract automation solutions, powered by AI promises increased efficiency and accuracy in the workflow. The surge in digitization has streamlined contract automation by benefitting businesses to increase their brand value, and develop trust amongst the concerned stakeholders, which creates an everlasting business relationship based on transparency, work efficiency, and e-secure management of a business, powered by high tech contract automation software.