The COVID-19 and coronavirus quarantine has forced every business to examine online collaboration. Here are five steps organizations can take to improve contract management through collaboration. These techniques also help protect revenue and minimize expenses.
Online contract management collaboration steps:
It is easier than you think. You are not alone. Most organizations manage contracts with a spreadsheet application like Microsoft Excel1 or Google Sheets2 with documents scattered across departments, network drives, and personal computers.
The sheets-and-files approach is typically an organic, haphazard solution from departments and staff trying to control their own work. There are three problems with the sheets-and-files approach:
The good news is that it is easy to migrate to an online contract management system. Migration runs a spectrum from all-or-nothing to incremental.
It starts with professional leadership to aggregate existing data into a single source of truth. It is also necessary to standardize the data about your contracts.
Each migration path is unique. Talk to a professional about your options.
With an online contract management system, you can share access to contracts internal and, with some vendors, externally.
There are three factors to consider with sharing contract information through an online portal.
Licensing contract management software The threshold question is whether and how much your solution provider allows you to share from a licensing perspective. In some cases, vendors might not have the technical ability to allow flexible access. In other cases, there may be user-based licensing fees.
Lextree allows unlimited users, for example. The users can be any type (administrators, editors, readers, etc.). You can also give access to outside lawyers, auditors, or accountants if you want.
Make sure your solution is affordable once you have full adoption, not just at the beginning.
Limit access to specified groups You should limit access to contracts based on business need. For example, the leader of one facility needs access for the contracts that relate to her facility. She does not need access to the contracts for the facility across town run by another manager. Senior management would have access to both groups of contracts.
Use read-only and editor roles The "role" controls what user can do in an application. There are three essential roles: administrators, editors, and readers.
Admins can make changes to the configuration of your contract management system. Editors can make changes to contract records. Users with read-only access can view information about the contract, but not make any changes. There might be other roles as well.
Once you have all your contract records in one place and have controlled access, where to start your analysis? Often auto-renewing expense contracts are the best place to start.
Flagging contracts as auto-renewing or evergreen allows you to run reports against your entire contract portfolio to find ways to save money.
Auto-renewal provisions typically require advanced notice to prevent the renewal. You can configure contract management software to remind you far enough in advance to prevent the auto-renewal.
Stem unnecessary expenses to achieve a quick win in difficult financial times.
The next logical place to start your contract analysis is with revenue generating contracts, whether sales or service contracts.
Revenue contracts that are not renewing or are tied to volume purchases create significant risk, because the other party can reduce their expenses with a simple decision. These risks add to the increase risk of bankruptcy and breach of contract during times of economic stress.
To anticipate the day when customers return in full force, this is a great time to streamline your contract approval process.3
Most contract request and approval processes boil down to phone and email messages. While they seem expedient, phone and email lead to frustration and missed timelines.
Online contract management software allows you to make contract requests from the field to the legal department or management quick and easy.
A contract approval workflow delivers several benefits:
While remote work challenges every business, especially in times of COVID-19 and coronavirus, it can also create an opportunity to get contracts and contracting processes in order.