Let’s face it, like The Brexit Papers, contracts aren’t exactly the most exciting documents you’ll ever read. In fact, they can be quite the opposite. The pain of writing, negotiating and finally agreeing the contract means that the temptation to shove that signed sheaf of papers in the filing cabinet and forget about it is strong…
The human touch
Despite the increasing reliance on remote and agile working, and the huge range of communication channels which support the virtual office, there’s no substitute for face to face meetings. Britain and Europe are pressing the flesh as they negotiate Brexit. The human touch is always better, right?
Actually, wrong. When it comes to the complexities of contract management, contract negotiations and the contract lifecycle, Brexit or otherwise, human errors creep in and can seriously compromise the value of our agreements. Given that it’s your contracts which shore up the foundations of your business, can you really afford for things to go wrong?
The cost of our mistakes
We all know that there are recognisable flaws inherent in manually managing our contracts. But do you know just how catastrophic it can be? Are the fears which constantly circulate about the challenge of Brexit negotiations justified? Well, just a few days on the wrong side of the contract saw things go horribly wrong for Powdr Corporation: ‘Failing to properly file paperwork renewing its 20-year lease will go down in history as the ski industry’s most costly clerical error. Business classes will review this case.’
And here’s another – ‘ ineffective control and management of contracts costs businesses more than $153 billion per year’ www.businesswire.com. These stats – from the Aberdeen Group – also tell us that 57% of companies generate more than 100 contracts a month. 7.5% of those companies have more than 10,000 active sales contracts during the same period.
Common contract management mistakes
Human error can have cost implications throughout the lifecycle of the contract. Here’s a few other problems you can avoid by simply embracing the world of contract management software.
- Confusion and premature signing
First off, can you be sure that everyone involved has the same level of clarity and understanding of the scope of your agreement? Sending various versions of the document back and forth via email can be confusing. Far better for all parties to view the contract online and understand every element of the document. Together you can be sure your objectives are clear, and you’ll reduce the chance of premature signing.
You’ll also avoid becoming bogged down in jargon and legal terms. During the authoring process, you can agree between you the structure, style and language – from an online legal repository – which is meaningful to everyone.
- Lack of engagement
Contract complexities can lead to under or over-involvement in the process. You might find your key stakeholders become bored, then disengage and sign hastily. Or negotiations become protracted, involving far too much precious company time. If you can invite the relevant people to view, comment on, or amend the live version and do it all online, you’ll optimise communication. If everyone has access to the same version with no loss of version control, you’ll be able to review, update and agree your contract more quickly. Chances are it will also help you avoid any claims or disputes at a later date.
- Lack of insight
Paper-based systems can take a lot of mining. If this is the route you need to go to find out specific information on your contracts you’re going to be wasting a lot of time and money. You’ll struggle to know which contracts are expiring soon, and it’s likely you’ll simply go for an auto-renewal which is unlikely to give either yourself or your customers the best deal. If you can’t search your contracts on keyword terms or run reports, you simply don’t have the full picture and so you’re making decisions based on partial information. This is a very real danger for our government during Brexit negotiations.
- Confused contract repositories
Where do you hold your contracts? It’s such a simple thing. But in this complex digital world of mergers and acquisitions, hybrid cloud, remote working, and global corporates, different departments work in different ways. Different departments store files differently. A phalanx of repositories is only going to lead to problems with versioning control and compliance. If you centralise your contract repository everyone is going to be working on the latest version of the contract and using the approved template. You’ll avoid confusion from the start, and penalties later on for lack of compliance.
- Lack of flexibility
Once a contract is agreed, it’s set in stone, right? Well actually this lack of flexibility and any efficient option for performance management can really cause some problems. If you can’t make proactive changes to a live contract, then chances are you’ll simply wait until something goes wrong. Which results in the apportioning of blame, the breakdown of communications and the souring of professional relationships. Online contract management gives you an open, transparent platform which makes your contracts continually flexible as your business relationships change and grow. And if someone does make a mistake, you won’t have to throw the baby out with the bath water. Contract Insight stores all versions of the contract as your negotiations progress, so you can backtrack easily.
- Undefined contract lifecycle
Every contract has a complex lifecycle, including request, authoring, negotiation, approval, execution, obligation, compliance and renewal. If you haven’t got a consistent lifecycle process across your contracts, you’re going to fall foul of the varied obligations you have towards your stakeholders, partnerships and suppliers.
- Poor governance
Once the contract’s drafted and signed, it’s frequently handed over to a different team or department to implement and manage. If they’ve had no involvement in the negotiations, their understanding might be limited. Which can lead to mismanagement and poor governance. To guarantee the commitments you’ve already made, online contract management software gives essential transparency to all members of your team. Valuable information can be shared, and any member of your contract team can get updates on ongoing contract status.
Don’t mirror the pain of Brexit negotiations
So as we see the pain of Brexit negotiations continue, contract management software really can help you avoid the impact of human error on your own organisation. Your contracts will become less of a drain on your resources and actually streamline the operations that are fundamental to the success of your business.