Contracts forms the foundation to every business relationship. A streamlined contract management process automation solution is a key requirement for many organisations to attract, retain and service right parties to achieve organisations overall goals and objectives.
With increased volume, variety and velocity of contracts created or received both in paper and electronic form organisations are looking at improving the management of contractual agreements through the entire lifecycle. Unfortunately, many organisations rely upon disparate systems that are loosely connected, manual paper centric methods, reliant on ad-hoc solutions, and might not meet compliance requirements.
A contract document management solution developed on a proven and flexible Enterprise Content Management (ECM) platform such as Microsoft SharePoint provide you the required level information governance, auditability, findability and compliance while improving the knowledge worker productivity with a measurable return on investment. In this post I am going to share with you few important tips in selecting a right contract management solution that provides the right balance between productivity and compliance with process analytics.
Today, companies struggle with the following challenges when managing their contracts.
- Increased regulatory reporting and compliance risk
- Increasing risk associated with contract obligations and rights
- Lack of formal control over content governance and document assembly
- Disconnection between document scanning system and contract management system
- High error rate due to manual data entry into disparate systems
- Inability to find existing contracts in an efficient and effective manner
- No digital signature solution in place to sign the contracts electronically
- Manual filing, handling and coping tasks with no version control
- Process participants usually have very little insight into the current status of a contract.
- Employees question if they are working with the latest contract version.
- Many times no central repository exists for current and archived contracts
The goal of a contract lifecycle management solution is to provide contract content governance, execution management, and performance tracking while improving efficiency. The contract management process automation solution often consists of a multi-step process that involves multiple collaborators from legal, procurement and other line of business departments. Contracts often go through several iterations and get passed back and forth between organization and external client or supplier many times. However most contracts follow a formalised lifecycle which usually follows 5 steps which can be simplified using automated workflow.
1. Contract authoring and Document Capture:
The Contract Management process automation typically starts with some form of initial agreement with a client. Whether it is an inbound document or internally developing draft document, document capture represents the point where contract is loaded into the contact management system with associated metadata fields. This includes key contract elements such as negotiations, approvals, actual deployment of contracts, management of contract related activities during the run, the renewal phase and/or the Phase-Out etc. All incoming and archived contracts are housed in a contract library that includes centralised version control and customized views. Each library item contains required and optional metadata which is used for searching, grouping and classification. Adding a contract to this library can automatically kicks off the contract review workflow.
2. Contract Review and Document Control:
The organization receives the contract and passes it through an internal review process. This review process usually routes through several individuals or groups within multiple departments across the organization, such as legal, sales, marketing and contract management. Many organizations handle this contract distribution process via some mixture of phone calls, email attachments, faxes and shared network drives.
These review and approval tasks can be automated via contract document control workflow. Notifications and tasks alerts automatically route to the assigned process participant. Workflow tasks are completed and the contact review process continues on to the next steps. After the organizational review process is completed, the client automatically receives an email with the contract as an attachment. Depending on their response, a client can approve or request changes to the current contract and the workflow branches accordingly. Client contract approval triggers a series of events marking the contract as final, updating contract status and notifying organizational employees.
3. Contract Document finalisation and sign-off:
Once internal signoff is achieved, the contract gets emailed, faxed or mailed back to the client for review. Once the review process is completed the contract document before finalised ready for the signing. Today, many organisations benefit from electronic signatures well integrated into the contract management solution as it save significant amount of time and printing costs. It is also the fastest way to get formal document signoff from busy decision makers often working with mobile devices and tablets. Depending on the organisational policy some contacts requires print and obtain wet signatures and scanned the signed contract back to the contact management system as signed .pdf working copy with full text search capabilities.
4. Contract Document Retention:
Once the contract is signed and formally executed the contract documents becomes an important record for the organisation that needs to be retained as per the records retention schedule. This is usually defined by the organisations information management policy. Contact management workflow can notify the important milestones and expiry dates about to the contract administrators and procurement managers. It is important that all amendments and actives are logged and maintain centrally for auditing, legal hold and e-discovey purposes.
5. Contract Document Disposition:
The Contract Disposition workflow is designed to support records management needs within an organization. This workflow manages the document expiration and retention process by allowing participants to decide whether to retain or delete expired contract.
Automating the contract management process by adopting Microsoft SharePoint companies can get following unique benefits over isolated systems.
- Collapse contract creation and negotiation cycle times and ease back-end integration with existing ERP systems.
- Knowledge workers always work with the latest version of the contract, no matter how many times it has been changed.
- Contract approval workflow tasks are automatically assigned to individuals or groups and can be delegated or escalated based upon predetermined criteria.
- Contracts can be digitally signed or approved on a mobile and tablet devices.
- Leverage existing technology and infrastructure investments such as enterprise security with active directory, high availability, consolidated backup and disaster recovery and single-sign-on capabilities with fast ROI
- Built in Auditing, Records management, Search and e-Discovery capabilities
- Seamless integration with Microsoft Office system already in place.
- Minimal training and maintenance costs with higher user adoption
- Users can quickly find the contract information they need with site search capabilities.
- Process analytics dashboard provides a view of real-time contract status by accessing a graphical view of the workflow or a workflow history report.
- Address the need for content governance while lowering administrative and legal costs associated with document assembly, establishing and managing strategic relationships.
With the proposed solution companies can connect directly with customers, partners and suppliers when creating, negotiating, executing, and managing the ongoing administration of contracts. Trusted by some of the most successful organisations, the contract management solution developed with Microsoft SharePoint provides greater efficiency, lower administrative costs, and improved relationships that result in higher value agreements.