Five Stages of the Contract Management Process

An important part of analyzing contract workflows is breaking that lifecycle down into recognizable steps. To identify broad trends, the entire process needs to be separated into definitive stages, starting with contract generation and following a distinct progression of activities to completion.

Breaking down the contract management process into individual steps is also the best way to determine how your process can be updated and improved.

In this post, we'll go through each of the five stages of the

contract management
process and explain how you can use technology to streamline each one.

Generation

To start a contract's lifecycle, the first draft of the document has to be created. Chances are you'll use a pre-existing contract or contract template to create your next contract rather than starting from scratch, but even with somewhere to start, generation can still be a frustratingly lengthy process.

The most efficient way to speed up the generation step of this process is to utilize a single contract generation tool for all of your contract creation, saving, and editing needs. This way, you'll have everything on hand that you need to generate new contracts, including your clause templates, legally approved language, and e-signature request forms.

Keeping all of your document generation information in a single database won't just speed up your generation process, either. Even more importantly, it's also one of the most effective ways to prevent mistakes during the generation or editing process. Relying on traditional, disconnected technology for document generation introduces the kind of complexities that lead to the most common contract generation mistakes, such as using an outdated clause or segment of language from an outdated version of your information.

Negotiation

After a contract is generated, all parties involved need to negotiate back and forth until final terms are agreed to. This tends to be the most time-intensive stage of the contract management process, especially if any of the parties involved are relying on outdated technology or information.

In fact, in a survey of over 1,300 contracting professionals that we conducted back in 2022, nearly half of respondents said that they regularly had to create at least three new versions of their contract document during the negotiation phase. Often, these new versions had to be created to account for the simplest of mistakes, such as - again- using the wrong version of a clause or amendment.

One of the main causes of these hurdles is the lack of a platform to share contracts and collaborate on revisions. The existence of multiple versions of the same contract makes it easier to make mistakes or lose track of progress made elsewhere. Keeping the negotiation process centralized through online collaboration tools reduces the possibility of human error and ensures all parties have access to the most recent version of the contract.

Routing

After all parties reach an agreement on the version of the contract they'll be moving forward with, the document management team needs to make sure every relevant party has a copy of the accurate, up-to-date version of the contract.

Unfortunately, this frequently presents challenges for contract management teams, as well. It's still all too common for contracting professionals to use a wide range of tools to share contracts internally and externally. Many professionals still rely on combinations of different routing tools, such as email, cloud storage systems or even traditional postal mail or fax systems.

Electronic or physical, all of these contract-sharing methods have the same primary flaw: they take the contract and the users out of the contract management system where the contract resides.

As soon as your contract leaves the secure environment of the contract management tool where you created it, you open yourself up to risks, such as reduced visibility or lost documents. It also makes it easy to accidentally share the contract with the wrong party.

Contract lifecycle management technology can automate contract routing for internal and external review with detailed version control. By using it, your contract management team can ensure everyone involved in the contract review process always has the most accurate and up-to-date version of your contracts available.

Approval/signature

When everyone has the correct version of the contract they've agreed upon, it's finally time to sign. Unfortunately, this is yet another stage of the process that can introduce significant and time-consuming complications, especially for management teams that rely on old, manual processes.

An average of five people are involved in any contract approval process at the signing stage. These reviewers often represent several different departments such as legal, pricing, and procurement, and all of them will need to see and sign off on the latest version of the contract before the process can move forward.

If these reviewers don't have a single, version-controlled contract document to review, they may see an outdated or incorrect version. Then, even in the best-case scenario where they catch the mistake, they'll have to track down the right version of the contract and re-review from scratch. Repeat this several times across multiple disconnected departments, and the time delays can add up quickly.

Gaining approval on a final version of the contract from all reviewing parties is often one of the biggest hurdles to today's contract management process. The more disjointed approvals are from a central contract management platform, the more likely it is for delays and errors to occur.

The easiest way to prevent delays during the signing process is to use electronic signature software integrated directly into the CRM used to review. With the help of e-signature technology, you can have every party sign the same version of the document as soon as they review it and share these signatures throughout all relevant organizations.

Storage

Even after all parties sign the contract and the deal goes through, the contract management process is far from finished. The contract managers still need to properly file the contract in such a way that anyone who needs access to it can find it immediately.

Contracting professionals need to re-consult completed or in-progress contracts quite frequently. In fact, during our 2022 survey, more than two-thirds of respondents said they needed to locate archived contracts on a weekly or even daily basis.

Even with the overwhelming popularity of cloud storage, finding these contracts can be a hassle. Cloud storage solutions can often contain an overwhelming number of files and documents. It's very easy to lose an individual contract in a maze of files and extensions. Even after finding the contract, a traditional cloud storage system won't provide an easy way to search it for the information you're looking for, which can also cost considerable time.

Organizational challenges like these are exactly why contract management tools are the ideal way.

to facilitate unified storage and naming conventions. They speed up the process of finding the right document and locating the relevant clauses. Once contract management is established, additional insights can be gained through AI and other advanced analytics tools.

Over one instance of contract management, these improvements may seem like small time and energy-saving tweaks. Over the course of hundreds of contract generations, however, all that time saved will add up significantly, giving your whole team far more bandwidth to tackle important functions such as securing your next deal.

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