How long does it take you to retrieve a contract from your company’s database? Do you know specifically where to access each piece of contract information?
A good contract management system acts as both a repository and contract management tool. So in this article, we’ll introduce why you need a contract repository, how it benefits your contract management processes and how you should implement it within your company.
What Is A Contract Repository?
A contract repository is a centralized location for storing contracts and their related documents.
Believe it or not, some businesses prefer using a filing cabinet as part of their contract management process, despite the inherent risks of relying on hard-copy storage. In fact, this type of repository can lead to missing contracts, outdated information and the inability for team members to access the information as and when they need it, especially if they’re working remotely.
Others are slightly more advanced, using a mixture of electronic solutions such as shared drives, emails and programs such as Contract Hound to store, manage and collaborate on contracts.
What Can You Use as A Contract Repository Platform?
- Contract management platforms – Cloud-based platforms such as Contract Hound saves you the worry from hard drives crashing. Cloud storage systems create enough backup copies to ensure that no data is lost.
- Folders – These are secondary contract repositories for copies of the contacts. They clutter your desktop when there are many separate projects to manage. It’s also very prone to mismanagement (e.g. getting lost).
- Spreadsheets – Excel is a common option for new contract managers as it is easy to use and cost effective. But it’s not the best for storing sensitive contract information at scale.
Pitfalls Of Using Excel And Folders As Your Contract Repository
1. Data fragmentation
This occurs when there is a huge amount of secondary data across a variety of different locations, infrastructure and management systems. One may not notice the impact of this immediately, but this leads to a lack of visibility and control, potentially resulting in poor management of supplier performance and frustrated relationships.
Excel documents can easily be duplicated with the “save as” function and end up in different shared drives. With so many different versions available, it can be incredibly difficult to track which contract versions are updated.
2. Manual management is prone to human error
One or more administrative staff will be engaged to input data manually each time a new contract is initiated or when details need to be updated. This time-consuming task creates an additional burden on teams and is more prone to human error. Inaccurate contract data will lead to further problems in the long run.
3. No scalability
Excel is a great starting point as a contract repository when the business is new and has limited contracts to manage. However, when the business grows to over a few hundred contracts, greater complexity is introduced and flaws in manual processes are likely to increase.
Why Should Your Contract Repository Also Be A Management Platform?
- If the repository is manual, it will be time-consuming for contract administrators to always have to key in contract details into the repository.
- There are too many people involved in the contract finalization process, so having a manual repository only may lead to unwanted and rogue changes.
- An automated platform allows you to have an overview of everything that is being done around the contract.
Essential Features To Look Out For In An Automated Contract Repository
In a nutshell, a contract repository should:
- Be secure
- Be automated
- Have notifications
- Allow online signatures
Security -The platform needs to be secure
There is an abundance of confidential information tracked and stored throughout the entire contract lifecycle. Hence, the contract management tool you are looking for should allow managers to place access restrictions on personally identifiable information and other sensitive data.
Automation – It should enhance current contract workflows with automation
Rather than the outdated practice requiring managers to oversee every stage of the contract lifecycle personally, automating your existing contract workflows will reduce contract lifecycle delays. Contract Hound’s automatic task reminders and alerts helps engage and remind employees tasked with keeping track of contract renewals and payments of key milestones.
Moreover, you want to be able to view an up-to-date record of contract changes through your contract management tool. This allows you to cut contract approval cycle times while assuring accountability with automated workflows.
Notifications – It should have contract status tracking
Manual contract tracking is not feasible when your contract volumes increase to hundreds or thousands as your contract failure rates will similarly increase. With the status tracking feature in Contract Hound, you will always be updated on the contract approval workflows.
There will no longer be a need to constantly email back-and-forth as you can also chat with others within the platform.
Signatures – It should allow eSignatures
Signing is arguably the most important aspect of contract management and can also be extremely difficult and time-consuming when the employees with signing authority are unavailable. With DocuSign integrated into Contract Hound, costs resulting from paper-based processes such as printing, and mailing fees can be removed.
Send-to-sign time can be cut by up to 20% through the adoption of electronic signature software. This is great for companies where signature bottlenecks are prevalent, triggering delays in meeting obligations, compliance standards and executions.
How To Implement A Contract Repository
#1. Identify top priorities.
What is your purpose of getting a contract repository? What results are you expecting from it?
These questions will help you figure out your priorities. Once your priorities have been established, find out what your executive team needs the most through questions such as:
- How often do we store contracts?
- Do our contracts vary in complexity?
- Which teams or members are responsible for managing contracts?
- What type of data is most requested from contract management or legal teams?
- Are there any recurring bottlenecks that a contract repository can eliminate?
Next up, involve your sales team in a discussion to find ways a contract repository can streamline your sales funnel.
For example, you might need:
- The ability to search specific terms and conditions in previous contracts.
- To Be able to set up automatic reminders to stay ahead of key contract deadlines – renewals, payments, etc
Lastly, don’t forget your contract managers and administrators. They are involved with the company’s contracts daily and will have the most information to advise you on what’s important and why.
#2. Choose your repository type
#3. Organize contracts.
With the information you gathered from identifying your top priorities, determine which contracts you should upload first.
Which contract type will have the highest impact once it’s in the repository? Once you have a clearer view, it helps you manage your document migration process in phases rather than doing it all at once.
Regardless of how you proceed with this step, it requires time and patience. Don’t rush through the process and increase the likelihood of keying in inaccurate information into your repository. Your end goal for clean data to obtain an effective repository should be prioritised.
#4. Get started.
After you’re done organizing your contracts and planning how you are going to migrate all your documents, it’s time to put your plan into action.
By now, you should have selected a contract repository platform. Reach out to the vendor’s team to see if they can share some tips on how to efficiently migrate large volumes of documentation. They may be able to share pointers on how to effectively handle markup, narrow down priorities and map out a migration plan to ensure a seamless transition.
How successful your final contract repository will be largely depends on the amount of research and planning you do upfront. Rather than jumping in headfirst, it is important to choose a reliable partner and plan for the process ahead to ensure you get the results you want from your contract repository.
8 Reasons Why You Need A Cloud-Based Contract Repository
1. Ease of locating contracts.
With a centralized contract repository like Contract Hound, all employees will know exactly where to locate a contract or its related documents if it is required. Consolidating paperwork into a single location ensures effective record keeping and eliminates the need to scour through company networks or sift through cabinets.
2. Secure protection of confidential information.
Contracts often contain critical, confidential information that needs to be protected, so that it doesn’t leak. File cabinet drawers are far too easy to access and destroy, and even company internal networks are easy to access.
However, a reputable cloud-based solution (like Contract Hound) will be able to offer stronger and more varied security measures such as encryption and access control to keep all your documents safe. This in turn boosts accountability and increases productivity of all employees while simplifying the contract management process.
3. Digital files are easier to organize.
Digital files can easily be dragged and dropped into boards and folders on Contract Hound without any manual labour or additional resources. As such, even the most sophisticated paper-based contract management system involving color-coding and indexing cannot compete with the organizational superiority and convenience of an online contract repository.
Additionally, the manual storage of contracts hinders the success of organizations in these aspects:
- Limiting access
- Leaving documents and associated files disconnected.
- Reducing visibility and transparency of documents.
- Does not support proactive tracking and management of contract approvals, status, milestones, etc.
4. Centralization and increased responsiveness.
Companies with an intensive and detailed filing protocol may be able to keep printed documents very organized. However, that doesn’t mean that it will be easy to locate a specific contractual document.
In comparison, with an online contract repository, a simple search in the database will enable users to find what they are looking for instantly. With advanced search and filter features, companies can save a lot of time.
5. Everyone has access to the latest versions.
The traditional process of sharing contractual documents included scanning and forwarding countless emails to related parties. However, with a contract repository, you can simply assign the related employees access to the file and set permissions to only allow them access to view or edit.
Now, everyone will be able to access the latest versions of contracts without having to constantly mail back and forth to confirm contract versions.
6. Improve audit preparation.
Contract management software offers a centralized portal which usually includes features such as audit trails. Audit trails are electronic records that chronologically catalogues events to provide support documentation and history used to authenticate security and operational actions. It provides access to your entire contract history where you can view all the changes made to the contract.
With this tool, your business will be able to maintain accurate contract history for auditing purposes and keep a full audit trail for the Sarbanes Oxley or internal policy compliance.
7. Risk reduction
Significant benefits such as risk reduction are associated with improved contract compliance. A study from Aberdeen has shown that compliance management is enhanced by 55% when companies use a contract management system.
Adopting a contract repository also allows for greater effectiveness in supplier onboarding, which is critical to managing an organization’s operational risks. This is because contracts with suppliers, especially those that are in high-risk zones (because of economic uncertainty, political unrest, natural disasters, etc.) can be easily identified.
Moreover, contract repositories make it easy to identify policy or regulation violations for the company to take corrective action swiftly.
8. Improves spending visibility and minimizes maverick spending.
Transactional and performance tracking is simplified with the help of a contract repository. This increases the company’s spending visibility and improves the transparency of where the money is going.
Maverick spending, where purchases from suppliers are beyond a company’s pre-established procurement policy, is a critical issue plaguing many businesses. Hence, the higher spending visibility will help to curb undocumented expenditures and identify higher cost savings opportunities for your company.