For many companies, it makes sense sooner or later to introduce a central, digital solution for contract management. In one or the other, the first steps have perhaps been taken and contracts are no longer printed out, for example, but only processed digitally with “pdfs” and sent by mail. Of course, this saves paper, as we have arrived at a sustainable time in which we want to protect the environment as much as possible. The next step should then be to fully digitize these processes. And in doing so, many companies are asking themselves the question mentioned in the headline.
Digital contract management – but the right way!
Before we go into this question in particular, we need to clarify the basic terminology. Contract management is not just about managing contracts, i.e. storing and retrieving them. No, there is much more to it. Contract data is processed to such an extent that it has a significant influence on business processes. Many companies still work with Excel lists for evaluations and KPIs. But on the one hand, these are extremely time-consuming to create, and on the other, their use is severely limited. And there is one thing we have learned in the digital age: information should be available quickly at the right time. And it should be available anywhere in the world. This in turn saves us tedious work and inquiries. So it’s a good move to say: I’d like to take a closer look at a digital contract management solution and have it presented to me. But where is contract management better off? In the administration or in the legal department? To that end, let’s take a look at the individual tasks.
Contract management – administration is already part of the word!
The mandatory tasks of the administration include the recording, forwarding, and archiving of contracts. The administration always has an overview of the current events and ensures that nothing gets lost and therefore plays a central role. And this is where a potential for error lurks. From time to time, contracts may be filed incorrectly, or deadlines overlooked. In addition, there is an increased effort in forwarding, for example, to the legal department for clarification. Mails can be accidentally deleted or incorrectly assigned. In the worst case, the result is a serious misunderstanding that costs both the legal department and the administration a great deal of time and therefore money for the company. The goal of every company should be to avoid such cases. In the long term, this will only work with an audit-proof digital workflow in which both sides contribute their points to ensure a secure and fast process.
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So why do we need the legal department?
While the administration has mainly the quantitative care over the contracts, the legal department is much more concerned with the qualitative content of a contract. Often, individual contracts must be laboriously drafted or, if templates already exist, they have to be adapted in a lengthy process and only after double-checking. With a digital contract management solution, this individual administration can be eliminated and replaced by so-called standard contract template administration. The legal experts can set up standard contracts and these can be fed by the administration by entering the information.
Hybrid collaboration between departments
Now let’s get to the initial question: whose job is contract management? The beauty: when using a digital solution, this question does not arise. Through simple workflows, these two departments can be linked together without having to sit next to each other and print the whole thing out in analog format or physically transport it from A to B, as was the case in the past. Tasks have always been clearly defined. Standard contract templates can be signed off and approved by the legal department, which the administration can then use by default. This makes it much easier for departments to work together. There are fewer misunderstandings, because comment functions can be added to allow communication on a specific issue. The legal department no longer has to deal with all standard contracts but can devote itself to special cases that are more likely to require its attention. At the end of the day, both departments are involved again. The administration takes care of the correct filing and the execution of the standards, the legal department takes care of the content output, so that everyone can concentrate on the essentials and is not distracted by side issues. Above all, collaboration is accelerated and made loss-proof by the introduction of a central solution. This frees up the departments involved to focus on other tasks.
What tasks can digital contract management software perform?
Contract management is considered a central information point in every company. What relationships prevail with other contracts? Etc. It is completely up to you which information is recorded and stored for which contract; in any case, everything is stored centrally and can be retrieved centrally and accessed by all intended users. For each contract, an electronic file is kept and all essential information is stored. Furthermore, research is optimized. Normally, this takes a lot of time. In an analog edition, you have to dig through mountains of folders until you finally find the right contract. With a search function, the contracts can be found or filtered quickly. Keeping track of tasks or deadlines can also get in the way. The administration notes in the calendar if necessary, the deadlines, in the vacation is forgotten however such a First to hand over. As a result, time is not only lost in advance, because entering the deadlines is very cumbersome, but also afterwards, should a deadline be forgotten. This can also lead to contracts not being terminated on time, for example, which costs the company even more money. By familiarizing yourself with the digital contract management workflow, you can easily store this data and add a reminder function. Then the employee is informed by e-mail that there is a deadline. This function can then also be stored for several employees, which means that substitutes also receive this information at the appropriate time. This should be a core function built into any contract management software.
What should be considered when implementing digital contract management?
The decision to go digital and procure a digital contract management solution should be a no-brainer given the security and time-saving considerations. Deciding on the right software for the company, on the other hand, is somewhat more difficult and should be made carefully. Of course, the type of contracts to be handled and which departments are to work with it play a role. Factors such as speed and reporting functions should also be defined and discussed in advance. The question of single or multiple languages should also be addressed strategically. Am I only present on the domestic market or also abroad? In our view, the most important point is the specific requirements of the company. How are the workflows and processes between the departments regulated and can these be represented by the software? This also includes interfaces to SAP or other tools. This question should be the focus for the company and play an important role in the decision.