Despite the important role that contracts play in the daily operation and future of a business, responsibility for contract management often falls on a single employee. As a result, your company may miss important contractual deadlines, agree to terms that conflict with preexisting contracts, or even mistakenly breach a contract. Contract management software can solve many of these problems by systematically organzing your contracts as well as reducing the risks—and costs—associated with breached and mismanaged contracts. Here’s a brief overview of what to look for in a contract management software solution.
What is Contract Management Software?
As businesses grow, they often enter into hundreds, if not thousands, of contracts. Contract management software allows you to store and organize contracts, recall important contractual deadlines and set reminders for those dates, and easily search through contracts to identify key clauses. These functions make it possible to more efficiently manage work and reduce your company’s administrative and legal expenses.
Criteria for Evaluating Contract Management Software
There are hundreds of contract management software providers, many of which will not have all of the capabilities that your company needs. When evaluating contract management software solutions, consider the following criteria:
How are contracts stored and organized? Contract storage and organization may be the simplest function of contract management software. In terms of storage, you should consider whether you want local, on-premises storage or a cloud-based solution. Many contract management systems, like Agiloft, offer both, which allows for a more customizable experience. In terms of organization, you should think about how the software allows you to organize contracts (i.e. by client, date, or contract type) and what organizational style best fits your company’s needs.
Does the software allow flagging and tracking of key contract provisions? Most contract management software allows you to flag and track dates relevant to the contract. Not all, however, allow you to customize fields to help track provisions across contracts. Kira is one piece of software that does have this capability. For example, you may want to track provisions assigning or leasing your company’s intellectual property to make sure that you do not over-assign intellectual property or run into issues with overlapping dates for intellectual property assignments. Or you may want to track materiality clauses across contracts to determine what standard you typically apply and when (and why) you depart from that standard. Before choosing a contract management software, think about what provisions you may want to track across contracts and ask potential software providers about whether you can easily track those provisions.
How easy is it to search through contracts? In many instances, it’s impossible to plan ahead and flag all of the contract provisions that you want to analyze at a later date. With this in mind, ask your software provider about search tools and filters for searching through multiple contracts. Efficient search tools are an absolute necessity for contract management software solutions. Without an efficient search function, you can waste hours poring through contracts to find the terms you were looking for—exactly the problem that your contract management software was supposed to solve. Contract Assistant is a popular software application that has search functionality.
Does the software allow for the exporting of search results/analysis into a report? If you need reporting about the state of affairs for a group of contracts (e.g., your company’s real estate or employment contracts), you should strongly consider finding a contract management software solution that provides an exporting or reporting function. Instead of spending time analyzing the data and creating a report using different software, you should be able to rely on your contract management software solution to create a presentable report for you. ContractWorks recently enhanced its reporting feature to allow users to customize and pre-schedule reports.
How customizable is the software for your company’s needs? Your company’s needs change over time. As your company enters into a growing number of contracts, you may need to change how the contracts are organized, labeled, or searched based on new business goals. When considering contract software management solutions, ask your potential provider about customizability both during and after initial implementation.
When choosing a contract management software provider, it’s easy to fixate on easily comparable criteria, like pricing or the length of the free trial period. However, given the importance of efficient contract management software for a growing business, make sure to look beyond price and consider all of the criteria above to find the right solution for your company.