The term ‘workflow’ has become something of a buzz-word in the business world. It has just enough ambiguity about it to enable it to be applied to many situations, though it clearly relates to processes within specific areas of activity. While it is well-used across the commercial spectrum, it is actually highly applicable to contract management, because the contract lifecycle is a very specific, very well-defined set of processes. The term ‘contract workflow,’ therefore, describes the well-defined set of processes that constitute the whole of the contract lifecycle. In essence, the contract workflow is everything involved in contract management.
Why is contract workflow efficiency so important?
We may initially consider business contracts to be documents that relate to the legal side of operations but, in reality, our business contracts are the lifeblood of the enterprise, maintaining the flow of information, supply, and money through every department. Everything is governed by contracts – from employment and premises, to sales and suppliers – so efficiency within the contract workflow delivers efficiency throughout the operation. The optimisation of contract workflow can ensure that the whole organisation is functioning at its best, resulting in greater profitability.
By that same token, the consequence of inefficient contract workflow can be lasting damage. Workflow bottlenecks can cause delays and contract disputes that not only have a negative impact on reputation and the relationship you have with customers and suppliers but can also lead to costly litigation and increased insurance premiums.
Creating an efficient contract workflow
Contract Lifecycle Management is a complex and vital area of your business, which means that the implementation of efficient contract workflow is both important and potentially overwhelming. While broad categories of contracts exist, each document is different in that it reflects the specific needs and obligations pertaining to a particular relationship. With the contract lifecycle encompassing everything from initial request and negotiation to renewals or terminations, the intricacies of details and eventualities covered by each agreement can appear difficult to tackle.
As with all large tasks, the creation of an efficient contract workflow is made easier by breaking it down into smaller steps, undertaken in a methodical order.
1. Implement or update your Contract Management Software -
If your business does not already use a state-of-the-art Contract Management Software platform, such as Symfact, then this is the first step to creating an efficient contract workflow. Contract Management Software is designed to optimise and streamline the entire Contract Lifecycle Management process, from end-to-end, including every aspect of workflow relating to the proper management of legal agreements.
2. Centralise documentation -
A contract workflow cannot be efficient if legal agreements are not centrally stored, simply because the task of finding them when needed is made more time-consuming. By collecting the contract collection together into a centralised repository, not only is a significant amount of time is saved, but it also allows for more accurate data analysis. Storing all contracts centrally enables more efficient searching and filtration, which can be a key element in the further mitigation of risk. Contract Management Software is built around a centralised contract repository, including a template library for documents and clauses. This ensures that every stage of the contract lifecycle is accommodated.
3. Delegate and communicate -
For a contract workflow to be efficient, every task must be clearly assigned, and every team member must be fully informed. This is the very best way to ensure that tasks are completed on time, from a data-driven perspective. Within the Contract Lifecycle Management arena, timescales are key, and important milestones and events must be handled in a pro-active way. Without this approach, underperforming contracts will auto-renew and opportunities for re-negotiation and performance improvement are lost.
4. Implement electronic signatures as standard -
Few technological advancements have had the simple yet effective impact upon Contract Lifecycle Management than the advent of electronic signatures. Keeping the signing process entirely online ensures speed, cost-effectiveness, and increased security. When used within Contract Management Software, authenticated signatures of verified stakeholders can be added to legal documentation, accessed remotely in the centralised repository. This reduces expenditure that would otherwise have been incurred by printing and transporting a physical document, while the security measures required for the use of electronic signatures, along with the security within the Contract Management System, provides assurance of the integrity of both document and signatory.
5. Specify KPIs and data points for tracking -
Efficiency of contract workflow can only be achieved if the agreements themselves are performing in optimal fashion. This requires monitoring and tracking of specified data points and Key Performance Indicators (KPIs). Some will be generic, such as the timely meeting of milestones and deadlines, while others will relate to specific content in the agreement. For example, if a contract includes a unique, customised clause addressing the possibility of specific triggering circumstances, then the elements around those triggers also need to be monitored. Tracking data points and KPIs should be negotiated and agreed within the team and by stakeholders, before being recorded and communicated to all involved. When undertaken in conjunction with Contract Management Software, the proper determination of data points and KPIs can ensure that accurate, actionable data is generated through reporting, informing decision-making throughout the contract lifecycle.
6. Review and improve meta data use -
The accurate use of meta data within the contract library helps to make the contract workflow more efficient by increasing the speed at which filtration and remediation can be completed. This is because meta data is data that provides information about data, so contract meta data covers three main areas with regard to the information contained in the legal agreement. Structural meta data details the way the contract relates to other contracts, administrative meta data relates to work undertaken on the contract, and descriptive meta data relates to other information that can be used to locate information. Combined, these three forms of meta data cover every eventuality in terms of searching for specific contract-related items for the purpose of monitoring or amendment. Without accurate, consistent, focused use of meta data, these tasks become largely manual and highly inefficient.
7. Utilise third party risk assessment automation -
The efficacy of contract risk management has a significant impact on contract workflow efficiency. If risk is not mitigated in the most optimal way, inefficiencies in the workflow will remain due to a greater proportion of resources being diverted to dealing with the consequence of unmitigated risk. The centralisation of contract documentation provided by Contract Management Software provides opportunity for third party risk assessment automation. Your contract collection is essentially a unified data pool and, by harnessing automation and analysing that data, risk can be further mitigated through fully informed decision-making based on past performance of stakeholder relationships.
8. Fully configure reports -
Contract Management Software includes a customised reporting facility. An efficient contract workflow utilises this facility to its fullest extent, so it is essential to fully configure your Contract Management reports. Such configuration will be based upon agreed data tracking points, Key Performance Indicators, and contract meta data. By ensuring that contract reports are fully configured according to the specific needs of your operation, you ensure that the workflow is optimised and, above all, scalable. This not only creates an efficient contract workflow, but it also future-proofs the entire Contract Management system
The best Contract Management Software platforms – such as Symfact – provide scope for an automated workflow. This allows for authorised users to stipulate which team member is alerted to tasks, milestones and key dates through an AI-driven notification system. For an efficient contract workflow to be achieved, full use must be made of this automated workflow functionality.
In addition to keeping project timelines on track, the automated workflow facility of Contract Management Software ensures full transparency and accountability which, in turn, helps your business to meet compliance regulations and requirements. Due to the permission-based access design of the platform, all activity is entirely traceable. This helps keep version control in hand, while also building audit trails automatically. Such accountability measures make a significant contribution to the further mitigation of contract risk and, therefore, a significant contribution to the creation of an efficient contract workflow.
Efficiency boosts profitability
Efficiency within the processes of your business is the most surefire way to boost profitability because it allows you to reduce expenditure without cutting operationally critical resources from your organisation. By making procedural changes, it is possible to streamline and optimise your business and see an immediate impact on the bottom line. Efficiency within the contracting system will provide the biggest improvement in the shortest space of time, simply due to the fact that contracts connect with every department and business area within your enterprise.
We can conclude, therefore, that an efficient contract workflow will deliver the most significant long-term results, with the least amount of investment. This is made possible by Contract Management Software. Call Symfact today to discuss your contract workflow, and discover how it can be made more efficient for the benefit of your profit levels.