Your contracts are critical to the overall health of your company: both contracts with your customers and contracts with your vendors. When your legal contract management system is healthy, you’ll spend less time dealing with those contracts and more time addressing other critical processes within your business. Equally importantly, you won’t miss out on important contract renewal dates that could cost your business both time and money. You know your organization should maintain and regularly reevaluate your contract management system and processes (and our guide here can get you started).
But just how often is it necessary?
A General Timeline for When to Reevaluate Your Contract Management System
As a general rule of thumb, you should do an annual audit on the health of your legal contract management system. The beginning of the year, when you’re making new resolutions and goals for your business as a whole, is a great time to take care of many of those processes evaluations. Alternatively, schedule it for the middle of the third quarter, when you have time to do a thorough job. Make sure that you:
Review your contract templates.
You may have made many changes to your business with the beginning of a new year. Your contract templates should change along with it to ensure a more streamlined contract approval process.
Check your permissions.
Are you maintaining appropriate security for cloud-based or shared systems? Members of your team shouldn’t have access to documents they don’t need. At the same time, good security shouldn’t cause roadblocks. Are all members of the team able to easily access the data they need to handle negotiations, execution, or compliance details?
Streamline your processes.
Are there are any unnecessary steps in your contract approval process? Do you have the right checks and balances in place to ensure that no problems, including risky contracts or compliance issues, slip through the cracks?
Examine your workflow.
Check all the processes related to your workflow, from automated emails to reminders. Make sure all of those processes are working smoothly and correctly. Do reminders get sent out on time? Do those emails reflect the information you want sent to your clients or team members, or do you need to make changes to make those more effective?
You can also keep up with many of those processes throughout the year. Any time you notice problems with your enterprise contract management software, including reminders that aren’t getting sent out on time or user access that doesn’t seem quite right, make a few quick changes. Also, prioritize cleanup: if you change your contract terms or need to do away with a particular template, delete it quickly as the year moves forward.
Other Times to Reevaluate Your Contract Management System
An annual review of all of your systems keeps your business strong. But you also want to make sure you’re evaluating how you manage contracts online during critical upheavals. You may need to take a closer look at your contract tracking system if:
You’ve recently made big changes to your business.
You’ve just launched a new product or service, hired a new CEO, or made substantial changes to your business’s policies. During these busy times, you want to make sure that your legal contract management software is still filling your needs. You may need to adapt permissions, change contract templates, or add in new compliance details. This could impact the way your sales team and your customers interact with those contracts. Don’t let those changes fall through the cracks as you continue to shake up the system.
Your business has seen extreme growth.
If your business has grown more than expected over the course of the year, you may find that your legal contract management systems aren’t keeping up as well as you had hoped. Small businesses have processes that work excellently when they’re small. But they can break once you start to grow. If you have a clunky or poorly-organized system, it can be difficult to keep track of all those important contracts. So, you may notice that things start falling through the cracks. Make sure you evaluate your legal contract management system to ensure that it is still meeting your needs. Also, take this time to update any procedures or processes that need to change.
You’ve noticed unexpected problems in the contract life cycle.
If you’re having problems with your contracts, it does not automatically follow that your enterprise contract management software is to blame. If you’re having problems, however, it’s a great time to take a look at your system and make sure that it’s running smoothly. You may, for example, need to adapt your processes if you notice that the approval timeline is bogging down, or change the wording of an automated email that isn’t getting across the point you had hoped. Also, you can add automated emails or specific reminders that will help keep your contracts moving along smoothly. You don’t have to live with a problem until it’s time for your annual review. Instead, make sure you fix problems before they become more serious.
An annual evaluation of your contract system can help keep that system working more smoothly. Not only that, knowing when to reevaluate your contract management system can help prevent problems that could cost your business time or money.
Start the Year Off Right and Reevaluate Your Contract Management System
Like most automated processes, your legal contract management system does need some attention from its users. If you’re bumping into training gaps, don’t just patch the problem. Use these points in the timeline, a careful evaluation could improve efficiency and increase profits. Even after a health check, your systems may no longer keep up with your business. Tired of having to reevaluate your contract management system so often? Try a better system to usher in the new year, and test out ContraxAware with a 7-day free trial.