To most business leaders, the contract management process seems easy because they have barely any exposure to it. In their eyes, contracts hardly require more than a word processor, some fancy language, and signatures to be valid. In truth, contracts are incredibly dense and intricate documents that require diligence and patience to execute correctly. Unfortunately, few business leaders bother to learn the truth about contracts, so they fall victim to believing many of the myths shrouding contract management.
If you don’t know much about how contracts work, you might erroneously believe the following falsehoods. Before you generate another contract, you should learn the truth about contract management.
Simple Programs Will Suffice
You write your contracts in Microsoft Word. You track their execution in Microsoft Excel. You already license the Microsoft Office Suite, and these simple programs seem to be working fine — why would you need to pay for anything else?
Contract management software is so much better at generating and managing your contracts than simpler programs like Microsoft Office. In ways you can’t imagine until you try dedicated contract management services, the process is dramatically faster and easier. Microsoft Office and similar programs lack the attention to contracting processes, allowing critical events to pass by without notice. With committed contract management tools, you can focus your energy on other aspects of your business while feeling secure in your contracts.
One Management Tool Is Enough
Even if you don’t have a contract management program, you have other management tools. For one, your customer relationship management system collects enough data to help you understand what contracts you need and when. One type of management software is more than enough, right?
Management tools are created to address one specific need within your business. Your CRM is designed to collect and analyze customer-specific data and provide support to customers to develop lasting loyalty. While this is valuable to your business, it doesn’t acutely address issues related to contracts. All your management tools should sync, but one cannot truly replace any other.
All Contracts Are Basically the Same
One contract might be to bring an employee onto your team; another might be to establish a relationship between you and a vendor. Still, both documents are filled with legalese, both require your signature, and both will eventually expire, so why can’t you use the same template for every document?
Even two of the same type of contract can look vastly different. Every agreement has its own terms and using an improper contract template could obfuscate what you want and need from your relationship. Instead of applying an identical template to every contract, you should utilize contract management software that can prepare unique documents for every negotiation. Then, you and the other party are more likely to receive what you deserve.
Not All Parties Need to Be Involved
You know what you need in the contract, so you should be able to draw up a document, sign it, and send it over in a matter of hours. Isn’t it just a waste of time to permit the other party to be involved in contract generation?
Because both parties must have a purpose for entering into the contract — which is a fundamental element of contracts — it is vital that you involve the other party in creating the document. It doesn’t matter whether the other party is another business or a client; they need to understand your terms, supply their own, and have sufficient time to review the document before signing.
You Can’t Trust Contracts in the Cloud
The cloud has had more than its fair share of insecurities. Contracts tend to be incredibly sensitive documents, containing personal information on both parties that, if leaked, could result in irreparable damage to your business’s finances and brand. Why would you risk using cloud-based contract management tools?
In truth, the cloud might be safer than your on-site storage systems. Because the cloud has a bad reputation for security, major cloud services providers go above and beyond to protect their clients’ data. More than 52 percent of organizations already utilize a cloud-based service; using the cloud to support your contract management efforts is a smart way to build a powerful and safe contract management system.