This is the first in a series of four posts covering the essentials of contract organization: why it matters, best practices, key benefits, and what can go wrong.
DNA sequencing is the process of determining the sequence of nucleotide bases (the basic structural unit of DNA—A’s, Ts, Cs, and Gs) in a piece of your DNA. That DNA code—the combination of arrangements of those A, T, C, and G bases— decides whether your eyes are blue or brown, if your hair is red, if you have freckles, or are predisposed to getting cancer.
Contracts are like the DNA of your business. Verbal and written, contracts drive the relationships that build your business. And much like DNA, the way contracts are treated and nurtured determines the health of the whole. Consider that without contracts, there’s no revenue, no customers, no you. How you organize them can make the difference between growth and success, or failure.
This three-part series on organizing your contracts gives you key best practices to help you leverage your contracts to reduce costs, increase efficiency, and increase revenue, putting you in the strategic, business-enabling driver seat.
Let’s get started.
Why contract organization matters
You can’t successfully manage your contracts if you can’t find them. And, it’s hard to become strategic when you’re reactive, without any visibility into exactly how many contracts you have, and in what stage (i.e. unaware of renewal dates), instead of proactive and in control. Do you rely on emails, faxes, and shared network drives to manage this complex business ballet? It’s ok if so, you’re not alone.
Most companies worldwide, a shocking 96%, manually manage their contracts. However, this non-linear, fragmented process kills your efficiency, and results in chaotic confusion over which is the latest or correct contract version to edit.
A well-oiled machine, effective contract management gives you the visibility into upcoming renewals and deal closures, often swinging on a beginning or end of month or quarter pendulum, that would otherwise leave you scrambling. (Suddenly it’s a race to the finish line to get every deal the appropriate legal review, executive approval, or finance approval for revenue-recognition issues.) How effectively you manage this process can determine if your key deals get closed before the quarter closes and your company achieves its revenue targets.
Proper contract organization also alleviates the timeline crunch, removing 80% of your manual, administrative tasks by automating your process, and then streamlines it, keeping (ideally) every contract for every department within your company all in one place and easily searchable. And, if effectively organized, you can make compliance a nonissue with built-in approval workflows, the ability to link documents creating an audit trail, and even online negotiation.
The success of a contract is influenced by myriad factors—many outside an administrator’s control. That’s why we see growing investment in contract management teams—be they legal, procurement, operations, or finance.
The contract management team, with insight into the entire organization’s lifeblood—its contracts–and with the right organizational practices in place, can become a source for measurable financial improvements and critical insights to organizational performance.
In Part Two, we’ll look at best practices for these teams to follow to allow them to realize their full potential.
Interested in learning more?
Concord’s mission is to help companies achieve scalability and efficiency by automating their most central process, contracts. The cloud-based solution enables over 300,000 users around the globe to create, collaborate, sign, store, and manage their agreements all in one place. Founded in 2014 and headquartered in San Francisco, Concord is built by business for business.