If you had to, how would you find the correspondence regarding the third redlining revision of a contract negotiated in the fall of 2017 with a customer who wanted a special order? Did you start sweating before the end of that sentence? It’s OK, I get it. Contract storage and retrieval can be a messy business but there is a way to take the pain out of it: To have a contract database, not just file storage.
More than 20 percent of the benefit of a Contract Lifecycle Management tool is in the contract database alone, according to a leading report. So let’s look at what a contract database is and how it can benefit your business.
What is a Contract Database?
Simply put, a contract database is a central, searchable, tagged repository for all the contracts your business is responsible for as well as information relevant to their status, approval process, legal onus, and fulfillment requirements. Leading small businesses are moving to databases from generic file storage to enjoy easier search and retrieval, as well as the workflow and integration benefits of having their contracts in a system that integrates with other tools.
Contract Lifecycle Management comprises three parts – upstream, negotiation & award, and downstream. Each of the elements are described in the Contract Lifecycle Management 101 whitepaper.
- Business case & management approval
- Team definition
- Strategy formation
- Risk assessment & contingency planning
- Contract exit strategy formation
- Contract management plan preparation
- Detailed specifications and requirements
2. Negotiation and Award
- Contract type selection
- Pre-qualification, qualification, & tendering procedure definition
- Draft invitation-to-tender documents
- Supplier notifications
- RFI and tender evaluation
- Contract award
- Change management
- Performance management
- Relationship management
- Risk management
- Task management
- Effectiveness review
- Evergreen and expiry
Each of these stages creates a digital record that is important to contract approval, fulfillment, audit, or renewal. All that information has to go somewhere and it should be easily findable for the person who needs it.
The Problem with Storing Contracts in File Storage
Many small businesses began storing files in shared drives by necessity. Years ago, when the contract negotiation, redlining, and signing processes were predominantly handled by email, the customer rep would file the signed final contract in a shared drive and alert the fulfillment teams of the need to deliver on their promises. The shared file storage evolved into a cloud drive, enabling multiple users to access the contract. Overall, that’s a good thing, but the more people you have accessing a file, the more opportunity there is for something to go awry.
Generic file storage is only as good as the weakest link in the chain – for example, a salesperson who is really good at making the deal but rarely up-to-date on their paperwork might never file the contract. Here are a few ways file storage fails businesses when it comes to contract management:
- There is no record of who uploaded a file, which means it’s difficult to investigate potential problems.
- Version control goes awry unless rules are strictly enforced.
- There are often as many naming conventions and file trees as there are individual employees, making it hard to find the right file, even if you know what you’re looking for.
- Even if you do find the right file, there is no contextual information like how many rounds of revisions it took or which staff were involved, which are useful clues to how you should act.
- Managing role-based control is difficult, which means many companies default to a free-for-all.
Contract Audits Can Be a Nightmare Without Good Storage
Often a small business’s worst nightmare, contract audits are an unavoidable part of doing business because there’s no better way to ascertain whether a company is delivering exactly what it promised and billing appropriately. As contracts get increasingly individualized, audits are getting more onerous and taking time away from the money-making parts of what we do.
The key is to store your contracts in a database where they are searchable and retrievable by relevant staff without the need for specialist assistance. With just a few keystrokes, your team should be able to find the most relevant contract (for example, the final signed version) as well as the context they need to verify that your company has delivered what it promised.
This is achieved through metadata – the important keywords that are assigned to a document in a database, either by a human or machine. A database looks for the metadata attached to a document and serves up the most relevant, based on your search terms, filters, and in some cases additional context like the role of the person searching. So simply filter for 2017, special order, and contract redlining to find the right client, navigate to the right version of the file and open the comments field. That troublesome query from the start of this blog is suddenly a snap!
Even if everything is hunky-dory, every day of delay during this process is eroding customer trust. A fast audit is a good audit, and that requires empowering your staff with a robust tool.
Start Small and Don’t Sweat a Major Migration
I’ve got you thinking about your file folders now, so you probably want to blow them up and start again. Don’t panic – you don’t have to start over. With contract management software like Anapact, you can start small, bringing in only new contracts at first to build up your library. In fact, you don’t even need to migrate your files, just leave them where they are and have Anapact seamlessly integrate them and tag them through its smart ingestion process.
Find technology champions in your organization and encourage them to inspire and train others in the benefits of having a contract database.
With a strong set of tools at your fingertips, a contract database is closer than you think. So stop sweating and get a demo today.