How to implement contract management for small businesses
In the heart of the city's tech district, amidst the buzz of innovation and the glow of computer screens, sits a small startup office. Meet Jake, a tech entrepreneur with big dreams and even bigger ambitions.
As he sips his cold brew coffee and stares at the stack of contracts on his desk, he knows that success won't come easy. Each of these documents represents a new opportunity, but also a new challenge - especially, if dealing with contracts is something that gives you shivers and you’re not sure where to start. Follow Jake on his quest to implement contract management effectively, from preparation to choosing the right software. Discover how small businesses can conquer the maze of contracts with ease!
Understanding contract management
Contract management is a critical process that ensures compliance, tracks obligations, protects assets, and facilitates timely payments. It involves centralizing multiple records, enabling collaboration, prioritizing data protection, gaining insights, scaling the contract process, and providing greater flexibility.
One of the key purposes of such practice - to facilitate the contract lifecycle, or in other words, the speed with which the document goes through the process of signing. Most contracts will follow a defined lifecycle consisting of nine stages:
Contract request: identifying the purpose of contracts.
Authoring: efficiently creating contracts using digital systems.
Negotiation: discussing and adjusting contract terms with the other party.
Approval: gaining approval from the appropriate individuals.
Execution: signing the contract, making it legally binding.
Obligations management: ensuring contract obligations are met.
Contract amendment: updating contracts to reflect changes in obligations.
Audit and reporting: evaluating contract compliance and addressing any issues.
Renewal: simplifying the renewal process to prevent oversight.
Benefits of contract management
Implementing the practice of contract management helps businesses streamline their operations in a number of ways, some of which are the following:
Streamlined contract lifecycle management: contract management streamlines the entire contract lifecycle for small businesses, from creation and negotiation to execution, storage, and renewals. Solutions like Enty automate manual processes and enable seamless collaboration.
Improved visibility and control: it provides small businesses with a complete overview of their contracts, making it easier to track critical information like renewal dates, opt-outs, and key terms. This improved visibility enables better decision-making and control over contract-related processes.
Standardized contract templates: leverage pre-approved contract templates to ensure consistency and streamline the creation process.
Efficient negotiation and approvals: facilitate hassle-free negotiations and approvals, reducing bottlenecks and delays.
E-Signatures and audit trails: implement e-signatures and maintain digital audit trails for enhanced security and compliance.
Compliance and risk mitigation: contract management software automates compliance by providing digital audit trails and approval workflows, ensuring contracts meet legal requirements without constant legal team involvement. This helps mitigate risks associated with contract breaches, oversights, and non-compliance.
Planning your contract management strategy
To effectively implement contract management software for your small business, a well-thought-out strategy is crucial. Here are a few tips on planning your contract management strategy:
1. Evaluate your current processes
Understand your current contracting process by identifying inefficiencies and areas for improvement. This step helps to tailor the contract management software to address specific pain points, enhancing overall efficiency.
2. Strategic usage of contract templates
Implement contract templates to streamline the creation process, ensuring consistency and reducing errors. Templates increase efficiency and customer satisfaction by speeding up contract preparation and ensuring all legal standards are met.
3. Define your contract management goals
Set clear expectations for what you aim to achieve with your contract management system, aligning with your business’s vision and strategic objectives. This alignment ensures that the software supports your business goals, promoting efficiency across departments.
4. Choose the right contract management software
Select a software solution that fits well with your existing workflows, meets the complexity needed by your team, and offers good value for the cost. Compatibility with existing systems ensures smooth integration and user adoption, while appropriate complexity and cost considerations keep the solution practical and sustainable.
Let’s look at a few of the factors to consider when choosing contract management software for small businesses in more detail:
Ease of use: prioritize user-friendly interfaces and intuitive navigation to facilitate adoption and minimize training requirements.
Pricing and scalability: evaluate pricing models and scalability options to accommodate your business's growth and changing needs. Consider optimizing the cost by using platforms like Enty, which offers multiple irreplaceable tools under one subscription.
Core functionality: look for essential features like document storage, e-signing feature, tracking and alerts for contract milestones and obligations, robust search tools, audit trails, security, and compliance features.
Advanced features: explore additional features that can simplify contract creation, review, risk management, and provide valuable insights, such as lawyer-approved contract templates, contract analytics, and risk scoring.
Customer support and training: consider the level of customer support, including implementation assistance, training resources, and ongoing troubleshooting support.
Enty’s contract management service helps small businesses streamline the entire contract workflow, from creation to signature and beyond. It offers a wide array of features, starting with the absolute basics like contract storage and lifecycle tracking, and ending with advanced AI integration. Together with professional lawyers, we have created over 10 contract templates, sprinkled them with technology, and voila - you can now rate and review your contracts using AI, track their lifecycle, and automate a number of other back-office processes.
Implementing contract management
Now that we have accessed the current state of the business and decided to implement Enty contract management system for more efficient operations, it’s time to learn a few actionable tips.
Adhere to a plan
Prioritize planning when initiating contract management in your business. Outline a structured approach covering creation, execution, and ongoing maintenance. Regular reviews and goal-setting ensure continuity and efficacy throughout the process.
Make effective decisions
Exercise thoughtful consideration at every stage of contract management. Assess the capacity of parties to fulfill obligations during creation. Plan for long-term operations and anticipate potential contingencies. Thorough planning minimizes foreseeable losses and equips your company to address unexpected challenges effectively.
Engaging internal stakeholders
Engage with internal business partners and stakeholders to gain their perspectives and insights. Collaborate with teams involved in contract management, such as legal, finance, and operations, to understand their unique needs and pain points. Their input will help develop a contract management system that aligns with your organization's requirements.
Gaining leadership support
Successful implementation of a contract management system requires buy-in and sponsorship from senior leadership. Present the benefits of a centralized solution, such as improved compliance, risk mitigation, and increased efficiency. With leadership support, you can secure the necessary resources and drive organizational changes to adopt new strategies and policies.
Implementing a phased approach
Strategically manage the implementation process by adopting a phased approach. Start with training key stakeholders on the new system and its features. Gradually roll out the solution to different departments or teams, ensuring a smooth transition and adoption.
Maintaining and updating templates, policies, and procedures
Regularly maintain and update contract templates, policies, and procedures to align with the new contract management system. Standardized templates might be a good option to start with, but don’t forget to customize each contract and invoice at Enty according to your needs. Setting clear policies will ensure consistency and compliance across your organization, while streamlining the contract creation and review processes.
Ensuring legal compliance
Notably, Enty contract management software can automate compliance by providing digital audit trails and approval workflows, ensuring contracts meet legal requirements without constant legal team involvement. You can request a trail or read more about how it helps mitigate risks associated with contract breaches, oversights, and non-compliance. Therefore, such measures enable small businesses to focus on their core operations while maintaining a robust legal framework.
Contract management challenges for small businesses
Despite all the benefits and opportunities offered by implementing a contract management system, enterprises are still faced with a number of challenges. These may be relatively minor in comparison to the advantages, but they are still worth knowing about.
Lack of resources and expertise: in small businesses, contract management duties often fall to individuals like in-house lawyers, CFOs, COOs, or CEOs, even if they lack legal expertise.
High volume of contracts: managing a high volume of contracts can be overwhelming, especially when dealing with limited resources.
Ensuring contract security and confidentiality: maintaining the security and confidentiality of contracts is crucial, but can be challenging without proper systems in place.
Contract disputes and negotiations: handling contract disputes and negotiations can be time-consuming and complex, especially for those without legal training.
Last thoughts
The implications of adopting a contract management system and software extend beyond mere efficiency gains; they encapsulate a transformation in how small businesses manage their legal obligations and interact with stakeholders. As we delve into the future, the continuous improvement of contract management practices will undeniably play a pivotal role in driving business growth, mitigating risks, and enhancing the overall strategic positioning. Contract management is not just about adopting new tools like Enty - it’s about embracing a culture of clarity, transparency, and agility that will define the successful businesses of tomorrow.
