Over the last two decades, many financial institutions, enterprises, and small business alike across every industry have sought ways to digitize their contracting process as part of larger digital transformation initiatives. Whether involving purchase orders and business contracts, NDAs, or real estate contracting, the legality of digital contracts signed with electronic signatures has been challenged and stood up in court. The Electronic Signatures in Global and National Commerce Act (ESIGN Act) and the Uniform Electronic Transactions Act (UETA) are both well-established pieces of legislation in the United States and over 60 countries around the world have passed their own similar e-signature laws, such as the eIDAS regulation in the European Union. The enforceability of electronic signatures from providers such as OneSpan, HelloSign, Adobe Sign, SignNow, and DocuSign is not in question. Check your specific country or state laws for details on specific requirements around electronic signatures.
For many organizations, establishing a remote, paperless digital contracting and procurement process utilizing electronic signature software has been a tremendous success. E-Signatures enable an organization to streamline processes, eliminate time-consuming bottlenecks, and offer a superior customer experience.
Digitization and digital contracting align with market pressure to transact faster and more efficiently while meeting consumer demand for technology solutions compatible with users’ iOS and Android mobile phones and other mobile devices. Cloud-based e-signature plug-ins for popular CRM and CPQ apps are quickly eliminating the final impediments to a fully electronic contracting process. In the near future, e-signatures may replace paper processes and handwritten signatures as the standard contract signing method. Paper contracts are soon to be a thing of the past and all new contracts will be electronic contracts.
OneSpan Sign is OneSpan’s electronic signature solution with decades of refinement and development to help organizations sign documents, eliminate hassle, and close deals.
Contract Management, Contract Administration, and Contract Lifecycle Management
Contract administration and contract management refer to distinct portions of the contract agreement process, but these terms are often mistakenly used as synonyms. Let’s take a moment to clarify these terms before moving on:
- Contract Administration: This refers to the process, tasks, and logistics involving the contract before the contract takes effect. This includes the signing ceremony itself.
- Contract Management: This refers to the process, tasks, and logistics involving the contract after it takes effect. This includes planning, renewal, and ensuring the terms of the contract are upheld.
Finally, contract lifecycle management (CLM) encompasses both the administration and management stages for a holistic view of a contract from beginning to end.
Why Does Contract Management Matter?
An agreement between two parties matters little if neither party lives up to the terms of the agreement. That’s why contract management matters. During the contract management portion of the lifecycle, a contract management team ensures that all contractual obligations are met, and this could include a significant customer service role if there are service level agreements (SLAs) involved in the contract.
What’s more, the reputation of a company depends on its ability to follow through on its promises and commitments to its customers. To ensure future business and a strong reputation for excellence, successful contract management is essential.
7 Stages of Contract Management
To meet contract requirements, organizations follow these steps in a typical contract management process.
1. Planning Stage: The contract management process actually begins during the contract administration process, and the early stages overlap chronologically. To begin, the goal is to plan, scope, and take a realistic assessment of your contract management team resources, challenges, and technology. Understanding your limitations and assets, such as whether or not your team will be using an electronic signature solution, will help inform decisions later in the process.
2. Implementation Stage: At this stage, the contract management team will deploy the systems and tools at their disposal to manage the pool of contracts. A small team may only require basic, manual solutions like Microsoft Excel, shared drives, or calendars. However, the ability to automate processes with contract management software can empower your team to manage a much larger pool of contracts with ease.
3. Pre-Contract Stage: At this point, the contract administration team is finalizing terms and getting ready to send the contract to be electronically signed. The contract management team should be kept abreast of the progress and made ready to take on another contract in the next stage.
4. Handover Stage: The contract is now signed and the contract administration period is now complete. This stage signals the hand off of responsibilities from the contract administration team to the contract management team and all obligations that entail. To ensure there are no oversights or misunderstandings, it is a good idea to host meetings between the two teams to make the terms clear and eliminate the potential for oversights.
5. Contract Stage: Stage 5 is the most important stage in the process. The contract management team’s role at this point is to ensure the terms of the contract are actually upheld, and the scoped work is executed. This is also an opportunity for digital contract management software to streamline challenges found in paper processes. Tools such as automated alerts, notifications, templates, customer reporting, and bulk send will ensure the team stays abreast of any important dates or commitments in the contract and help prevent cancellation.
6. Pre-Renewal Stage: As the end of the contract period approaches, it is typical for the two agreeing parties to discuss the potential for renewing the contract, revising terms, and extending the contract period. Some contracts may cover only a finite period of work while others may seek to establish an ongoing working relationship. In either case, this stage represents an opportunity to revisit the successes and challenges of the process and look ahead to the future.
7. Post-Contract Stage: After the conclusion of the contract period, the contract management team has one last stage before closing the account. It is important for the team to review terms once more to ensure that all obligations were met. From there, they can settle any outstanding invoices and archive the contract. This also presents an opportunity to review the contract management lifecycle to find areas of improvement or refinement.
Best Practices for Contract Management
There are numerous strategies to help organizations find success in their contract management processes. Here we have assembled some of our best practices:
- Keep all contracts in one location where they are easy to find and access. Ideally this would be done through contract management software where each contract is digitized and archived.
- Identify bottlenecks in your process with clearly defined KPIs. During stage 1 and 7 in the contract management process, reviewing these KPIs will present opportunities to find efficiencies.
- Be deliberate about who has access and what permissions are assigned within the contract management platform. This will help reduce the risk of fraud and human error by ensuring the team can only access the portions of the platform relevant to their roles.
- Conduct compliance reviews with the legal team to ensure the contract management team remains aligned with all regulations and legal requirements. This is especially important when working in highly regulated industries like financial services.
Next Steps: How to Get Started Today
Ready to get started with electronic signatures and digital contracts? Here are three things you can do to get started:
- Contract Audit: Complete step 1 of the contract management process by identifying existing processes, assets, tools, and stakeholders.
- Build a Framework: Using the findings of your audit, map out your existing processes and cite what tool and what personnel come into play at each step.
- Explore technology solutions: Evaluate contract management software to find the right solution with the functionality to meet your needs and build the ideal workflow. An excellent place to start is to evaluate e-signature solutions that leverage digital signatures, advanced authentication, contract templates, audit trails, and automation. You can leverage these solutions to send contracts and signature requests for unlimited documents as well as utilize integrations with the apps you use everyday, like Salesforce. This will ensure a convenient digital signing process for your electronic documents and online contracts.