Research shows that up to 9% of topline revenue is lost due to inefficient contract management. Contract management governance helps avoid inaccuracies and non-compliance and ensures that suppliers and licensees adhere to the contract and payment terms.

Contract management is the process of managing contract creation, execution, and analysis to maximize operational and financial performance at an organization, all while reducing financial risk. Organizations encounter ever-increasing pressure to reduce costs and improve company performance. Contract management is a very time-consuming element of business, facilitating the need for an effective contract management system.

Effective contract management involves:
  • Building a system that prevents contracts from stalling business operations.
  • Monitoring them to ensure compliance with contractual obligations and regulations.
  • Make sure to complete all critical deadlines, like contract renewal.
Effective contract management improves organizational efficiency, mitigating risk, minimizing cost, and building profitable relationships.

Generally, contract management involves a few key stages. There are the early stages or pre-award phase. All the work before a contract is given to someone, whether a business or an employee. The middle stage is when the process is awarded, including all the paperwork to make the agreement final. Third, the post-award stage is where contract management and maintenance come in, and contract risks are managed.

One of the key activities within the post-award stage is contract searchability and reporting. Some organizations combine contract reporting and analytics/insights.

Contract searchability and reporting

Many enterprises have contracts sitting in various repositories, file shares, and servers with key terms and data buried in their text or contract management software. Statements of work, indemnifications, assignment terms, revenue recognition policies, auto-renewals, and unknown incentives are a few examples of contract information that add risk & impact liabilities.

Since contracting is at a critical point in the business process in which transaction data becomes the source of truth once the contract is signed, it has become essential to track and report data about the transaction (e.g., price, discounts, clauses, rebates, chargebacks). One of the critical inputs to efficient contract reporting and analysis is the ease of searchability; hence contract searchability and reporting work hand in hand to contribute to the overall efficiency of contract management.

Tips to improve contract searchability and reporting

  1. Centralize all contracts - one of the most simple but effective things to improve your contract management is to centralize all arrangements in a single, secure online location, such as contract management software. Having all contracts on one file will help avoid searching for misplaced contracts and will protect contracts from being hacked. Keeping arrangements organized in a searchable database is the hallmark of solid contract management — according to a report from the Aberdeen Group, “best-in-class” organizations have over 75% of their contracts in a “searchable repository,” versus others who have roughly a third of their data stored in such a location.
Keeping your contacts in a digital location also allows team members to access them from anywhere, which is critical in today’s era of remote work.
  1. Set Milestone Reminders - Designing reminders for contract milestones like auto-renewal dates and expiry dates will support a proactive approach to your contracts for the whole team. When you set milestone reminders, the right people have enough time to review a contract before its auto-renewal date to renegotiate and get the best deal possible (if applicable). In addition, giving enough time before renewal can terminate a given contract ahead of its auto-renewal date. To ensure you don’t lose track of contract milestones, I recommend that key contract dates be included in your digital calendar and configure automated reminders for each. Setting milestone reminders will help improve contract reporting.
  2. Automate contract tracking procedures - Key dates, deadlines, obligations, deliverables, and milestones can easily slip through the cracks with manual contract strategies and a below-average contract lifecycle management approach. Instead of leaving contracts up to chance, leveraging automation to support contract tracking and monitoring is recommended. Based on the type of contract, the document might contain several deadlines you must prepare for. When a contract portfolio becomes oversaturated, staying up to date on every deadline becomes increasingly challenging. The more a contract portfolio grows, the more automation as a solution is needed. Contract management software offers automated calendar reminders to support the whole team with keeping tabs on upcoming deadlines and key dates, eliminating the tendency to forget auto-renewals, milestones, and contract expiry dates – a pain point commonly found in manual contract tracking.
  3. Automate reporting - Reporting plays a vital role in contract lifecycle management. However, it’s an activity that is sorely overlooked far too often. Reporting gets thrown out the window when contract managers are consumed with other contract activities. However, reporting is essential to creating and maintaining awareness of the performance of the contract management strategy. With custom reports, exact data points that reveal the strengths and weaknesses of contracts can be reviewed. It is recommended to schedule the creation of these reports in time and send them out on an automated basis. According to the volume and complexity of your company’s contract portfolio, it might be beneficial to schedule your reports to be sent on a more frequent basis so that the whole team can key in and gain awareness of the status and performance of the company’s contracts as they move through the lifecycle. Customizable, sharable contract reports are one of contract management software’s most advanced capabilities. It configures when to run reports, how often to send and share them, which contract data points to create reports, and the report receiver.
  4. Capture Contract Metadata - Any well-written individual contract should provide comprehensive information about that specific agreement. If you read through it in detail, you’ll be able to understand exactly who’s involved in the contract, what it’s for, and the expectations for delivery. It is essential but is of limited value in the context of a business with thousands of agreements. No single person will have the time to read through the agreements, fully understand how they inter-relate and stay on top of them throughout their duration. Capturing metadata serves several purposes:
  • Searchability - Metadata makes an extensive contract database searchable by data points such as counterparty, value, renewal date, etc. With this data being captured in a contract tracker, you would have more options for retrieving specific contracts.
  • Reporting - Accurate reporting becomes possible across the contract dataset, split by metadata, and can be tracked over time to demonstrate its changing composition and performance. Reporting dashboards can make the information accessible to various stakeholders, from senior management, who may require high-level oversight, to procurement or finance, which may be looking to optimize spending and need to drill into the details.
  • Prompting timely action - By extracting and capturing metadata from contracts, you can use it to trigger movement as required. Assuming a dedicated contract management system, you should have the facility to generate automated reminders from contract metadata.
  • Capturing Compliance Status - Depending on your industry, capturing the compliance status of your contracted parties can be mandatory. Tracking whether certifications have been provided and signed off would be another typical use for metadata.
  • Add tags for key categories - Tags help sort your contract list and capture key insights. When building a tags list, it’s essential to consider the contracts’ general attributes. For example, you may tag the type of contact (e.g., NDAs, Order Forms) and the associated department (e.g., Sales, HR). You may also opt to tag any data points key stakeholders want to track in Reports, like the contract’s value (e.g., $0-50k, $50-100k) or whether they contain non-standard terms.
  • Standardize Tag names - Committing to a standard naming convention for your tags will maintain clean reports and help your teammates use tags efficiently. A great way to achieve this is to prefix your titles with a specific identifier. For example, use the prefix ‘Doc’ for each contract type tag (Doc – NDA, Doc – MSA), and use the prefix ‘Dept’ for the associated department/team tag (Dept – Sales, Dept – Legal).
  • Automate Tagging with Templates - this boosts efficiency and compliance by allowing you to standardize a contract’s content and metadata. When you use a template containing tags, the new agreement automatically contains the pre-set tags, content, signers, and other metadata added to the Summary Sheet.
  • Filter your database – this helps you quickly pull a list of contacts with a specific tag or a combination of tags. You can combine filters for granular data analysis and export your filtered lists to Excel. Doing this will aid reporting.
Although there are many options for managing and improving contract searchability and reporting, manual methods can lead to inaccuracies caused by human error. It can also be time-consuming and create additional work for already over-stretched teams.

Automating the task allows teams to upload a PDF or scanned contract for languages and clauses to be extracted accurately and without duplication before storing them in a central repository. Teams no longer have to make manual decisions about arrangements that may be hard to read. Technological solutions can extract and upload critical information even if contracts are hard to read, including complex tables or handwritten notes that are difficult to decipher.

Investing in contract management software that can automate this process saves time, reduces manual work, and boosts compliance.