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Mastering Contract Management: How the Right Software Transforms Your Workflow

The right software simplifies contract management by making it faster and more efficient. There are several ways to approach contract management, depending on how your organization works—whether you organize contracts by themes, departments, or specific projects.

Contract Management Software
Jennifer Ritz
Jennifer RitzInventory Expert8 Min
Key Takeaways:
  • Software improves contract management by making it more efficient and organized.
  • You can easily integrate contract management with other tasks, simplifying workflows.
  • The key to success is embedding the software into your processes in a way that fits your needs. There’s no one-size-fits-all solution.

What Is Contract Management?

Contract management is all about handling contracts efficiently, from creation to execution and beyond. Almost every business has activities that depend on written agreements, making contracts an essential function. Here are some examples of common contracts:

  • Purchase contracts in procurement
  • Employment contracts in HR
  • Rental agreements in facility management
  • Maintenance contracts in production
  • Supply contracts in sales

In the past, contracts were typically handled and stored in paper form, but in the digital world we now live in, things have changed. Moving to a digital system is now key to ensuring contracts are stored in a legally compliant way.

Today, various software solutions are available to manage contracts. Some systems only save scanned documents on a network drive, while specialized contract management software can give you many extra features.

If you are thinking about purchasing a contract management software for your business, it’s important to first ask yourself a few key questions:

  • Will multiple people need access to the contract?
  • Are there legal regulations that must be followed?
  • Is ongoing, permanent access required?
  • Is remote access from different locations necessary?
  • Are there any special legal requirements or privacy concerns?
  • Do the contracts contain sensitive or confidential information?

Ideally, a single software solution should be used to manage all contracts, ensuring consistent access and information across your organization. This also saves your team time switching between softwares and can prevent errors in transferring data.

The Key Stages of Contract Management

Managing contracts involves several stages. But every contract is different so not every step is required for every contract type.

Here is a rough idea of the key stages you can expect to go through in contract management:

1. Drafting and Review: Contracts are created and reviewed by specialists, often with input from legal teams. It’s common to send draft versions to contractual partners for feedback and adjustments at this stage.

2. Secure Signing: Contracts aren’t valid until signed by all parties. Depending on the type of contract, this can involve different methods. For paper contracts that are later digitized, a scanned signature is often sufficient. For digital contracts, legally binding e-signature solutions can be used, which we’ll explore in detail later.

3. Delivery: Once finalized, the contract must be shared with both parties. This can be done through various channels such as email, secure data rooms, or other digital methods.

4. Storage: Contracts need to be stored securely, but also in a way that makes them easy to find and access when needed. Good organization and accessibility are key here .

5. Archiving: Business contracts come with legal retention requirements, meaning they must be archived for a set number of years after the transaction is complete. For example, in the UK Section 5 of the Limitation Act 1980 states that legal action must be brought within six years of the contract arising. Businesses, then, have a responsibility to keep these documents for at least six years after they expire so they can refer to them if there’s a disagreement. This makes a total of 12 years that the record should be stored securely.

6. Monitoring and Compliance: Contracts are a crucial part of day-to-day operations. They must be searchable and accessible for ongoing tasks like compliance and controlling. Deadlines, renewal dates, and terms need to stay front and center to avoid any issues down the road.

Team in meeting discussing contract management software

What Makes Contract Management Work Well?

Effective contract management relies on several key factors that ensure:

  • Legal compliance
  • Ease of use
  • Accessibility
  • Security
  • Automation
  • Efficient communication

Let’s break down each of these:

Legal Compliance

Many different laws impact how contracts must be processed and stored.

For example, health and safety laws require businesses to maintain accurate records of safety-related maintenance. Additionally, laws such as the Companies Act 2006 and the UK Data Protection Act 2018 (which incorporates GDPR) set specific standards for contract storage and processing.

For digital contract management, the HMRC’s Making Tax Digital (MTD) regulations govern the electronic storage and processing of financial records, ensuring that bookkeeping principles are followed.

Key areas of note include:

  • Traceability and verifiability
  • Completeness and accuracy
  • Timely recording
  • Order and immutability

Data security is another important factor. In the UK, the Data Protection Act 2018 ensures that contracts containing personal data are handled with care, requiring strict security measures for digital storage and access.

Ease of Use

Contract management software should be user-friendly. Errors can have serious consequences, and since employees have varying levels of training and may not use the system frequently, the software should be intuitive. A clear structure and logical filing system can help reduce mistakes and cut down on the need for ongoing, costly training.

Accessibility

A centralized storage solution allows multiple people to access contracts when they need to. Local storage is rarely practical for contract management. Instead, network drives or specialized software with centralized databases should be used.

These options also raise the question of using cloud-based applications, which allow employees to access contracts while working remotely. VPNs (virtual private networks) are another option for secure access from different locations.

Security

Contracts often contain sensitive information, including personal data, which means access control is essential. Contract management software must offer flexible permission levels, determining who can access, modify, or delete specific files. Over-complicating this process can slow down workflows, so practical solutions that balance security with ease of use are important.

Automation

Automation can make contract management a lot more efficient. Software can:

  • Automatically send reminders for contract deadlines
  • Generate reports
  • Create regular status updates for relevant parties

Ticketing systems are another useful tool, streamlining collaboration between departments and making task statuses visible at all times.

Communication

Good communication is essential for contract management. It can be helpful to integrate communication directly into your management system, keeping a clear record of inquiries and responses. Ticketing systems can help with this by ensuring all employees are on the same page and have access to the latest information.

Documentation

Proper documentation is important not just for preventing errors but also for legal compliance. For example, contract management in procurement may require storage of contracts that were not finalized to prove compliance with guidelines. In HR, stricter regulations apply, requiring detailed tracking of every instance of access to personal data to ensure transparency.

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The Different Approaches to Contract Management

Different businesses will have different methods for organizing and managing contracts. There is no ‘right’ way or one-size fits all approach. The right approach your business uses will depend on the specific structure, size, and operational needs of your business.

Here are some of the most common approaches:

1. Thematic Organization

In this approach, contracts are grouped by specialized areas or departments within the organization. For example, contracts related to vehicle management, IT infrastructure, or procurement are stored within their respective specialist departments. This method ensures that those directly responsible for managing the contracts—such as department heads or specialized teams—have easy access to all the relevant documents.

Thematic organization is particularly useful in sectors where subject-matter expertise is crucial such as healthcare or construction. However, a potential downside is that finding information can be difficult, especially in large organizations where multiple departments handle different contracts.

2. Work Area Classification

Work area classification organizes contracts based on the company’s internal structure. This means that all contracts related to a particular department or function, such as HR, finance, or procurement, are managed within that area. Under this system, contracts are not divided by type (employment, supply, service, etc.), but by the specific work area or division they impact.

The main benefit here is that contract information is readily available exactly where it’s needed. Employees in each department can quickly locate and manage the contracts that are relevant to their tasks, leading to more streamlined processes and fewer delays.

The downside of this approach is the lack of a central overview, which can be problematic for managers needing to track contracts across multiple departments.

3. Object-Oriented Approach

The object-oriented approach links contracts directly to the assets, projects, or resources. This method is particularly useful for sectors with tangible assets or inventory, such as management of construction contracts or facility management. In this approach, each contract is attached to a specific object or resource, for example, a vehicle, a building, or a piece of equipment.

For example, in an inventory management system like Timly’s digital device file, contracts are stored within the profile of each specific object. This makes it easy to locate relevant documents without having to sift through unrelated information.

This system ensures a blend of centralized access and specialized oversight, offering a balance of efficiency and security. However, the drawback is that it may require more sophisticated software solutions to organize and manage contracts effectively within this framework.

Possible Software Solutions for Contract Management

Choosing the right software for contract management begins with figuring out your businesses specific needs. After looking at your goals and listing your must haves, as well as your preferred method for organizing contracts, you’ll need to find the right software solution. Here are some of the most common options:

1. Existing Filing Systems

One straightforward option is to digitize contracts and store them in existing systems, such as network drives or cloud storage services. This method involves scanning paper contracts and organizing them into digital folders. While this solution may work for smaller businesses or organizations with minimal contract management needs, it has limitations.

2. Specialized Contract Management Software

For organizations with more complex contract management needs, specialized software can give you a more complete option. These platforms are designed with contract management in mind, offering features like:

  • Document Tracking
  • Version Control
  • Automated Reminders for Contract Renewals
  • Deadlines

Digital Data Rooms

Digital data rooms are designed for highly sensitive transactions, such as company mergers and acquisitions. These rooms feature strict rights management, logging each user interaction with the documents. Enhanced security measures can include restrictions on screenshots and copying content, as well as watermarks to trace unauthorized distribution.

Comprehensive Software Solutions:

All-in-one programs integrate multiple functionalities beyond contract management. An example is Timly’s inventory management software, which allows users to record all inventory items and link documents spatially by item, room, or building.

This solution includes a digital device file for each asset, automated deadline management, and an integrated ticketing system to manage tasks. Additionally, the platform includes personnel management, allowing documents like employment contracts and training certificates to be stored within digital personnel files.

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Ticketing System Ensures Transparency

A ticketing system simplifies communication and keeps everything organized. Each ticket remains linked to its relevant contract or object, ensuring accountability and traceability. When an order is created, it connects directly to the associated contract, with both the order and its status documented. Authorized users can then view and update information as needed.

Deadlines are also easier to track within tickets, and automated reminders help prevent missed deadlines by sending alerts as they approach. This structure ensures that no tasks are forgotten about, simplifies monitoring, and creates more transparency. Once a task is completed, the system verifies that all related tickets are closed, providing a clear overview of the entire process.

What Forms of Electronic Signature Are There?

Signatures are an essential part of any contract, and digital contract management requires electronic signatures.

These come in several forms:

  • Simple, Digitized Signature: This includes scanned signatures or signatories made with a digital pen on a compatible device. While convenient, this form has the lowest level of security as it can be more easily falsified.
  • Certificate-Based Signature: This type uses digital certificates based on cryptographic functions, creating a unique, unforgeable character string. These signatures can be verified for authenticity by the issuing authority, making them more secure.
  • Qualified Electronic Signature: Issued only by government-certified bodies, this form of signature provides the highest level of security and legal standing. Processing typically requires approved devices, such as chip card readers, and may soon include options like the electronic ID card.
Contract management made easy

Software-As-A-Service: Reliability and Security Are Key

Today’s software can be hosted in a variety of ways. Some applications are installed directly on local computers, but most companies rely on networked solutions where entire teams access a central database on a server.

The latest development is Software-as-a-Service (SaaS), where the software runs entirely online. With SaaS, users log in through a web app, eliminating the need for on-site infrastructure. All that’s needed is an internet connection, making it easy to work from any location.

However, SaaS does require strict security measures to ensure data safety. Key requirements include data encryption, robust access controls, and GDPR-compliant servers. Many established providers offer these security assurances, making SaaS a reliable choice that simplifies electronic contract management.

Avoid Interface Problems: The Advantage of Integrated Solutions

Most companies rely on multiple applications to get work done, but using too many different programs can complicate processes. Training costs rise, as employees need instruction on each software, and new features require regular updates. Transferring data between multiple applications can also be challenging, often requiring special interfaces. In the worst case this translates to manual data entry, which is time-consuming and prone to errors.

Additionally, using multiple systems demands more hardware, making troubleshooting more complex and security harder to manage. To address these issues, many software developers now take a holistic approach, creating solutions that combine multiple functions into one platform. This type of integrated solution simplifies contract management, boosting both efficiency and security.

FAQs on Effective Contract Management

Why Does Digital Contract Management Make Sense?

Keeping information up-to-date and accessible is essential, and paper filing systems just don’t cut it. Digital contract management provides the flexibility employees need to access and update contracts when and where they need them—something locked paper files can’t offer.

How Can Digital Contract Management Be Implemented?

Electronic files are now standard across many sectors. However, basic storage on network drives often lacks the functionality required for effective contract management. Embedding digital contract files directly into inventory or asset management systems can make tracking and managing these documents much easier.

Why Are Authorization Settings So Important?

Contracts often contain sensitive information, so limiting access to authorized personnel is key. Not every employee needs full access, read-only permissions are often sufficient.

Is Cloud Storage Allowed for Contracts?

Yes, cloud storage is generally considered as secure as local storage, as long as it meets specific requirements. For example, GDPR outlines essential security standards, and reputable providers like Timly ensure full compliance with these guidelines.

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Timly Wins New Customer Clinique Delc

The Timly team was delighted to kick-off with Clinique DELC and welcome its first client from the medical sector. Clinique DELC is an innovative clinic specialising in dermatology, venous medicine, laser therap...

Oct 5, 2022

Inventory Software Free - Used by An Employee

Inventory Software Free – Is That Possible?

Companies across all sectors are struggling with supply shortages and rising prices. The causes for this are rarely within the sphere of influence of those responsible at the companies concerned. They usually o...

Oct 4, 2022

Employee on a computer uses device management software

Device Management: As Flexible as Your Company

There is no way around effective equipment management. Whether in industry, trade or construction: all companies have a constantly growing number of machines, tools and other work equipment. Therefore, modern c...

Sep 29, 2022

Laptop auf einem Tisch mit geöffnetem Inventar Programm

The Inventory Programme for More Productivity

Now that current software solutions for managing everyday tasks have shifted to the cloud, IT inventory is also facing a change. Especially in the context of efficient management of inventories, executed action...

Sep 28, 2022

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