Document Management Briefing: Contracts: Is Your Technology in Agreement?
Often created by committee and revised endlessly, contracts can be challenging to track. Of all the documents you manage and archive, these deserve special attention. Your business depends on it.
The Four Most Common Contracts Challenges
Which of these are you currently facing?
- Handling the access, risk management and integrity issues of contracts created in a distributed manner and in mixed (electronic and hard-copy) formats.
- Maintaining chain of custody and controlling costs when involved parties send contracts via mail or courier.
- Managing a contract’s multiple copies.
- Locating contracts quickly on demand.
The Strategy: Trailing Documents on the Move
Research indicates that a business can save 2 percent of its total annual costs by “eliminating inaccuracies and non-compliance through improved contract management.”1 So then, why not get started?
Here’s a great potential reason for your procrastination thus far: To do so, you’ll need to first own up to the fact that your firm is probably still executing and storing the vast majority of your customer, vendor and partner agreements, price schedules, policies and service level agreements on paper—and is storing these in distributed locations. Among the many downsides of this circumstance is impeded access for your colleagues in customer service, finance and legal departments, among others who need secure and timely access to these records.
Another big reason contracts pose a serious document management challenge: they’re typically written by committee and thus subjected to a high degree of input and revision—which requires the saving of multiple drafts. Once written, a contract calls for a signature—and therefore one or more hard copies. Paper copies in transit are subject to loss and security breaches.
If you think it’s smooth sailing once the initial signatures are completed, guess again. A contract in effect will most likely need renewal and/or revision, starting the cycle all over again. So what are the best ways to control contract creation, management and archiving?
One way is to set up a contract management system. Such an infrastructure lets sales teams leverage contract templates. These frameworks, typically developed by a firm’s pricing or business development team and its legal department, empower the sales team to create standard contracts quickly—and get them to the right people for QA review and approval.
A Global Publisher Creates a World-class Solution
One great example of a contract management system was born of an international publishing company’s fast growth and acquisition activity: It ended up inheriting a wide range of non-standard contract documents, stored in widely distributed locations. When the firm decided to move these thousands of contracts to a new location, it realized that it would need to consolidate several document indexes, so as to provide worldwide access.
The company’s subsequent contract management solution succeeds in three key ways, because it now:
- Enables faster processing of payments to creditors and clients, thereby improving client service.
- Consolidates thousands of non-standard contract formats into an accurately indexed and easily accessed global system.
- Leverages the existing content management system, as needed, to reduce risk and to provide better control contracts management.
Faster and Less Expensive
Another exceptional contracts-management case involves a company with more than $11 billion in annual revenues and a presence in more than 100 countries. This firm realized that while many of its contracts on file seldom (or almost never) needed to see the light of day, predictable and time-sensitive occurrences such as renewals, litigation and due diligence could change that in a second.
Unfortunately, the firm’s manual document-management processes (including document storage on site with limited searchability) hindered any easy-access plan. Transmitting a document was equally cumbersome, requiring an employee to fax it, ship it, or create a PDF file to be e-mailed as an attachment.
The ultimate solution? The firm has instituted an end-to-end system for capturing, managing, and providing secure distributed access to its contracts and agreements. Its architecture includes document conversion and image archiving for 100,000 contracts, which are now within easy reach of legal staff and other authorized employees. What’s more, the new system greatly enhanced distributed access to documents while reducing onsite document storage costs. That’s a double win.
Getting It Right
The system that will ultimately ease your contracts management conundrum will include a central repository of contract documents. This nerve center should accommodate both paper and digital contract documents. If so, you can secure and track document access, chain of custody and integrity. Such an architecture also lets your firm scan contracts only as needed. Such “intelligent scanning” also lets involved parties communicate accurate and current contract terms and obligations, while also consolidating costs frequently hidden across the organization. Additionally, your firm can leverage faster access to contract data to create faster sales and renewal cycles, easier revenue recognition and better customer service.
The cases cited here make it perfectly clear: Get control of your contracts, and you’ll gain optimal control of your business.
Iron Mountain Suggests:
Four Steps to Greater Contracts Efficiency
- Centralize your archive. Legacy collections are often scattered throughout an organization. Collect and index them to afford access by the legal team—as well as any other department that needs it.
- Image from the start. Yes, paper still dominates the contracts world. But even if you still depend on paper copies, imaging them upstream affords easier indexing, storage, and access.
- Train every department. Moving to a more centralized and image-based contract management system has been known to cause many a case of culture shock. Thwart this by providing formal training—especially regarding chain-of-custody issues.
- Consult and collaborate with experts. Optimal contract management poses many challenges, but there’s no need to go it alone. Consultants can advise you on better contract management and physical storage, while also implementing powerful Intranet tools that empower your colleagues with more efficient contract access.