One of the most critical facets of contract management is the contract negotiations process. Contract document versions are shared between parties numerous times before being finalized. The back-and-forth process of editing contract documents is called contract redlining.
With so many contract document versions scattered amongst each other during contract collaboration, there is ample room for error on all sides of the process. Any hiccups in contract redlining can result in the finalization of outdated contract documents, overlooked opportunities, the inclusion of incorrect clauses, and even severe legal issues. Organizations need to employ strategies that make contract redlining flow as smoothly as possible.
To that end, here is how organizations can improve contract redlining processes with the help of user-friendly contract management software.
#1. Retain Content Control & Clause Ownership
Contract clauses and language play a pivotal role in contract redlining. Organizations need to do their best to ensure that the proper contract language and contract clauses are being inserted into a contract during redlining. What’s more, they need governance over the language and clauses they are working with. If this is not the case, changes can be made to clauses without organizations’ realization – potentially resulting in unfavorable terms and conditions.
Luckily, organizations can leverage contract management solutions to retain content control and clause ownership.
Contracting professionals can configure a CLM software platform so that – if changes are made to a specific language section or clause within a contract document during redlining, then an assigned “clause owner” can receive automated notification of such changes. This “clause owner” can be added to an approval process when any changes are made to their assigned clause, and they are prompted to approve changes made to the clause. Clause owners are only added to a contract redlining process if their given clause is edited – according to an automated, rules-based clause ownership procedure. The benefit is increased governance over important contract language that directly affects the efficacy of a contract and the favorability of its terms and conditions for involved parties!
#2. Leverage Intelligent Contract Workflow Automation
Contract redlining is a multi-faceted process requiring the participation of many moving parts. As such, it can be easy for contract redlining tasks to fall by the wayside – primarily when organizations rely on task spreadsheets and manually emailed task reminders. With such obsolete methods, organizations can suffer from a lack of task accountability, missed deadlines, prolonged contract redlining, and many other harmful consequences.
Organizations can leverage intelligent workflow automation to support task performance monitoring. Contract administrators can identify how long it takes employees to complete assigned contract redlining tasks – promoting broader accountability. If a contract redlining task is not being observed on time, a task can be quickly escalated to encourage a more timely and efficient contract redlining experience.
#3. Manage A Centralized Contract Collaboration Platform
The more segmented and separated a contract redlining process is between platforms, the more room for error. This is why organizations using a mishmash of emailed contract document versions, shared drives, and manually emailed contract redlining task reminders can experience lost contract document versions, missed opportunities for contract redlines, increased risk, decreased revenue, and higher contract failure rates.
Contract redlining with contract management software can bring organizations more automated and efficient external collaboration on negotiations between contract parties. For example, leading contract management software can offer a document collaboration portal. With a document collaboration portal, organizations can quickly and easily configure a rules-based process for stakeholders involved in a contract.
This contract negotiation portal for contract redlining can provide a very similar process to that of an internal, familiar contract management workflow for an organization’s system users. Assigned contract stakeholders engaged in contract redlining can receive a notification to bring them to this portal. There, relevant contract documents can be accessed for contract redlining. This way, counterparties can access critical documents pertinent to a contract, but they are not granted access to extraneous contract management software features that are unnecessary to their process. An organization using contract management software can have a document for contract redlining isolated – so that counterparty resources can quickly access that document, make necessary changes, and redline directly from this portal.
The Solution: AI-Based Contract Software for Contract Redlining
There are many reasons to leave a contract redlining process reliant on shared drives, emails, and spreadsheets in the past – and the methods above are just some examples. A CLM solution will help save time and streamline, automate, and centralize the contract redlining process. There are many other benefits of a CLM solution built on a foundation of contract artificial intelligence with machine learning.
Organizations can also leverage AI-based contract management software to keep tabs on the number of days a given contract remains in a particular CLM stage, analyze employee usage of contract redlining workflow tools, analyze the accuracy of clause language, and much more.
Learn more about leveraging contract management software for contract redlining by reading this free contract intelligence whitepaper.
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