No code automation and self-executing contract management sound the same. However, there are subtle differences between the two. Here’s how you can identify which of the two is right for your business.
Contract management and contract automation both address similar needs. But self-executing contract management requires very specific technology to work.
Self executing contracts rely on a distributed consensus model that smart contracts use. Smart contracts have the DNA of blockchains and run on platforms similar to cryptocurrencies. These technology-enabled innovations in contract management are being watched closely as they make contracts more reliable, simultaneously making it difficult to evade execution.
Understanding the contract lifecycle
To understand the differences between contract management and automation, it’s important to look at the entire lifecycle of the contract.
Creation
Most people create contracts in legacy software like Microsoft Word. Usually, teams will find an older Word document and copy/paste the information, changing the details as necessary. It can be a time-consuming task, especially if the person needs to create several contracts and the risk of making an error while transferring or inputting information is high.
Review
Contracts usually involve and affect several parts of the business, including: sales, procurement, finance, compliance, people and talent, and more. With remote working becoming the norm, teams are relying on communication platforms like Slack to alleviate this problem. However, they still run the risk of creating long chains of discussion where key information is lost under the volume of messages.
Redline
Negotiations are inevitable and the party that is redlining the document must keep track of the changes the document will go through. With traditional methods of negotiation involving back-and-forth emails and a limited audit trail of edits, it can be challenging to maintain visibility over the contract and keep track of versions.
Signing
eSignature is quickly phasing out the old wet method as it offers flexible, mobile-responsive eSigning across any device. This tech has a huge impact on the recipients of most contracts – saving them time and sparing them the laborious process of printing, signing, and rescanning a document.
Monitoring
Post-signature, this category covers the storage and management of the document. Most signed contracts live as a copy somewhere in a shared drive, on personal desktops – or even worse, as hard copies in the depths of a filing cabinet. This makes it difficult to keep track of important information, such as key dates and terms agreed between the two parties. It also adds a mountain of due diligence work when companies are approaching funding rounds, for example.
Renewal
The signature doesn’t represent the end of the contracting process – instead, a multitude of obligations and key deadlines follow for the parties involved. This means teams need a system in place to monitor contracts as they progress through their post-signature lifecycle.
What are the benefits of self-executing contract management?
There are several benefits of adopting self-executing contract management:
Scalability – Automating contract management when you deal with a high volume of contracts means you won’t need the extra headcount or budget
Collaboration – Instead of relying on Word track changes, email chains, and snail-mail, teams can use self-executing contract management to apply changes immediately to a live document
Visibility – Having a borderless system in place means legal won’t need to dig through folders to look for a signed contract – they can access the document with just a few clicks
Compatibility – Asking suppliers to change their working routine and adopt new software is always a challenge. Fortunately, self-executing contract management means you can integrate it with other common systems, helping teams build a new way of working into existing routines
When you are considering contract management, automation or self-execution, Trakti can help you streamline your operations.