Benefits of Digital Contracting

If you’re a contract manager or in-house counsel, you already know how time-consuming it is to draft, manage, and negotiate contracts. Contract managers are responsible for creating new agreements when multiple deals are in motion, often from scratch. This is because they don’t use templates and make manual edits instead of implementing automation. Creating and organizing contracts is particularly draining if Legal is in charge of many active contracts at once, as in most mid-to-large-sized companies.

That’s where the benefits of digital contracting come in. A streamlined way of approaching the contract management lifecycle (CLM), digital contracting connects you to the data, processes, and people involved in contracts so you can execute agreements faster than ever. 

From privacy policies and order forms to Terms of Service, digital contracting allows collaboration with other parts of the business, automates workflows, provides multiple signing methods, and centralizes all contracts and contract activity so that you can keep track of who is doing what and what’s going on with your in-flight contracts. 

It also gives you insight into the performance of your contracts to enable data-driven business decisions. Say goodbye to spending long hours drafting, editing, and negotiating from scratch agreements with low dollar value. Digital contracting allows you to focus your time and energy on tasks that require innovative thinking and strategic planning.

Read on to learn more about the benefits of digital contracting.

Digital contracting refers to a cloud-based contract management system that streamlines contract creation and management. It digitizes every step of the contact management lifecycle: preparing, drafting, editing, negotiating, signing, acting on, and managing contracts, and integrates with other tools in your workflows, 

Digital contracting typically provides you with the following tools:

• Automated contract generation using templatable workflows
• A platform for streamlined negotiations
• Communication and workflow alerts
• A digitized hub for storing contracts and contract metadata
• Multiple signing options

The most sophisticated digital contracting software also allows you to present clickwrap agreements for contract acceptance and use artificial intelligence (AI) to automate repetitive aspects of the contracting process, such as writing and editing clauses from scratch. The end result? Better communication between departments, greater productivity, and most importantly, efficient contracting. 

Digital contracting tools stand in stark contrast to legacy CLM platforms. Although legacy platforms have promised more efficient and faster contracting since the 2000s, they have yet to deliver value. Analog CLM systems remain difficult to implement, draining to use, and disconnected from people in other departments and other tech systems that are crucial to your business’ operation. 

Digital contracting empowers Legal to boost business agility and minimize risks by unlocking their organization’s operational efficiency.

Here are the core benefits of digital contracting:

1. Everything is digital

Digital contracting is, well, digital. Most digital contracting tools come with a centralized, searchable cloud where you can store all of your organization’s contracts. This digital hub will:

• Increase contract visibility: Which of your intellectual property contracts do you have to finish next week? What terms did you agree to for that particular deal? With just a few strokes of your keyboard, you’ll be able to answer questions about your agreements in seconds.
• Boost contract accessibility: In the past, only Legal had access to contracts, which were often stored in hard-to-reach places like USBs, computer hard drives, and even physical cabinets. Having a digital, searchable hub will make it easier and safer for authorized team members to access contracts at any time.
• Speed up the contract lifecycle management process: Negotiation can be one of the most time-consuming steps of the contract management lifecycle, particularly if you need to spend hours or days locating the answer to a simple contract question. Having a contract hub at your fingertips will empower you to stay ahead of the curve and meet deadlines quickly. You’ll also be able to create agendas and drafts much faster.

2. Digital contracting provides various signing methods

Analog contracting tools usually only give you two signing methods:

• “Wet” or paper signatures, which require you to print out the contract to sign it
• eSignatures, which require you to send copies of the contract through email and wait for the signer to add a signature using Adobe Acrobat, Word, and other software.

They’re also well-suited for certain types of transactions, especially high-negotiation contracts that require a lot of customization. These include high-value M&A deals and other enterprise contracts. 

However, wet signatures and eSignatures aren’t viable signing methods for companies that deal with a steady flow of low-negotiation contracts. Imagine having to print or draft or email hundreds or thousands of individual contracts every day. With that much responsibility on your hands, you won’t have any time left for thinking at a higher, more strategic level, leaving your business on the tail end of innovation. 

In contrast, digital contracting has alternate, more accessible signing methods.

Clickwrap and embedded signatures

Digital contracting solutions provide embedded signatures and clickwrap. Both of these signing solutions make it easier for people to sign anywhere, anytime, and on any device, which is the type of frictionless experience that vendors, employees, customers, and partners expect.

Embedded signing captures acceptance by allowing users to accept embedded signature requests on your app or website. They are a faster way to get approval since they don’t require users to upload, send, and sign individually through email. Clickwrap agreements speed up the signing process even further—they only require users to click a button or check a box to indicate consent. 

By providing a frictionless experience for simple, no-negotiation contracts such as Terms and Conditions and privacy policies, clickwrap can help you achieve efficient contract management. However, clickwrap may not be the best choice for high-negotiation contracts that typically require eSignatures.

3. Actionable insights via process metrics

If you’ve always felt that you didn’t have enough data to understand your business, don’t fret. Digital contracting tools offer amazing data to better drive your strategic decisions and understand your business.

The metrics offered depend on which digital contracting platform you pick, but most provide process metrics reporting. This functionality lets you view, generate, and send metrics reports, including:

• The number of contracts created and launched per month
• The number of workflows created and launched per month
• The number of contracts completed per month
• Breakdowns of contracts by department and user
• How long it takes to complete different types of contracts
• What tasks are throttling delivery (which tasks take the most time)
• Which contract workflows are waiting for editing, execution, or signature

These metrics will give you the actionable insights you need to understand:

• How your organization works
• How your team works
• How you can help your team to grow
• How you can use your time better
• How to streamline the contract lifecycle

4. More automated and streamlined contract processes 

Contract processes are notorious for sapping precious time and energy. They’re often convoluted, require a lot of back-and-forth with different parties, and require a lot of negotiation.

Luckily, digital contracting can streamline the contract management process. By giving you tools like Workflow Designer, digital contracting platforms will help you build and launch contract approval and generation processes in minutes. These types of tools usually give you a centralized location for all requests so that you can see all of your processes in one glance. They also give you the ability to create contracts using templatable workflows. Instead of creating contracts from scratch, all you have to do is find the proper template, customize clauses as needed, tag fields that need to be filled in, and add the appropriate signers and approvers. 

Workflow designers can also help you ensure that your contracts comply with legal and organizational requirements without manual review. Digital contracting tools provide templates with up-to-date approval routing and guardrails to ensure automatic contract compliance.

5. Better team collaboration 

Finally, digital contracting tools offer a collaborative team experience. 

Unlike analog solutions, digital contracting platforms aim to break down communication barriers. If your digital contracting solution comes with a centralized contract storage hub, you can use it to share information with other departments. By granting permission to specific users in other departments, Legal can collaborate with other departments to draft, manage, and execute contracts that interest more than one department at once. With insight pouring in from HR, Sales, Procurement, and other departments, you’ll be able to create contracts that are higher-value and tighter than ever. You’ll also be able to:

• Get more insight regarding which contracts to prioritize and which contracts have back-stories that you need to consider.
• Inform these departments about the status of their in-flight contracts and deals.

Some digital contracting solutions also offer platforms that employees and counterparties can use for better team real-time collaboration. Ironclad, for instance, comes with a powerful Editor that streamlines contract review. This editor enables all parties to negotiate, comment, and edit in real-time on a shared digital platform, making it easier for everyone to stay on the same page.

All in all, digital contracting offers many benefits. Compared to traditional contracting tools, digital contracting solutions provide:

• A fully digitized experience
• A gamut of signing tools
• Actionable insights via process metrics
• Automated and streamlined contract processes
• Better team collaboration

Chat with a CLM expert today to learn more about digital contracting. You can also try our sandbox demo to experience the digital contracting difference.