Are you familiar with this cycle?
Drafting contracts, entering data, printing, scanning, signing, and emailing them back. Not only are the task cycles long but inefficient, especially for businesses handling large volumes or with limited legal and finance staff.
But there's good news: with contract automation, you can replace all those tasks with one tool, speeding up the process and enhancing accuracy.
This article explores the benefits of contract automation and offers insights into its effective implementation.
What is Contract Automation?
Contract automation uses software to simplify repetitive tasks associated with contract lifecycle management, such as drafting, reviewing, approval, and storage. The software{ gathers data from different sources, like databases and CRM systems, to fill in dynamic fields in contract templates.
For instance, consider a contract template for freelance services. With contract automation, you could create a system where a freelancer fills out a form with their details, such as name, rate, and project specifics, and the software automatically generates a customized contract based on that information. This saves time and reduces errors compared to manually creating each contract from scratch.
Why Should You Automate a Contract?
There are many benefits to automating a contract and they include:
Time Savings
Aberdeen's benchmarks indicate that it takes 20 to 30 days, on average, for a company to finalize a contract but contract automation can save up to 75% of that time according to WCC.
So, if you’re spending 25 days for instance, with 75% saved, you'd only need about 7 days. Imagine the possibilities for your recovered time: launch a marketing campaign, nurture leads—wouldn't that give a better ROI?
With contract automation, you make an initial time investment to set up templates and integrations, and your workflow runs automatically, requiring only periodic updates to stay relevant and effective.
Reduce Friction Points and Increase Accuracy
Friction points like manual data entry are the bedrock of errors, misunderstandings, and deviations from standard procedures in contract processes. According to Deloitte, a typical contract has up to 40 friction points, with about 70% occurring during the evaluation, approval, drafting, and negotiation stages.
Fortunately, this stage is where automation tools shine the most. They streamline contract creation workflows through templates, content libraries, e-signing, advanced conditional logic to, reduce human involvement, and minimize ambiguity in the content, terms, or legal language that can lead to potential legal disputes.
Cost Reduction
Deloitte reports that due to ambiguity around contract terms, and errors in the contract creation and delivery process, companies can face a “value gap” over the lifetime of the contract — meaning that the anticipated benefit at the start of the arrangement is gradually eroded over time.
Automating your contracts sustains the value of your contract, preventing revenue losses from inefficient processes and boosting it by eliminating manual processes and increasing your team's productivity. For example, by automating and standardizing contract creation through templates, businesses can ensure all contracts are created using pre-approved clauses, reducing the risk of inconsistent terms or ambiguous language that can lead to scope creep and miscommunication.
Better Control and Centralization
Do you know where your contracts are? EU Contracting Report reveals that 90% of contracting professionals face challenges trying to locate contracts. If that’s your story, too, you’re exposing your business to legal risks and operational inefficiencies. But with contract automation software, you have a centralized location for managing your contracts.
You can categorize your contracts for easy retrieval, access them at any time, from any device, and easily view contract status, obligations, and performance, aiding better decision-making.
Who Benefits from Contract Automation?
Legal Team
According to Gartner, 25%–40% of a lawyer’s time is spent on tasks that don’t require a lawyer, resulting in $2.7 million in lost productivity. With all that time and money wasted, lawyers can definitely benefit from automation.
Suzi Duncan, Senior Legal Counsel at Novartis, captured the benefits of automation to lawyers in the LinkedIn post below.
Here’s the summary of Suzi’s post:
- Contract automation speeds up the contracting process and reduces costs.
- It eliminates unnecessary negotiation points, saving time for lawyers.
- In-house legal teams can trust business colleagues to manage routine contracting.
- Lawyers can focus on strategic thinking, innovation, and providing high-value services.
Sales Team
The typical contracting process often involves sales teams relying on legal for contract creation, leading to delays in closing deals. However, with automation, sales teams can generate contracts quickly using pre-approved templates, customize terms as needed, and accelerate the sales cycle. This results in faster deal closure and improved customer satisfaction.
Human Resources
HR teams handle various contracts, like employment agreements and NDAs, that often lead to errors when done manually. Glogloby.io, a hiring agency, faced salary and start date discrepancies, causing wasted time and a poor first impression on new hires due to manual contract creation. Here's how the co-founder, Vit Koval, narrated the ordeal.
Here’s Glogloby’s post-automation experience:
Essentially, Automation helps HR teams improve contract integrity, improve new hires' experience, and save time.
Business Managers
Business managers spend time coordinating between different teams to finalize contracts, leading to inefficiencies and delays. Automation provides them with real-time insights into contract status, improves collaboration between teams, and enables better decision-making based on contract data and analytics.
Customers and Suppliers
Manual contract processes can lead to misunderstandings, delays, and disputes between customers/suppliers and the company. However, automation streamlines contract negotiation and execution, improving transparency, reducing errors, and enhancing trust and satisfaction between parties.
Which Tasks can be Automated in Contracts?
Several tasks in the contract lifecycle can be automated including:
Document Creation: Automated templates streamline the creation of contracts, eliminating the need to start from scratch each time. This saves time by providing standardized formats that can be easily customized.
Data Entry: Automation tools can extract data from various sources and populate contract fields automatically, reducing manual data entry and error risks.
E-Signatures: Electronic signatures enable contracts to be signed from anywhere, eliminating the time and hassle of printing, signing, scanning, and mailing documents.
Version Control: Automation ensures that all stakeholders have access to the latest version of the contract, eliminating time wasted on tracking updates or reconciling conflicting versions.
How to Automate Contracts Using Contract Automation Software
Here are the steps to follow to start your contract automation process:
Step 1: Choose the Right Software
Choosing the right software is an important first step, as not all software is the same and there's no one-size-fits-all solution. Hence, to make the best choice, consider your must-have features.
Your must-have features are based on your crucial needs, which could include a limited budget, manual data entry, and time-consuming contract drafting.
For example, if you’re facing errors due to manual data entry, your must-have feature is data integration capabilities.
If you're looking for a tool to help you build custom templates, automate contract generation, and offer strong integration, consider Docupilot. To test run it, sign up for free and follow the subsequent steps to create your first automated contract.
Step 2: Draft a Template
Your contract templates are the foundation for effective automation. You can start drafting it in Docupilot by customizing pre-built templates, importing an existing one, or creating from scratch using the create button.
Step 3: Insert Dynamic Fields
Dynamic fields are elements in contract templates that change based on various conditions. So, after drafting your templates, identify the points of alterations and make provision for them with dynamic fields. Here are the types of dynamic fields you can insert in Docupilot.
- Variables: Add placeholders for data like names and addresses from external databases (e.g. Airtable, HubSpot) which are then automatically populated from the connected source.
- Conditionals: Configure when and how certain information is pulled in (e.g. if-else statements for warranty terms).
- Loops: Iterate data for each agreement, useful for multiple products or services.
- Tables: Organize data in rows and columns (e.g. product details).
- Bulleted List: Organize information clearly with bullet points to enhance readability and presentation in documents.
- Numbered List: Sequence information or steps in a document using automatically incremented numbers.
- Inserting a Dynamic Image: Embed images that automatically update based on document data or conditions.
- Inserting a Dynamic QR Code: Generate QR codes within documents that link to relevant information.
- Inserting Google Maps: Automatically insert map images into documents based on address data, enhancing location-specific information.
- Grid Formatter: Arrange elements in a structured grid format within a document for organized layouts and consistent formatting.
- Insert Rich Text: Utilize advanced text formatting options to insert preformatted content into your document without loosing the visual appeal and readability of document content.
Step 4: Update Settings and test
The preference tab allows you to decide how your documents would be generated by entering details such as file name, document format, time zone, page size, and more.
Next is to test your document to ensure it's working as expected. In the test tab, you'll get a form with fields based on the merge field variables you inserted earlier. Fill it with dummy data and click test.
Docupilot will merge these data with the fields in your template and generate your contract.
Step 5: Create Bulk Contracts
Now, it’s time to create your contract automatically. To do this, integrate Docupilot with your data sources such as CRM or Forms using Zapier or Make integration.
Now, Docupilot can pull in details to create new forms.
Step 6: Delivery
The delivery tab provides various platforms to send your contract.
Features of Contract Automation Software
Premade and Custom Template
Templates are crucial for saving time in contracting processes. Your contract automation software should offer premade templates for various contract use cases and provide rich text formatting features to customize it. It should also support condition statements and dynamic fields to adapt contracts to various scenarios.
Automated Document Generation
Once you've created your template, a contract automation software should have a feature like “bulk creation” in Docupilot to populate dynamic fields with relevant information provided by the user such as names, dates, and contract terms. This allows you to generate multiple contracts quickly, reduces manual effort, and minimizes errors.
Multi-User Collaboration
This feature allows multiple users to work on contracts simultaneously. However, ensure your contract automation software offers role-based access control to manage permissions and restrict access based on user roles and responsibilities.
E-signature Integration
E-signature allows electronic signing of contracts, eliminating the need for printing, scanning, and physical signatures.
Conclusion
Contract automation saves time, and cost, reduces error rate, and provides a repository to easily retrieve and access your contract.
Start your contract automation process by choosing software that matches your needs. If you need a tool that prioritizes efficiency and ease of use, sign up for Docupilot.
Contract Automation FAQs
What is an automated contract?
An automated contract is a digital contract created and managed through software.
Why automate contract management?
Automating contract management improves efficiency, reduces errors, ensures compliance, and provides better insights into contract performance.
What app can I use to create a contract?
Docupilot is the best app for creating contracts. It’s easy to use and affordable.
