A Pramata Article
How to Organize Your Contracts in 2023
Learn the radically simple, time-saving way to organize your history of contracts throughout your company in this helpful, in-depth guide.
“There’s got to be a better way!” Have you found this thought passing through your mind while trying to locate a contract? If so, you’re not alone.
Many organizations and their teams struggle with organizing contracts. The process can be cumbersome and chaotic, with contracts scattered in multiple locations.
Even if you have a CLM (contract lifecycle management software), it might be so counterintuitive and complicated that it just adds to the mayhem instead of simplifying how your contracts are managed.
Disorganized contracts come with a swarm of repercussions, especially for sales and legal teams. It’s critical to organize your contracts so your entire contract management process supports the overarching, long-term goals of the business.
In order to organize your contracts effectively, there are some key fundamentals to understand. By the end of this guide, you’ll know exactly what kind of organizational approach to take.
What we mean by “organizing” contracts
Organizing contracts isn’t just an administrative task of filing, labeling and digitizing papers. Instead, notice what happens when you apply the word “organization” to every level of your contract’s lifecycle.
In other words, you’re not just organizing the actual contracts, you’re organizing the entire process of managing your contracts. From locating a contract to renewing a deal, there are multiple crucial steps involved with contract management.
This means that every step involving a contract should be based on a highly intuitive, well-organized process that empowers each key player.
Here’s an example: Let’s say you’re part of the sales team. You’re waiting for a contract to be reviewed by the legal team and need to check on its current status.
Instead of this update being readily accessible to you in a digitized system, you have to identify and track down the assigned legal team member (if they’re available) to ask about it.
You may find yourself constantly communicating back and forth, especially if you’re up against a deadline and need to check on the contract’s status throughout the week.
This might not seem like a big deal at first. But apply it to hundreds of contracts, and your precious time is instantly devoured. That’s time that could be better spent on closing deals.
In short, the concept of organization shouldn’t only focus on organizing the contracts themselves—it should also help you streamline your contracting processes.
Why does contract organization matter?
When you’re a key player in driving revenue for your company, contract organization helps you close deals. But before we delve into the “why,” let’s shed light on the negative impact of having disorganized contracts.
When contracts aren’t organized, everyone pays a price
Without an organizational system in place, productivity and efficiency take a nosedive for every task involving a contract. See if any of the following sounds familiar:
- It takes you days to respond to contract requests because you’re wasting valuable time trying to find a contract.
- You’re struggling to close business deals and missing crucial deadlines for contract renewals.
- You overlook a vendor contract auto-renewal you had no desire to continue.
- Miscommunication between departments about contracts happens on a regular (maybe daily) basis.
- You don’t notice opportunities for price increases in your commercial contracts, so you end up losing out on additional revenue.
- Across teams, no one is sure about a contract’s status.
- Closing deals takes much longer than it should.
If you nodded “yes” to at least one of these, your contracts and/or your contract management needs to be better organized.
Organizing contracts comes with major benefits
When you organize your contracts properly, the rewards are game-changing for everyone involved and your business as a whole. Imagine this:
- The ability to locate contracts and their associated data in a few seconds
- No more missed deadlines, auto-renewals or opportunities for price increases
- Less time spent on administrative tasks and more time spent on high-value work
- Streamlined communication and collaboration across departments
- Simple request forms and workflows to accelerate the closing of deals
- Being able to immediately identify a contract’s lifecycle status
- A clear relationship hierarchy so you can understand all the agreements and amendments related to a contract, empowering you to identify future opportunities for business and revenue growth
If organizing contracts is so beneficial, what’s preventing companies and their teams from doing it effectively? Unfortunately, many obstacles stand in the way.
Why companies struggle with organizing contracts
Your company may already be trying to organize its contracts better, which we applaud. It is, after all, a significant undertaking. However, the people leading this effort may be struggling to create a well-organized system.
This isn’t anyone’s fault. In fact, there are valid reasons why they’re falling short.
Too much sharing
Some companies organize their contracts by spreading them across multiple shared drives and platforms. Unfortunately, this causes a wide range of challenges.
Teams struggle to find where a contract is stored and to make sure they’re working with the latest version of a contract. This can lead to duplicated efforts across departments, miscommunication and unaligned collaboration where people are unclear about a contract’s status.
Without visibility built into a single, centralized system, no one (not even key stakeholders) can easily access, review and revise contracts as needed. Ultimately precious time is wasted, important deadlines are missed, and revenue opportunities go out the window, sometimes completely unnoticed.
Stuck in manual organization
It’s 2023, yet many organizations are still organizing contracts manually on individual hard drives, overflowing inboxes and shared G: drives. This isn’t a criticism. Rather, it’s a common hurdle that many organizations don’t know how to overcome.
Considering the long history of contract management, organizing contracts digitally is relatively new. When a company has been manually managing contracts for years in share points, switching over to a centralized repository can feel like climbing Mount Everest.
That’s because so much work can go into the transition. From uncovering decades of contracts in multiple drives to spending significant time (and money) training key players on a new system, it’s a significant undertaking.
Companies might not have the capacity or resources to start – or even to consider – this laborious, overwhelming process. Especially when implementing a centralized system is way too complicated.
Using SharePoint to organize contracts
With so many complicated CLMs (Contract Lifecycle Management), some companies turn to Microsoft’s SharePoint for their contract management. This platform provides a centralized workspace for storing, organizing and managing documents.
SharePoint is an adequate solution for switching from manual contract organization to a centralized network. It promotes improved collaboration with streamlined document sharing and provides templates within Microsoft Word.
However, SharePoint does have its limits. While contracts stored in SharePoint are at least centralized, which is a great first step, users still have to open up each contract and manually identify clauses and key terms. It doesn’t enable users to search for contracts based on the metadata within them. This also means there is no reporting on contract insights, if users want to generate reports, they must manually analyze each contract individually, extract the data and build the reports in excel.
And any contracts you’re working on are uploaded to SharePoint once they’re approved, meaning your contracts have to live somewhere else until they’re finalized.
SharePoint has the potential to be an effective enough system for contract organization within your company. However, its lack of automation and ease-of-use features more commonly found in CLMs might make it a temporary solution that helps with only a handful of disorganization challenges.
Dealing with overly complicated contract management systems that fall short
Let’s say your organization has invested in a digital contract management system. Fantastic. Now everything, including organizing contracts, will be easier, right?
It’s a harsh reality, but also a common one. The reason: Some contract management systems are simply making you do too much.
Many contract management systems come with a wide range of complex features. Some of these features may be useful, but others are simply unnecessary for your organization’s specific needs. All of those bells & whistles can create an overcrowded system that’s challenging to understand and navigate.
With so much technical complexity, there’s a significant learning curve for those who don’t have extensive technical expertise. And you shouldn’t have to be an IT expert to access, view, organize and process your contracts.
On the other end of the spectrum, contract management systems can have capabilities that are too limited. From renewal reminders to contract visibility, some systems lack key features necessary for organizing contracts and simplifying workflows.
Remember, contract organization isn’t just about organizing the contracts themselves. A system should also efficiently structure and streamline your processes to truly make managing and organizing contracts easier.
A contract management system is supposed to free up your time by making everything simple. When a system’s features are insufficient, you may find yourself back at square one.
Even with your new system, you can find yourself still spending way too much time locating contracts, digging up or entering in data and tracking down whoever is managing it. It’s enough to make you ask, “What’s the point of this?”
Contract migration is an uphill battle
When you’re implementing a contract management system to organize your contracts, the first step should always be contract migration. And you’re not just focusing on new and incoming contracts. You’re also trying to organize your entire history of contracts.
This means you need to digitize and migrate every contract and move it into the new system. And some contract management systems may require you to do all the contract migration yourself.
Uploading your contracts into the system is only the first step. To actually make them organized, accessible and searchable, every contract needs to be correctly tagged. They also need to be structured into a logical relationship hierarchy, which allows you to clearly see the complete history of your customers and vendors.
When combined with an overcomplicated system that doesn’t carry the features you need, the task of organizing your contracts can feel impossible.
Pramata's radically simple platform organizes your contracts into complete document families for you...eliminating the heavy lifting.
How to organize contracts: Use a radically simple contract management system
Organizing contracts has been historically difficult and complicated. But let’s make one thing crystal clear: It doesn’t have to be this way.
You can do away with your contract organizing issues (and all the problems that come with it) through a contract management system that keeps everything simple. Simplicity is the secret ingredient for contract organization and management victory.
You may be thinking, “How can I tell if a contract management system is simple – but not too simple?” Let’s break down what to look for in a simple, easy-to-use contract management system with the right kinds of features to help you organize your contracts efficiently.
Key contract management system features for organizing contracts
It does the contract migration for you
Contract migration is a significant energy and time-eater. Wouldn’t it be nice to simply upload your contracts and be done with it?
Well, we’re happy to tell you this is 100% possible. A contract management system that does all of the organizing for you will take this giant task off your plate and make your work (and life) much easier.
When you’re considering contract management systems, don’t think of contract migration as a bonus feature or a third-party add-on. It’s an integral core capability that you must demand from your contract management system.
Top-tier contract migration will extract data from your contracts, categorize each one and dynamically organize them into a clear document hierarchy where you can see how they relate to one other. In other words, it saves you massive amounts of work and time.
See Pramata’s best-in-class contract migration in action.
A centralized system with effortless contract access and visibility
It’s time to stop wasting time searching through email or drives for the most up-to-date version of a contract.
Everyone in your organization should be able to find the right contract when they need it within seconds, which means you need all of your contracts digitized in one place.
A centralized, digital repository allows you to easily access and clearly view every updated contract in a matter of moments. This includes not just new contracts, but your entire legacy of contracts.
Now your teams can clearly see the status of contract negotiations, track and prioritize work, and close deals faster. They no longer have to check in with other team members on contract statuses. They can simply pull them up in a few clicks, creating a more streamlined workflow.
Plus, a centralized system with clear contract visibility eliminates the risk of misplacing and losing contracts in a sea of disorganized folders and platforms.
Organized by relationship with ongoing contract digitization
In addition to doing all the organizing up front, you need your contract organizing function to continue working for you over the long term.
It’s essential to understand the contract documents involved with a business relationship. You need to clearly view your entire legacy of contracts to uncover potential opportunities and determine risks. And that includes incoming contracts and all of their amendments and orders.
Yes, your contract management system should organize your contracts into a clear relationship hierarchy. But it should also systematically add new contracts to your centralized repository for the foreseeable future.
Now, no matter how many incoming contracts you have, you can easily identify all of the intricate agreements, amendments and orders of a relationship, understand their connection to each other, and track and evaluate the evolution.
Data and reporting accuracy
If your contract data isn’t accurate and up-to-date, staying organized will be practically impossible. A cardinal rule for simplicity is for your contract management system to provide accurate data (including amendments and orders) from your contracts.
When a system combines an accurate reporting feature with robust analytics, you can perform critical contract-related tasks that were previously impossible. This includes effectively evaluating the performance of each contract, identifying potential risks and assessing the compliance of a contact’s language.
With the ability to do all of these tasks at your fingertips, it’s far simpler to make strategic, data-driven decisions concerning your contracts so you can yield better business results.
This may seem like a simple feature, but remember, simple is what we’re going for. Automated alerts remove the need to manually track important events like upcoming contract renewals and expirations in a calendar. Instead, you’re notified well in advance, allowing you to stay on top of these critical deadlines without missing a beat.
Pro tip: To ensure your renewal alerts are useful and accurate, it’s important that they be in advance of the renewal date. And calculating that date is often harder than you think.
Most contracts don’t state the renewal date. Instead, you have to understand the effective date, term, type of term (fixed vs auto-renewal) and also calculate the notice period required.
Your contract management system must be able to do this automatically and continue to update this data to factor in auto-renewals, terminations, and amendments. This way, you’ll always know proactively when every contract renews without the need for manual intervention.
One of the biggest timesavers in a contract management system is a searchable database. This feature allows you to search for data within a contract across all of your contracts.
You can filter your search results using contract metadata like their effective date, contract status, counterparty, and more, enabling you to answer contract-related questions immediately.
Implementing a new contract management system can feel daunting when it’s overly complicated and requires hours of team training. If the system lacks user-friendliness, companies may find themselves wasting as much time as they did before integrating it.
Working with a new contract management system shouldn’t be rocket science. Otherwise, it becomes counterproductive, completely neutralizing the time-saving benefits that were supposed to come with it.
To adhere to your goals of organizing contracts, optimizing your workflows and maximizing your productivity, your contract management system should be intuitive and simple to use for everyone. Even non-legal team members.
From pulling up a contract to generating a customizable report, you should be able to quickly complete a task with a straightforward user interface. And to get true adoption across the business, choose a system that offers unlimited user licenses. And integrates with tools like Salesforce or other CRMs. Remember, the goal is to empower everyone in your business.
To do this, people should be able to access exactly what they need with an easy-to-understand, centralized system. One click, two click, blast off!
Contract Nirvana Is Possible
It’s essential to take control of your contracts, but wrapping your mind around contract organization can be overwhelming. And organizing every single contract in a useful, accurate, streamlined way can be even harder. But it doesn’t have to be.
Your contract management system should make organizing and working with your contracts radically simple. For the simple part to manifest, your system must prioritize intuitive, reliable contract organization in a single, centralized digital repository.
At Pramata, we have the only solution that does the heavy lifting for you, and at a fraction of the cost of other contract management systems. All you have to do is upload your contracts, and we’ll take the organizing from there.
And we do mean all of the organizing. From structuring your contracts into a relationship hierarchy to tagging and extracting data from your contracts, you’ll have everything conveniently within reach and completely visible with a single click, freeing up your valuable time to focus on high-value, revenue-driving work.
If you’re ready to reclaim your time, energy and resources, learn more about how to organize all of your contracts into one centralized and searchable resource.