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3 Ways to Create a Functioning Contract Archive

Contracts are now more than just paperwork, as they not only contain huge amounts of contract data, but also require platforms that combine all contract versions, chats, redlines and emails during negotiations between the parties.

What is a contract archive?

In most cases, a contract archive is an electronic collection of contracts and relevant contract data, which is necessary by a company to carry out any transactions and maintain business relationships.

The primary goal of a contract archive is to centrally store and make all contracts accessible to ensure that all parties involved can quickly access the required information. A well-organized contract archive also helps track contract renewals, terminations, and other important deadlines and ensure that all contract terms are met. A digital contract archive can also provide automated reminders and notifications for important dates and deadlines.

There are basically different types of contract archives. Modern contract archives based on CLM solutions include functions such as automatic contract templates defined from individualized parameters, tracking and notifications about any contract deadlines, and detailed data analyses.

Why a contract archive is essential

A typical day for an employee in a company (after a morning coffee) often starts with looking for documents and documents that are needed to complete the tasks at hand. It is not too rare that these are contracts that still need to be pulled out of the closet or archive.

For the employee, however, this now means that he has to search for this contract and thus has to sacrifice unnecessarily valuable time and nerves to look up what is often just a small detail.

The employee could of course use this time for other and also really profitable, productive tasks. Instead, he must waste his energy on something so trivial.

Hand in hand with such annoying tasks, we often also observe a declining work ethic and, ultimately, a further decline in productivity for the company. It is therefore worthwhile to invest in a contract management system at an early stage.

It is not uncommon for companies to work with many different contracts and measures to master the excessive chaos quickly end when trying. :

1. Where are all contracts?

After successful signing by both sides, many employees pay little or no attention to contracts, which means that they are saved incorrectly, incorrectly or not at all

If it is not possible to answer this question, this leads to a major problem, as it is now no longer possible to review the components of the contract. This creates the risk that, for example, a breach of contract is committed or that deadlines are not met.

This also means that contract templates have to be set up again and again, or that many employees create their own template collections, but what they have learned from previous contracts is not collected on a medium that is accessible to all and what they have learned is thus lost for many.

2. Who keeps an eye on all important contract components?

If this was not agreed in advance, no one will consider themselves responsible in case of doubt and the contract will therefore not be properly managed. In many cases, it is advisable to inquire about a contract manager and, if necessary, to contact them.

3. When do which contracts expire?

If important contracts have not been extended in time, a company can shut it down if the required resources are no longer being delivered. The topic of contract deadlines can generally be found in Contract renewals and contract extensions differentiate. It is therefore essential for every company to use a system which not only provides a detailed overview of all relevant contract deadlines, but also provides timely information about upcoming deadlines.

Creating a contract database: The different approaches

The manual contract database

A contract management system that keeps an eye on all these issues is therefore recommended or even indispensable.

Here, of course, it also depends on the size of the company what kind of contract management system is required. A small company or startup with a manageable number of contracts may still be able to keep these in mind, but obviously the goal of a startup is to grow and expand.

Even here, it is therefore necessary to integrate such a system and in the beginning this can also be a simple calculation table, which is linked to a database as a storage location. This can either be an Excel spreadsheet or a Google Docx in a Google Drive.

Beginner method: contract management system in Excel

The easiest way to bring order to chaos with a centralized database for contracts is to Excel spreadsheet. This method is both very easy to implement and extremely cost-effective. In addition, only basic Excel skills are required.

First of all, a responsible person must be appointed who will take care of the matter and will continue to maintain the Excel spreadsheet in the future. All important information about the contracts must now be included in the Excel spreadsheet and updated if necessary. This alone can already be seen to save time, as it provides a rough overview and employees do not have to read through the entire contract first to obtain the most important content points.

Important information that an Excel spreadsheet can immediately recognize:

  • Contracting parties
  • Type of contract
  • Summary of content
  • Deadlines and dates
  • reference number
  • Status: In Negotiation, Signed, Expired
  • And other important notes

Advanced method: dedicated contract management system

Excel may still work quite well with a small number of contracts, but you will soon find that after a certain number of contracts and also different people who are involved in them, Excel quickly reaches its limits. In particular, the limitation of the amount of data and the inconvenience of editing the Excel spreadsheet at the same time will quickly cause users to despair.

The next step could therefore be your own dedicated contract management system. This allows different departments to work together on contracts and access all current or already concluded contracts. To create a contract in such a database, the responsible employee only has to type the key parameters into an input mask and upload the current version of the contract.

This gives you an indispensable overview of the contracts again and enables collaboration between all authorized users. For a company that works very interdepartmentally, this is a very practical, efficient and resource-saving alternative that requires very little work.

The disadvantage of this method, however, is the need for your own programming. If you want to create your own contract management system that is adapted to your own wishes, it must of course be created yourself. This means additional work for the mostly already overloaded and understaffed IT department.

In addition, the work does not end after programming the database, as it must be constantly managed, errors corrected or new requests integrated.

Alternatively, you could hire an external company to code this contract management system for you. However, this involves high creation and maintenance costs and the security of your data depends on the data protection measures of the external company.

Professional method: contract management software for all process steps of the contract cycle

Finally, there is another option, namely to implement professional contract lifecycle management software in your company. As the name suggests, this software follows a contract from the beginning to the end of its life cycle.

The process steps of a contract cycle usually include creating, negotiating, signing and finally managing the finished document. One of these CLM softwares was developed by top.legal and offers many helpful functions.

1. Creating a contract database

First of all, all their contracts must be transferred to the software so that they can use them in digital format and with the functions of the software. This may sound daunting and like a lot of work at first, but don't worry, our team of experts is here to help you and importing will pay off later.

2. Guided preparation of contracts based on approved templates

It is then useful to create your most frequently used contracts (e.g. non-disclosure, employment contracts, rental agreements, license agreements, etc.) as automated templates. This allows your employees to easily access them when they need them. This means that employees do not have to rewrite the same contract from scratch or dig out a suitable document from their own contract collection, which can include very different contracts from employee to employee, as usual. This can therefore initially save valuable time when drafting contracts and at the same time creates a uniform standard that always makes your company look professional to the outside world.

An intelligent contract assistant helps your employees to find their way around the legal jungle and issues the appropriate clauses or text sections depending on the answer. In addition, the contract assistant shows a suitable explanation for each point, should the available options alone not be self-explanatory.

3. Use of top.legal features

Now the time has finally come and you want to negotiate a contract with a partner. Now simply send an invitation from the contract to your opponent via e-mail and this will grant him access to the contract on the top.legal platform. Here you can now negotiate the contract, make changes and integrate other people for review and approval.

To do this, all changes and suggestions from you or your partner are saved and can be viewed in the monitoring path. If the contract has been approved by all parties, you do not have to submit it to the post office first and wait until it has been sent back and forth, but the implemented 2-key factor eSignature makes this process easier for you and can be carried out on the computer in seconds.

4. Setting up appointment reminders

Setting deadlines and reminders in the contract database is essential. This ensures that tasks and events that are important for contract management are not forgotten. By setting a deadline for each task, users are required to complete their tasks on time, reducing the risk of unnecessary delays.

A major advantage of a digital contract database is that the good overview allows informed risk management and commitment monitoring. The software also helps you here and notifies you when contracts expire or liabilities have to be fulfilled.

5. Data analysis

The Analytics Dashboard allows you to view all important information about your current and old contracts at a glance. With the help of the data, you can monitor your contract cycle and draw conclusions that can be of great help to you during the next contract negotiations.

Conclusion

Regardless of which method is ultimately selected, it is obviously beneficial to establish a contract management system. Not only because of the aspect of clarity, but also for the nerves of your employees. Furthermore, it is also much easier than you thought, but you should do your research beforehand to see which is now the right one for your company and best meets your needs.

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