Contracts go through many distinct stages, from preparation to renewal and expiry. But the contract lifecycle can be complex if carried out manually because as well as the legal team, it can require the involvement of several other departments and stakeholders. That's why tracking the progress of a contract is a crucial step in ensuring it remains efficient and effective.
What is Contract Tracking?
Contract tracking determines the position and progress of a contract across the contract lifecycle. The contract will go through several critical stages, including:
- Preparation - Objectives for the contract are set, and a list of the required information is created
- Drafting - The contract is written containing all the necessary essential information, such as clauses, terms, and conditions
- Negotiation - The involved parties will negotiate the contract's terms until they are agreed
- Approval - The involved parties sign the contract to show their approval
- Execution - The parties are now bound by the terms and must complete the contract
- Auditing - The contract is audited to ensure compliance and key dates are monitored
- Renewal - The contract is either manually or automatically renewed
Contracts are agreements created to define an outcome of a relationship. But frequently, stakeholders lack visibility into these agreements and their progress. This lack of insight can cause bottlenecks and delays. Therefore, contracts must be accessible to the wider business.
Why Is Contract Tracking Important?
Contract tracking is an essential component of contract lifecycle management
because it establishes the progress of the contract throughout its lifecycle. Oversight of contract tracking can result in multiple outcomes, including:
Stakeholders' lack of contractual visibility can cause bottlenecks and delays, impacting revenue generation. And in business, time is money.
Contracts are documents full of critical dates and milestones. If the relevant stakeholders are unaware of this information, legal and financial risk will increase, and it can lead to contractual breaches.
Businesses without a central repository often have to swap between systems and folders, spending significant amounts of time searching for fragments of information. In fact, in May 2021, EY discovered that 90% of contracting professionals face difficulty locating contracts. This manual process will result in delays, especially for businesses that deal with a high volume of contracts.
What to Track?
Once a contract has entered the execution stage of the lifecycle, teams should consider tracking every essential piece of information. It also encourages in-house teams to be proactive and stay ahead of risk.
Some critical components of information to track during the contract lifecycle are:
- Contract end or renewal dates
- Termination notices
- Compliance requirements
- Obligations and rights
- Key dates and milestones
The legal team should also meet with the contract owner to identify any specific information that needs to be tracked outside this list.
What is the Difference Between Contract Tracking and Contract Management?
Although contract tracking and management seem similar, they are separate processes. But it is common for contract tracking to have task crossovers with a contract management framework.
Contract tracking involves the contract stakeholders and legal, effectively tracking the whereabouts of the contract in its lifecycle without having to search through multiple systems. Contract management encompasses every stage of a contract's lifecycle, from contract creation to renewal/expiry, and reduces legal and financial risk.
How to Track Contracts
You must first locate them all when you want to start tracking your contracts! Although this sounds simple, many companies lack a central contract repository, instead storing their contracts in physical locations from filing cabinets or online in cloud-based servers and local drives.
The second step is to determine how you will track your contracts. Every legal team will have a system to track and monitor their agreements. But manual contract tracking may prove problematic if your contract volumes are already significant and continuing to increase. Implementing contract automation, such as contract lifecycle management software, may be beneficial to help with the contract tracking process.
Contract Tracking with Software
Contracts are lengthy documents full of complex legal terms, key dates, and crucial information… and they are only getting more complicated! From changes in GPDR to sustainability issues, businesses are constantly facing evolving laws and regulations, and contracts are the agreements that protect them from risk.
Over the years, contracting technology has evolved from solutions aimed at solving an individual piece of the puzzle to systems encompassing every stage of the contract lifecycle. Contract lifecycle management software allows businesses to track and monitor their contracts throughout their lifecycle effectively.
Some of the benefits of contract lifecycle management software include the following:
For contract tracking to be effective, businesses must have a central repository for their agreements. A contract repository creates a single source of truth, providing one location to store and organise your contracts, making them easily accessible to the business. A report by Wolters Kluwer in 2021 found that 61% of respondents plan to introduce one central repository for information, data, and documents.
Summize’s contract repository allows users to manage their portfolio of contracts at a glace.
Automated reminders of critical dates and milestones within each contract allow teams to stay ahead of important dates, giving them plenty of time to take strategic action.
With accurate summaries, contextual insight, and access to key trends and data points within your contract portfolio, teams can seamlessly report on a contract's status.
Contract Tracking Features from Summize
Summize allows legal teams and commercial users to perform contract tracking effectively and seamlessly across their contract portfolio, from pre-signature to post-signature contract management.
Using Microsoft Teams and Slack as the primary business interface, Summize creates a modern approach to contract tracking, making contracts accessible to the entire business. Centralising contract requests allows non-legal users to get answers from their contracts using an intuitive Q&A chatbot.
Missed renewals cost time and money, create cycle bottlenecks, and slow down the path to revenue. That's why Summize automatically extracts key dates from your contracts and adds them to your calendar with built-in email reminders. With Summize, businesses are always ahead of the contract lifecycle, with sufficient time to plan and manage upcoming dates and milestones. “The calendar functionality has spread the workload connected with renewal dates, allowing other non-legal members of Purple to take accountability and own the renewal process without having to be reminded by legal”.
Daniela O'Brien, Head of Legal at Purple.
Read the full customer story here.
With multiple decision-makers across different departments, contracts can quickly become blockers in cycles and cause delays. Summize's intelligent automation makes contract workflows simpler and smarter, uniting legal teams and business stakeholders and eliminating bottlenecks.
With instant, accurate contract summaries and automatic red flags on areas of concern, businesses are provided with instant insight into their contract portfolio, allowing them to reduce business risk in minutes.
With a small in-house legal team, RVU were determined to automate the contract lifecycle to improve contract visibility and operation efficiency. By implementing Summize, RVU were able to digitise their legal processes. The Summize Word Add-In produced instant summaries and automatically red-flagged areas of concern, allowing RVU to reduce legal risk in minutes. Read the full customer story here.