How startups can benefit from contract management software

Contract management software can help early-stage or growing startups have full oversight of their contracting process on no legal budget. 

This article shares reasons why startups may not choose to use contract management software early on and an overview of the 7 benefits of contract management software for startups.

Reasons and solutions for implementing contract management 

Startups may not implement contract management effectively in their organisation early. Below we consider 4 possible reasons why they may not use contract management and the associated solutions automated processes and software can bring. 

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• ‍Reason 1: There are competing priorities for budgets and management resources.‍

‍Solution 1: A designated budget and process for contract management should be part of the initial priority list for startups. Having contract software in place enables startups to stay on top of their contract renewals.

• Reason 2: Not enough contracts to require a management process or software. 

Solution 2: Even if a startup is only processing a handful of contracts early on, it is recommended that they have a process or software to manage these contracts effectively. This also ensures there is a process in place when they begin adding more contracts. 

• Reason 3: They are happy with their manual solution and may be unaware of the possible benefits of automated solutions.‍

Solution 3: Often, manual solutions appear the most time and cost effective if the startup has become accustomed to using it, but automated solutions can actually save time and money in the long-term.  

• Reason 4: Limited legal knowledge or expertise or legal budget.

Solution 4: Contract management software can standardise their contracts across the business and reduce legal costs. 

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Below we take a deeper look into the 7 benefits of contract management software for startups. 

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1. Centralise contracts and provide full oversight

Contract management software allows startup founders to organise and manage their contracts much more effectively as they will be created and homed in a centralised place. 

Centralising contracts provides founders with a full oversight of the whole contract process and increases visibility of the contract portfolio. For example it allows users to track specific contract clauses and negotiation statistics such as terminations, probation periods, or expiry dates, in order to make more informed decisions. 

A contract management platform like Legislate makes it easy to keep track of contracts and the patented knowledge graph technology behind the dashboard will update values as soon as contract conditions are met such as expiries, opt-outs or renewals.

It will also mean there is no limit on storage systems so they can create as many contracts as needed, and can be accessed and searched with ease. Businesses can also invest in custom software solutions to ensure they achieve their full potential.

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2. Save revenue and time

The World Commerce & Contracting (formerly IACCM), estimates that poor contract management is costing businesses up to 9% of annual revenue. 

Contract management software streamlines the operational process of contract approvals and reviews as well as managing the financials such as budgeting and revenue. The software increases overall business efficiency and productivity. 

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3. De risk business

Having a contract management system in place mitigates the potential of risk for a startup, such as non compliance with regulations or financial losses. 

As a startup continues to grow, managing contracts and other applicable documents may be prone to human error - by having a system in place reduces the risk of error. 

The automated features of contract management software minimises business risk and maximises potential profits. 

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4. Due diligence for investors

An automated process and centralised record of contracts makes it clearer and easier for investors to perform their due diligence of the startup when considering making investment decisions. Contract and risk management also provides reassurance to investors. 

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5. Storage and security

Automated contract software maintains security by storing all contracts in a centralised place. This automation manages the permissions and access controls for contracts and signatories i.e. those who are signing a contract and therefore have a legal obligation. 

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6. Automated collaboration 

Contract management software ensures startup founders, their employees, or clients can all be on the same page of the contract process. 

This software automates communication between all parties and creates a better user experience for everyone. For example, automating the collaboration between the startup and a new hire when signing a contract, or between teams when negotiating a contract with a new client. 

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7. Ease of signing 

Contract management systems often include e-signature functionality for those involved in the signing process. This offers a more inclusive contracting experience to all parties and also streamlines the contract lifecycle by aligning all processes in one system.  

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About Legislate

Legislate is a contract management platform that empowers businesses to take control of their legal contracts. With Legislate, people can also sign, and manage contracts electronically, making the process more efficient. Book a demo or sign up today.

The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.