What are some ways you can reduce contract cycle time?
- Go paperless
- Use a contract template
- Simplify your contracts
- Have a clause library or playbook
- Analyze your cycle for bottlenecks
- Have your contracts digitally signed
Contract cycle time refers to the time it takes to prepare, process, and sign your company’s contracts. While this cycle is wholly necessary, it can be quite tedious and take a lot of time and effort. Thus, reducing the time it takes to finish the cycle can do a lot for the company in terms of saving not just resources, but money in the long run as well. Here are 6 tips to reduce contract cycle time.
Let’s say you are a startup founder who just got approved for funding. Preparing for the due diligence including all the contracts is super long and tedious. Few things are more efficient than optimizing your physical processes through digital technology. In the same vein, sharing your contracts through email saves a lot of valuable time compared to sending them via snail mail or courier. You also save up on costs for paper, ink, and printing, plus you help the environment by reducing the waste your company produces.
Use a contract template
Contract templates are exactly what their name suggests: they’re templates you create for the most common contracts your company utilizes. A common template might be for the contracts you give to new hires, which usually follow a similar pattern and only differ in terms of the job description, compensation and benefits, and expectations per recruit. Other examples would be templates for client contracts, Service Level, or Non-Disclosure Agreements.
The reason why this helps expedite your contract process is that you won’t have to create a new contract from scratch every time you have a new hire, enter into a new partnership with a client, or the like. You can simply leverage an existing contract and change its key terms like who it’s addressed to, the details of the agreement, and any additional or varying stipulations.
The best part is that you don’t need to shell out any additional payment for a contract template—you can simply make one yourself with word processing or document creation software.
Simplify your contracts
One way that contracts end up too long, too hard to read, and too boring is when they are written in terms that are simply too hard to understand. Not only are contracts like this time-consuming to create, but they also take even more time for the answering parties to read through, dissect and approve. In other words, you’ll be doing everyone involved a favor if you simplify your contract.
How do you do that? Simply stick to the basics. Make your stipulations clear and not too descriptive, and stick to straightforward writing. The best practice is to rely on a contract creator with appropriate experience, to lessen the need for many revisions once you have the document checked by a lawyer or legal adviser.
Have a clause library or playbook
Straightforward language aside, sometimes you need to use legal jargon in your contracts. But don’t worry; that can be optimized, too. Have a clause library—a list of terms they commonly use in contracts, which can be improved, continued, and added to over time—and do your best to memorize it throughout writing up contracts. Eventually, your legal jargon will become automatic once you pull up a document for a new contract because you already know the right terms to use.
An added benefit of having a clause playbook is that you get to standardize your contracts in a way that even people outside your company, like legal teams and services, will understand. This will make it easier not just during your contract cycle and duration of the period, but even for future issues, should the contract need to be revisited.
Analyze your cycle for bottlenecks
Beyond the three steps we mentioned above, there are some ways a contract cycle can bottleneck that are unique to certain contracts. If you notice, for example, that mailing a physical contract is a step that can be replaced with simply sending over a digital form, this is something you can do as long as all parties are okay with it. Or if you notice that it takes a certain party lots of time to approve and sign, you can follow up more often.
Have your contracts digitally signed
Finally, one of the ways to reduce contract cycle time iis to have your contracts signed digitally. This means they are signed with a personal signature that is unique to each party, encrypted with codes that confirm the signature’s authenticity and accompanied by a virtual log that records all changes made to the document before, during, and after its signing.
All these tools ensure the authenticity, validity, and legality of your contracts. If you want more information on how exactly it works, check out this previous post we made on our blog.
We’ve given you some tips to reduce contract cycle time for contracts in general as well as specific ones that have their usual bottlenecks. We hope these tips help, and we look forward to partnering with you in the process of automating and securing your contracts through digital signatures.