Contract Review Software VS Manual Contract Review
Contract review, an important process of finding errors with legal repercussions, requires your team to spend a lot of time and energy. Still, you can’t outcast the chances of human error.
That’s where contract review software comes in.
Using contract review automation software can help you minimize all the challenges associated with contract review and provides many benefits compared to manually performing contract reviews.
How’s the contract review software more efficient than the manual contract review technique? Let’s find out its various dimensions.
What is Contract Review?
Analyzing the key provisions of any agreement is known as a contract review. The usual practice involves reading the contract to highlight risky provisions and analyzing the organizational benefit terms.
The contract review process is a norm before finalizing every contract. It gives each party a chance to protect their rights and get the most value from the setting they opt for.
This contract stage often consists of multiple sub-stages where the terms are changed and reviewed several times to help each party protect its rights.
Challenges Involved in a Contract Review
Although important, contract review isn’t an easy stage to handle because it:
The contract moves between the parties multiple times before a settlement takes place. The entire process in itself is time-taking. Besides, it requires the people involved in reviewing to go through the entire contract every time, making the process even tougher.
Delays Contract Finalization Process
With your organizational processes as your strength, you can’t let the legal part delay a new customer or supplier from becoming your long-term stakeholder. Delays in finalizing the contracts might lead you to lose the customer.
Your team might be efficient and legally competent, but manual reviewing of a contract always leaves room for human error. You cannot ignore this aspect. Besides, the more lengthy a contract gets, the greater the risk of errors.
Manual Contract Review VS Contract Review Software
Companies are shifting from manual contract review to automated contract review software. But how is the process different in the manual and automated techniques?
The manual contract review process requires the legal team to read and review every document line regarding the meaning, consequences, risks, and possibly legal and financial actions. All the parties in a contract complete the entire process with their interests in consideration.
Any changes proposed by contracting parties are added to the contract, and the reviewing process starts again. The same cycle continues till everyone in the legal team is satisfied with each contract’s line.
However, automated software helps complete the same process with greater ease and traceability. While reading the contract, real-time changes can be marked and seen so everyone can remain on the same page.
When all the parties can see the changes in the contract simultaneously, transferring documents, losing revised versions, and time for communication can be saved significantly.
Overall, the process is the same but designed to be done efficiently.
Pros and Cons of Manual Contract Review
Manual contract review is the traditional procedure of analyzing the contract with the following advantages and disadvantages:
|Suitable for start-ups or small businesses||Time taking process|
|Doesn’t require investment in technology||Need greater resources|
|No formal training is required||Delay the contract finalization process|
|Chances of human error|
|Contract revisions can be easily lost|
Pros and Cons of Automated Contract Review Software
Below are the pros and cons of automated contract review software:
|Efficient and less time-consuming method of contract reviewing||Not all parties might be technology-savvy|
|Enhances employee productivity||Requires initial investment|
|Less risky approach as human error is minimized||Requires employee training|
|Increases revenue generation|
|Reduces the contract closing process|
How Does Manual Contract Review Cost Businesses Productivity and Profits?
The manual contract review requires more time from your legal team for a particular contract. In return, you’ll have to pay your team more, hire extra resources and spend more time on each contract. All of these aspects increase the business cost. The hectic process involvement will also decrease the productivity of the employees, costing your company a lot.
Simultaneously, the higher time for finalizing a contract will reduce the number of closed contracts, thus reducing revenue. So, both sides of the equation are negatively impacted.
When to Switch to a Contract Review Automation Software?
Now the question might be about the right time to switch to the automated review software from the manual practice. Switching to the automated version of the contract review process wouldn’t be rational if you don’t have a regular inflow of contracts taking up much of your time.
If you are just starting and have a legal team in-house, you won’t have enough workload that will impact your team’s productivity or increase your cost. So, wait till you get to the growth phase, and then you can expect the software to help you with an easy and quick contract review — ensuring maximum benefits.
How to Find the Best Contract Review Software?
Finding the best contract review software isn’t difficult when you know the major features required for contract review. You can match the features of the software for contract review with your requirements to get hold of the best one.
Tips for Using Contract Review Software
Here are a few tips to maximize your results through the software for contract review:
● Before incorporating the software into your processes, set KPIs. It will help you evaluate its performance and analyze results.
● Provide the required training to all your team members to ensure the best results.
● You might have to change a few internal organizational processes, so be ready for it.
● Lastly, choose the right contract review automation software to get all the intended features and benefits.
Manual contract review is a tedious process, which limits your ability to focus on the primary organizational operations. Besides, lower employee productivity and higher organizational costs are also prominent in the manual process.
You can shift the entire manual effort to the automated contract review software to get benefits like reduced contract finalization times, higher employee productivity, and reduced costs.