What is Contract Authoring?

Contract Authoring Defined

Contract authoring is the process of drafting and creating a legally binding agreement between two or more parties. It's the initial stage of the contract lifecycle management (CLM) process, where the terms and conditions of the agreement are documented.

Goals of Contract Authoring

Effective contract authoring strives for a four-pronged approach: clear and concise language that all parties understand, comprehensive documentation of all essential terms and conditions to avoid future disputes, meticulously crafted language to minimize legal and financial risks, and the consistent use of pre-approved templates and clauses across all contracts.

Why Is Contract Authoring Important?

Contract authoring is one of the foundational steps in the contract lifecycle where the agreement is created. Poor contract authoring frequently involves clauses scattered throughout many documents, subpar governance across contracts, development tracking breakdowns, lackluster line item management, and breakdowns in contract unification and subcontracting. Standardized language reduces business risk. Automation of contract management authoring with templates and clauses improves consistency and governance and enables more efficient self-service authoring.

Known also as the contract writing stage, the contract authoring stage of the contract lifecycle management process is important because it involves contract parties implementing the terms of a contract into a written contract by centralizing contract clauses, contract key dates, contract documents, and other associated data.

Businesses also have to store, manage, and retrieve a lot of important contract data, which can be an operational nightmare if you're storing and searching through hard copies. Contract management software alleviates that issue by storing contracts in a digital, organized repository, allowing contract managers to search the entire repository with just a few keystrokes and clicks and even filter by name, date, party, region, deal value, and more.

Below, we dive into some additional reasons why contract authoring is important.

1. Clause Management

Drive standardization across all your contracts to reduce risk. The Icertis contract management software platform has robust clause management with system-driven usage of approved language from the clause library. The library helps with managing fallbacks and dependents, requiring mandatory language for certain contracts, tracking deviations, organizing clause approval workflows, and managing different versions of contracts. The platform tracks all clause usage in contract templates and agreements to provide deeper insights.

2. Template Management

Accelerate contract creation with contract template selection rules and the Icertis platform’s comprehensive template lifecycle management capabilities. The Icertis Word Add-in enables template authoring in Microsoft Word with the ability to pull library clauses into the contract document, enter custom text, tag metadata in the contract document, and tag other data such as exhibits and annexures. Rules ensure that any new contract templates go through an approval process before becoming available for contract creation.

3. Automating Contract Authoring

Achieve faster speed to market and significantly improve governance through intelligent contract authoring. An extensive rules engine enables the dynamic creation of contracts from templates and contract clauses. Contract content is assembled automatically using any criteria associated with the contract, such as region, products, services, or price terms. The platform’s rules-based authoring capabilities greatly improve the scalability and agility of contracting operations while also enforcing appropriate process controls.

4. Commercial Terms Management

Leverage the flexibility of the Icertis platform to model commercial terms so you can better manage the increasing complexity of business contracts. A configurable data model enables the capture of products and services, price lists, prices and discounts, tiered discount terms, rebates and incentives, and other related terms. The flexible rules engine allows the user to easily assemble the most relevant commercial parameters in contract documents while also ensuring stakeholder visibility and approval policies. This helps drive compliance, streamline sales and procurement operations from a contracting standpoint, and increase revenue realization for all commercial contracts.

5. Third-Party Paper Contracting

Reduce the risk of managing third-party paper contracts at every stage—from intake, review, and negotiations to approvals, execution, and post-execution administration. Icertis' leading contract management software platform lets you easily bring third-party paper into the system to set up contracts and identify key terms and any resulting obligations. Drive approval workflows based on any identified exceptions and drag and drop standard language into the third-party paper from the clause library to include key missing terms.

An inefficient contract authoring process could cost your business money, and many companies say that the contract approval process causes deals to stall. The Icertis contract management solution offers a highly customizable, feature-rich system that can be scaled to meet your company's needs.

Steps to Contract Authoring

Successful contract creation often involves a collaborative approach to negotiation, using pre-approved templates and clauses, and a streamlined review process. To facilitate achieving those objectives, a contract management platform can help enforce clause standardization, facilitate redlining and version control, and speed up the review and approval process.

1. Negotiation and Collaboration: 

This process involves discussions between involved parties to reach a mutually agreeable set of terms and conditions. Contract authoring software can facilitate this by enabling version control and streamlined communication.

2. Drafting the Agreement: 

This is where the agreed-upon terms are translated into a formal legal document. Contract management software can offer pre-approved templates and clause libraries to ensure consistency and efficiency.

3. Review and Approval:

Once drafted, the contract is reviewed by legal teams and other stakeholders. Contract management systems can automate workflows and notifications to expedite approvals.

To learn more about the rest of the contract lifecycle management process, check out this article.

What is Contract Authoring Software?

In the past, contract managers often used a manual process and kept all of their contract documents in physical file cabinets and maintained lists or spreadsheets of an entity's different agreements, with a few key terms and dates noted. Today, contract authoring software makes the process of creating, negotiating, and managing contracts faster and easier while mitigating risk. Businesses in all industries use contract authoring software to help reduce the time it takes to prepare documents. Secure contract management software solutions give companies an audit trail for contract documents while keeping data safe in its secure cloud storage facilities.

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