Contract Automation Checklist: 10 Essential Steps

Want to save time, cut costs, and reduce risks in managing contracts? Automating your contract processes can reduce cycle times by up to 80%, lower management costs by 60%, and significantly improve compliance. Here’s a quick overview of the 10 steps to get started:

1. Review Current Processes: Map workflows, identify bottlenecks, and set clear metrics.
2. Move Contracts to Cloud Storage: Centralize and secure documents for easy access.
3. Create Standardized Templates: Reduce errors and speed up approvals by 50%.
4. Set Up Digital Forms: Streamline data collection with online, auto-populating forms.
5. Design Approval Workflows: Automate routing and escalation to avoid delays.
6. Add E-Signatures: Shrink signing times from days to hours with secure tools.
7. Configure Alerts: Stay on top of deadlines with smart notifications.
8. Track Performance: Monitor key metrics to improve efficiency and compliance.
9. Integrate Business Tools: Connect CLM software with CRM, ERP, and other systems.
10. Review and Update Regularly: Schedule audits to keep processes optimized.

Why it matters: Manual processes waste time and money – up to 11% of a contract’s value. Automation fixes this, helping you focus on what matters most. Ready to dive in? Let’s break it down.

Step 1: Review Current Contract Processes

Before diving into automation, take a close look at your current contract processes. Did you know that a simple contract review can cost up to $6,900?[↗] This highlights why assessing your process thoroughly is so important.

Map Current Workflows

Start by documenting every step of your contract lifecycle. Martin Brenig‐Jones, Director at Catalyst Consulting, emphasizes the value of process mapping:
“Process mapping assists in identifying where the value lies. Typically only 10-15% of the steps in a process add value, and usually these steps represent as little as 1% of the total process time (taking into account delays and the time where the product or service is static)” ^[↗].

Here are the key areas to focus on:

• Contract creation and templates
• Review and approval sequences
• Negotiation procedures
• Signature collection
• Storage and retrieval systems
• Compliance checking

Research shows that 40% of organizations are unclear about who is responsible for different parts of the contract process ^[↗]. By creating detailed process maps, you can pinpoint bottlenecks, redundancies, and areas that need improvement.

Set Clear Metrics

Once workflows are mapped, establish baseline metrics to measure progress. Use these metrics to track performance:

The numbers don’t lie: 90% of contracting professionals struggle to locate specific documents ^[↗], and nearly half (49%) don’t have a defined process for storing contracts after execution ^[↗]. Without clear metrics and an organized system, automation won’t solve these problems. 

Once your workflows are mapped and metrics are in place, the next step is moving your contracts into cloud storage to streamline efficiency.

Step 2: Move Contracts to Cloud Storage

Once you’ve outlined clear process maps and set measurable metrics, the next step is moving your contracts to a secure cloud storage platform. Why? Because disorganized storage is a major pain point – 58% of U.S. office workers report difficulty finding files, and 80% have had to recreate lost documents ^[↗]. Cloud storage not only solves these frustrations but also offers strong security and easy accessibility.

Why Cloud Storage Works

To protect sensitive contracts, a secure cloud platform needs to meet specific criteria. Here’s what to look for:

“Think about how many contracts sit on someone’s laptop or in multiple databases and then think about the value of contract management. The importance of simply being able to locate all of the company’s contracts and relevant amendments in one place without significant effort cannot be minimized” ^[↗].

To fully leverage these benefits, it’s essential to organize your cloud storage with a well-thought-out file structure. This ensures quick access and better control over your digital contracts.

Organizing Your Cloud Storage

A secure platform is just the foundation. How you structure your files plays a huge role in maintaining efficiency and compliance. Here’s how to get started:

• Set Up Logical Categories
  Begin with broad categories like department, client, or contract type. Then, add subcategories based on contract status (active/archived) or year.
• Use Consistent Naming Conventions
  Include details like a contract ID, company name, contract type, effective date, and status (draft/final). This makes searching and sorting a breeze.
• Leverage Smart Tags
  Tags can add another layer of organization. Use them to highlight contract value, renewal dates, risk levels, department ownership, or key terms.

Step 3: Create Contract Templates

Now that your contracts are securely stored, the next step is to standardize templates. This not only ensures consistency but also minimizes risks. Businesses using contract lifecycle management (CLM) tools with standardized templates report a 50% reduction in contract approval time ^[↗]. On the flip side, poor contract management can cost companies more than 9% of their annual revenue ^[↗].

Build a Centralized Template Collection

Gather all your contract templates into a single, organized repository. This makes it easier to manage and update them. Here’s a breakdown of key contract types and their benefits:

To make your templates as effective as possible, consider these steps:

• Audit Existing Templates
  Review all templates across departments at the same time. 
• Simplify the Language
  Strip out unnecessary legal jargon while keeping essential terms intact. This makes contracts easier for non-legal teams to understand without compromising compliance.

Tailor Templates with Industry-Specific Terms

Once your templates are centralized, refine them with terms that address the needs of your specific industry. For example, sectors like hospitality or renewable energy may require:

• Performance Metrics: Clear service-level agreements (SLAs) and key performance indicators (KPIs).
• Regulatory Requirements: Compliance terms tailored to industry regulations.
• Risk Management: Provisions for liability and insurance coverage.
• Term Variations: Adjustments for geographic or jurisdictional differences.

Keep Templates Updated

To ensure your templates remain effective and compliant:

• Review templates every quarter.
• Track how templates are being used.
• Monitor requests for deviations or changes.
• Update terms as regulations evolve.
• Maintain a version history for transparency.

Step 4: Set Up Digital Forms

Once your templates are ready, the next step is to digitize contract requests using online forms. Digital forms are a game-changer – they make data collection faster, reduce manual input, and help cut down on errors.

Build Simple Forms

The key to creating effective digital forms lies in balancing ease of use with accurate data collection. Here’s a breakdown of features that can make your forms more efficient:

For added security and compliance, consider these measures:

• Use strong encryption to protect sensitive data.
• Include consent options for data collection.
• Add verification steps to control submissions.
• Implement inline validation to catch errors as users fill out forms.
• Enable auto-save to prevent accidental data loss.

Once your forms are set up, the next step is to connect them to your templates for seamless contract creation.

Connect to Templates

Integrating your digital forms with templates allows you to auto-populate fields, saving time and ensuring consistency. Here are the essential steps:

• Map form fields to the placeholders in your templates.
• Route form submissions based on the responses provided.
• Verify that all data aligns with the template requirements.
• Notify relevant parties when a form is submitted.
• Track template versions for each submission to maintain clarity.

Steps to Get Started:

• Begin with the contract types that are used most often.
• Test the forms with real users to ensure they’re intuitive.
• Monitor completion rates to identify any bottlenecks.
• Gather feedback from users and make improvements.
• Regularly update your forms to keep them relevant and user-friendly.

Step 5: Create Approval Workflows

Once your forms are digitized, the next step is simplifying your contract management process with well-designed approval workflows. Why is this important? Poor contract management can cost companies up to 9% of their annual revenue. And according to a report by World Commerce and Contracting, 40% of organizations lack clear contract responsibilities ^[↗].

Define Approvers

Start by creating an approval matrix based on the value of the contract. Here’s an example:

To make this process even clearer, use a RACI matrix (Responsible, Accountable, Consulted, Informed) to assign roles for every contract type. Once you’ve mapped out who approves what, set clear rules to guide how contracts are routed through the system.

Establish Approval Rules

Approval rules are the backbone of a smooth workflow. They ensure compliance, save time, and reduce errors. Here are some key rules to consider:

• Value-Based Routing: Automatically route contracts based on their value. 
• Department-Specific Approvals: Route contracts to specific department heads depending on the type or content of the contract. 
• Escalation Protocols: Set up an automatic escalation process for approvals that get delayed, ensuring nothing falls through the cracks.

Key Workflow Features

To further streamline approvals, consider incorporating these essential features into your workflow:

• Automated email reminders to nudge reviewers about pending approvals
• Real-time dashboards that show the status of contracts at a glance
• Parallel approval paths for urgent, time-sensitive contracts
• Exception handling for unique or special cases
• Audit trails that document every step for compliance

Step 6: Add E-Signatures

Switching to electronic signatures isn’t just a time-saver – it’s a game-changer. They can shrink signing cycles from 7 days to just 2 hours, slashing delays by 96% ^[↗]. This step cements your path toward a fully automated and compliant contract lifecycle.

Choose the Right E-Signature Software

When selecting e-signature software, make sure it checks these boxes:

Security and Compliance

• Adheres to the U.S. ESIGN Act
• Offers strong encryption to protect sensitive data
• Includes two-factor authentication (2FA)
• Provides detailed audit trails for accountability

Must-Have Features

• Mobile-friendly signing options
• Tools for tracking and analytics
• Integration with your existing business tools
• Custom branding to align with your company’s identity
• Secure document storage

Set Up the Signing Workflow

Once you’ve got a secure, compliant e-signature solution, create a streamlined signing process to speed things up. Here’s how:

Sequential Signing (when signers need to follow a specific order):

• Establish a clear hierarchy of signers.
• Automate notifications and reminders for pending signatures.
• Use audit trails to track progress and completion.

Parallel Signing (when all parties can sign simultaneously):

• Enable multiple signers to act at the same time.
• Set up automatic notifications to keep everyone in the loop.
• Monitor the signing status in real time.

Forrester Research highlights that using electronic signatures can save businesses up to $20 per document while reducing signature times by 80% ^[↗].

Keep Security Front and Center

Protecting the integrity of your contracts is critical. Follow these practices for peace of mind:

• Confirm signer identities via email.
• Store completed documents in encrypted cloud storage.
• Regularly update your e-signature platform.
• Maintain detailed audit trails for every transaction.

It’s worth noting: U.S. businesses waste around $8 billion annually managing paper documents, according to Corp! Magazine ^[↗]. By embracing e-signatures, you’re not just cutting down on time – you’re also slashing operational costs while staying secure and compliant.

Step 7: Configure Alerts

Missing deadlines can cost companies millions and lead to compliance headaches. Surprisingly, only 44% of businesses have implemented systems to alert them about deadlines ^[↗]. Setting up a reliable notification system can help you stay ahead of the curve.

Track Important Dates

A good tracking system is essential for staying organized and avoiding missed deadlines. Here are some key dates you should always monitor:

• Renewal deadlines
• Payment milestones
• Compliance requirements
• Performance reviews
• Termination notices
• Audit schedules

How to Stay on Top of Dates:

• Set reminders at multiple intervals, like 90, 60, and 30 days before the deadline.
• Include clear action steps in each alert.
• Assign responsibility for each milestone to specific team members.
• Keep a record of completed milestone tasks for accountability.

Once you’ve identified the critical dates, the next step is setting up alerts to make sure nothing falls through the cracks.

Create Alert Rules

Too many notifications can overwhelm teams, leading to “alert fatigue.” In fact, 56% of large corporations deal with over 1,000 security alerts daily ^[↗], which increases the risk of missing truly important ones. A well-thought-out alert system can help you avoid this pitfall.

Organizing Alerts by Priority:

Non-compliance can be a costly mistake, with potential losses reaching up to $4,005,116 ^[↗]. To avoid this, follow these tips for effective notifications:

Tips for Managing Notifications:

• Tailor alerts to match team members’ roles and responsibilities.
• Group related notifications to reduce clutter.
• Use concise, actionable language in your alert messages.
• Set up escalation paths for unresolved alerts.
• Include key contract details in the notifications for quick reference.

By carefully managing alerts, you can ensure your team is always one step ahead.

Step 8: Track Performance

Keeping an eye on performance is essential to getting the most out of your contracts.

Choose Key Metrics

Zero in on metrics that not only highlight areas for improvement but also ensure compliance:

Efficiency Metrics:

• Track how long it takes to complete the contract lifecycle and approval processes.
• Measure the cost per transaction.

Effectiveness Metrics:

• Assess the revenue impact and overall contract value.
• Evaluate the benefits gained from negotiations.

Once you’ve set clear metrics, detailed reporting helps turn raw data into actionable insights.

Build Status Reports

Tips for Better Reporting:

• Generate real-time reports tailored to your industry.
• Keep an eye on overall performance and key contract milestones.
• Set up custom alerts to flag potential risks early.
• Use visual dashboards to provide stakeholders with quick and clear insights.

Organizations with strong contract compliance systems report 55% fewer disputes ^[↗].

Assign specific individuals or teams to oversee KPI tracking and reporting. Consistent monitoring not only drives immediate improvements but also enhances the benefits of automation over time.

Step 9: Connect Business Tools

Integrating your Contract Lifecycle Management (CLM) software with essential business systems can streamline operations and eliminate inefficiencies. By connecting these systems, you create a unified data ecosystem that supports seamless workflows.

Link Major Systems

CRM Integration
Did you know that 91% of CRM data is incomplete ^[↗]? Linking your CRM to your CLM system can help address this issue by enabling:

• Auto-population of customer details into contracts
• Real-time updates on deal progress
• Synchronization of contact records

Financial Systems
Integrating accounting and ERP platforms ensures financial data stays accurate and up-to-date. This allows you to:

• Update contract values in real time
• Track payment schedules effortlessly
• Adjust budget allocations as needed

Use API Connections

APIs are the foundation of effective system integration. As Josh Walker, a Forrester Research Analyst, puts it: “Building software without APIs is like building a house with no doors” ^[↗].

Best Practices for API Implementation:

• Document existing processes before starting integration
• Test and validate new workflows with key stakeholders
• Regularly monitor data synchronization to ensure accuracy

Here’s an example of how a consulting company used APIs to enhance their contract workflow:

1. Trigger AI review when a contract review is requested
2. Create a CLM ticket automatically
3. Populate CRM data into the system
4. Notify the legal team for review
5. Execute the contract and extract key details using AI
6. Share the finalized information across team platforms

To keep everything running smoothly, schedule quarterly reviews to evaluate the performance of your integrations and resolve any new challenges. These efforts will ensure your tools work harmoniously, paving the way for further automation and efficiency in your CLM processes.

Step 10: Review and Update

Once you’ve automated your contract processes, it’s crucial to keep things running smoothly by regularly reviewing and updating the system. This isn’t just a good habit – it can help avoid the 9% annual revenue loss that stems from poor contract management ^[30].

Schedule Reviews

Plan for scheduled reviews to stay ahead. For simpler systems, annual reviews might suffice, but for more complex setups, quarterly assessments are a better bet.

Key Process Metrics to Monitor

• Contract completion rates: How many contracts are finalized.
• Average processing times: How quickly contracts move through the system.
• Workflow bottlenecks: Identifying areas where processes slow down.
• Department performance: Evaluating how well each team contributes.

Financial Impact Metrics

After crunching the numbers, don’t stop there. Dig deeper by gathering qualitative feedback from your team.

Collect Team Input

Metrics are valuable, but they only tell part of the story. To truly fine-tune your system, you’ll need insights straight from the people using it every day.

How to Engage Stakeholders:

• Cross-functional Reviews: Get input from key departments like legal, procurement, sales, and finance.
• Performance Analysis: Enable legal and commercial teams to identify deal-closing criteria and align contract terms with revenue goals.
• Risk Assessment: Highlight potential pitfalls like auto-renewals to avoid costly, unnecessary contract extensions and improve decision-making.

Practical Tips for Implementation

• Schedule quarterly system audits.
• Document feedback systematically for better tracking.
• Monitor issue resolution to ensure problems are addressed.
• Measure improvements by comparing them to your initial benchmarks.

Conclusion

Contract automation has reshaped how agreements are managed, offering dramatic improvements in efficiency and cost savings. For instance, it can cut contract management expenses by 60% ^[↗] and speed up negotiation cycles by 50%, according to Goldman Sachs. Tools like automated e-signatures and standardized templates streamline processes, slashing contract execution times by as much as 80% ^[↗] and reducing approval times by 50% ^[↗]. These advancements also help businesses recover up to 9% of annual revenue that is often lost due to poor contract management practices ^[↗].

The numbers make a strong case for adopting contract automation, but achieving its full potential requires focusing on key success factors:

However, as Lucy Bassli, founder of InnoLaw Group, LLC, wisely points out:

“Automation without getting ready is a recipe for disaster…maybe they jumped a little too soon to technology because things weren’t quite settled and ready for automation” ^[↗].

This highlights the importance of preparation and adaptability. Contract automation is more than just adopting new tools – it’s about aligning processes and people to create a foundation for long-term success.

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