Step-By-Step Enhancement of Salesforce Contract Management

To maintain long-term business relations with customers, suppliers and partners, in particular, a company should organize an efficient contract management process. As business relationship and legal regulations become more complex, it becomes hard to handle contracts with high precision without dedicated software.

Still, according to PayStream Advisors, the vast majority (75%) of companies don’t automate contract lifecycle management (CLM). However, the same report says that no or poor automation of contract management causes a bunch of troubles, including:

  • Inconsistency among contracts (in 64% of companies).
  • Contract duplication (39%)
  • Supply chain problems resulting from slowing business processes (35%)
  • High risks of erroneous contracts (31%)
  • Legal compliance burdens (24%)

CLM software solves these problems as it:

  • Speeds up contracts movement across their lifecycle.
  • Supports team collaboration on them.
  • Brings more visibility into the changes in contract statuses.

To do this, a CLM tool should allow for internal authoring and collaboration, external negotiation, legal review, e-signing, as well as contract storage and tracking.

Not designed as a CLM system, Salesforce still provides a basic contract management module with the Sales Cloud license. Overall, the platform is used to solve three mentioned problems. Below, we test its capabilities around the contract lifecycle – request and drafting, internal approval, negotiation and signing, execution, compliance, and renewal – and share our best practices.

Step 1. Contract request and drafting
A sales rep requests a new contract from the legal department. Without automation, this can cause a lengthy and disorganized exchange of calls and emails between the sales and legal teams. An efficient solution to the problem is to let sales reps easily access and configure the latest contract templates approved by the legal team and automate the flow of contracts that do not need legal review. The legal team, in their turn, will be able to focus on non-standard agreements that require negotiation.

Salesforce Contract Management module, aka Contracts, is available in Sales Cloud OOTB and allows sales reps to create contracts without templates by filling in necessary fields. A Salesforce contract takes the form of an object, not a document. So a sales rep rather creates a detailed request to the legal team (contract object) than a contract draft per se (contract document). Your processes may require creating of a contract document already at this step. Then sales reps or attorneys have to use Salesforce document management tools as well. For more information on them, check out our recent article.

Our Salesforce consulting practice shows that some tweaks can improve contract requesting and drafting in Salesforce.

  • Tip 1:- Provide sales reps with a contract builder to speed up contract document generation and minimize the risk of errors and inconsistencies. Drafting a contract will take just a few clicks with the templates approved by your legal team, automatic filling of account information and intuitive configuration of contract parameters.
  • Tip 2:- Use custom workflows to initiate contract drafting upon winning an opportunity and automate contract sending for internal approval.
  • Tip 3:- Let sales reps browse for and compare contract versions to simplify drafting. Some necessary tweaks can enable Salesforce to show changes in the preview of the contract later version.

Step 2. Internal approval
Internal contract review and approval should be both quick and precise – which is hard to achieve. In practice this means that, while critical contracts get more legal attention, standard ones should follow the shortest path not to affect customer experience with delays.

Salesforce Contracts allows tracking contract approval status, as well as keeping the history of changes (date, time, maker and the nature of the change). Also, users can exchange quick messages in the Сhatter feed to clarify details.

  • Tip 4:- OOTB Salesforce Contract objects don’t have a Content section. This means users can’t attach documents to or associate them with contract objects. This can break a smooth contract flow. To solve this problem, consider using Salesforce custom objects to show related content on the Contract screen.
  • Tip 5:- To make the review process transparent, enable document redlining tools, version comparisons and in-document comments. Also, consider extending the history of document changes to track edits done by different users.
  • Tip 6:- Create custom Salesforce workflows to automate the movement of contract documents from one approval stage to another. Use different workflows for different contract types to minimize the approval time of low-risk contracts.

Step 3. External approval
As OOTB Salesforce Contracts are objects, after approval, sales people have to send related contract documents to accounts themselves. They can either upload new files from their computers or use Salesforce documents, CRM Content or Files if the contract is stored in the CRM. To send the doc for signing, sales reps can go to Chatter, Contacts or Opportunities and then fill in a form. You can also use workflows to notify a sales rep about an approved contract status and set automatic emails to remind the customer to sign the document.

  • Tip 7:- Integrate Salesforce with electronic signing tools, like EchoSign or DocuSign, to make external approval quick for the customer and automatically deliver signed contracts to your sales team.

Step 4. Contract execution
A company needs a centralized repository to store and monitor the state of enforced contracts. Contract objects can be easily found in Salesforce by clicking the Contracts tab or associating a contract with an account.

  • Tip 8:- Bringing related content to the Contract object (Tip 4) will also make working with multiple long-term customers more convenient. This way, users will be able to quickly access signed contract documents, both current and archived ones, to clarify needed details.
  • Tip 9:- Create a dedicated folder for contract documents to store them in an organized way. This way, legal team will instantly find them if a customer complains.

Step 5. Tracking compliance
Contracts seal mutual obligations: yours – to deliver services and goods and the customer’s – to pay in time. As an enhancement (Tip 10) at this step, consider Salesforce integration with the ERP and accounting systems to always be alert to any upcoming (or missed) deadlines and payments. Salesforce can be configured to allow searching in the document body. This feature makes it easier for the legal team to quickly check contract compliance with changing regulations and standards.

Step 6. Contract renewal
Salesforce Contract allows using workflow alerts to notify sales reps up about upcoming contract renewals. Such alerts won’t let attorneys and sales reps miss a contract expire by accident or run a last-minute contract renewal race.

  • Tip 10:- You can create custom Salesforce workflows to auto-renew certain contracts in line with the company policies, as well as to start new cycles of amendment and approval for the contracts that require changes.
  • Tip 11:- Also, consider using Salesforce analytical and reporting capabilities to make contract performance and lifecycle processes transparent (for example, to get reports on contracts by value, expiry, or legal queue). Custom dashboards will deliver insights to different groups of users (legal, sales, and financials).

Salesforce or CLM for contract management?
As Salesforce is not a CLM platform, it obviously has limited contract management capabilities. But zooming out, apart from the Contracts tab alone, a company can customize the platform to cover many day-to-day needs in this regard. As an alternative to Salesforce consulting and development, a company can take a look at Salesforce contract management apps on AppExchange or integrate their CRM with a full-fledged CLM system.