Contract Management Vs. Contract Automation: What is the Difference

While they may appear to be the same and produce similar results, the terms, the contract management, and the automation of contracts both refer to different aspects in the process of contracting.

Understanding the difference between these two types of technology and their role, you’ll be able to find the most effective legal technology solution for your company. To better understand the distinct differences in contract management and automation, it is essential to first dissect the whole contract’s lifecycle and then look at the different problems.

The Contract Lifecycle

To appreciate the difference between the two processes, automation and contract management, it is helpful to examine the complete duration of the contract.


The majority of people create contracts using older software such as Microsoft Word. Teams will often come across an earlier Word document, copy and paste the information, and then alter the info when necessary. It’s a lengthy process, especially if an individual need to draft multiple contracts. However, people have a greater chance of error when manually inserting information into the document. To avoid such errors, it is recommended to adopt modern CLM software and is your ultimate choice when looking for a reliable CLM software


Contracts aren’t just for legal teams. They can be a part of an impact several areas of the enterprise, including procurement, sales, finance and compliance, human resources, talent, and so on. Collaboration in person can be complex as remote working has become to become commonplace. Communication platforms Slack help solve this issue; however, they still carry the danger of creating lengthy discussions in which crucial information gets lost in the number of messages.


It is the same regarding discussions with the counterparty, which require redlining the document, negotiations are inevitable. Rarely will a contract be signed in the form of dotted lines without making some modifications or alterations unless the document is not rudimentary. When traditional negotiation methods involve email back and forth and a small audit trail of editing, it can be challenging to keep track of the contract and track the different revisions.


In the case of negotiating contracts, wet signatures are preferred. Still, there’s seen a surge in digital platforms that work with eSignature software, allowing an eSigning service that is mobile-friendly and flexible across every device. This technology significantly impacts the people who sign many contracts, making them more efficient and avoiding the time and effort in printing, signing, and rescanning documents.


Post-signature is the term used to describe the storage and administration of the contract. Most contracts signed by parties are kept as copies in shared drives, on personal desktops, or, even more surprisingly, hard copies hidden away in the back of the filing cabinet. This makes it hard to track vital details, like important dates and the two parties’ terms. This also creates a lot of due diligence as companies approach a round of funding.


The signature isn’t the finalization to the entire contracting procedure; instead, a myriad of deadlines and obligations will be set for the parties involved. Teams need an effective system to keep track of the progress of contracts through the post-signature phase. A flawed system can lead to deadlines not being met, which results in automatic renewals and costly costs for the company.


What is Contract Automation?

Contrarily the contract automation process is a modular system with proper inputs and outputs focused on optimizing each step in the contract’s lifecycle. It can improve visibility and simultaneously cutting down on turnaround time.


Where Can Contract Automation Software Excel?

  • Speed: In general, the contract automation processes eliminates the manual component of contract processing without compromising accuracy, thus dramatically reducing turnaround time for contracts.
  • Tamper-proofing: Teams can restrict access to contracts and see who has made the changes and when.
  • Collaboration: collaboration with external stakeholders’ approvals can be sought from multiple stakeholders simultaneously or in parallel through electronic signatures.
  • Interoperability: Through integration into other enterprise software such as ERP, CRM, and ERP, etc. CLM software allows teams to take advantage of new technologies without the hassle of disrupting their existing routine.

What Is the Contract Management?

Contract management typically addresses the whole lifecycle of contracts from start to finish. Suppose you’re in search of contract management software, you’re searching for a company that can assist in managing the creation of contracts, negotiations including signing, storage, and much more.

Contract management software allows teams to manage the whole process, including the pre-and post-signature. Legal teams typically spend money on contract management after the volume of contracts becomes too difficult to manage in Word and on shared drives. A poorly managed contract process could harm the company, considering that contracts control 80 percent of revenue from B2B.

What Are the Advantages of the Workflow of a Contract Management System?

  • Scalable. Five sales agreements per month may be feasible, but it quickly becomes a significant issue when that number grows tenfold. Customers depend upon contract administration to boost the number of contracts without requiring additional personnel or budget.
  • In lieu of using Word, keeps track of updates, email chains, or snail mail. Teams can utilize contract management software to make changes instantly to a current document.
  • With a digital system in place, legal personnel won’t have to go through folders to locate an agreement that has been signed – they can access the contract with just a couple of clicks.
  • Compatible. It can be difficult to convince colleagues to alter their work routine, and use new software can be difficult. Fortunately, many contract management software is compatible with other systems commonly used to help teams create an innovative way of work that fits into their existing routines.

Final Words

In the final analysis, contract management and automation are just terms whose definitions differ between companies and teams, based on the complexity of work and the responsibilities. The most important thing is to pick a strategy that emphasizes functionality over nomenclature based on aspects of the contract lifecycle that need to be optimized.