The Harmful Effects of Manual Contracting on Your Business and Possible Remedies.

Contracts are at the center of all business relationships whether one is making a sale, procuring a supplier, procuring an employee, or dealing with a distributor. And yet, in spite of their significance, the manner in which many companies deal with contracts has changed very little over the past 20 years.

If your teams are just continually emailing contracts, editing Word documents by hand, and saving them to individual folders or printed binders, not only is this antiquated, but you are literally harming your business.

In this article, we will be discussing the root issues with manual contract processes, with real-world examples. Primarily, we will explain how you can bring about improvement for the good with the right tools and automation.

The Challenge of Manual Contracting

Let us begin with a simple truth: manual contracting cannot scale. What perhaps worked when working in a smaller business environment readily becomes a bottleneck when the company expands.

Here are the most widespread issues we face and they are worse than you can even imagine:

1. It Postpones Transactions and Revenues

When contracts are left in inboxes and linger for days, and weeks, before they are read, signed, and ratified, that's not a delay, that's really money just sitting around.

Real-life example:

Your sales team lands a giant deal. Everybody is thrilled. Then the contract languishes on Legal's desk for two weeks because Legal is behind schedule, and the CFO must sign off personally. The customer becomes disinterested, makes some adjustments, and then vanishes.

Delay cost: One order of ₹40 lakhs was lost because of bureaucratic inefficiencies.

Modified solution

Contract templates must be utilized alongside intake forms. The salesperson fills out a brief questionnaire, and the system produces a deal-ready draft in seconds. Integrated workflows enable smooth approval and signing.

2. No Clear Version Control = Risky Mistakes

Without a single location for contract managing, it is all too simple for multiple versions to circulate concurrently. One individual is revising a stale draft, while another makes changes that are never noticed. Consequently, the incorrect version will be implemented.

Real-life situation:

An operations manager signs off on a vendor agreement without the most recent indemnity clause Legal added last week. Six months later, there is a breakdown in the service, and the firm realizes it has no cover.

Consequence: Legal risk and potential financial loss because the right version did not obtain a signature.

Solution:

A modern CLM solution ensures there is only ever one version of the live contract. All revisions are traceable. Redlines, comments, approvals, all in one location. No more rummaging through email threads or trying to figure out which file is most recent.

3. Overdue Deadlines, Renewals, and Responsibilities

It should be noted that most teams do not have the time and mental space to keep track of renewal dates, notice periods, or payment milestones of all contracts manually. When such information is missed, it can have financially negative effects.

Real-life example:

Your finance department overlooks the notice period in a marketing vendor agreement. It automatically extends for another year with a 10% increase. You are caught off guard, although you had intended to change agencies.

Impact: Wasteful expenditure due to insufficient visibility.

Rethink:

With contract automation, the requirements and the critical dates are imported automatically. You can remind, assign owners, and track it all on the same dashboard. No surprises anymore.

4. Overburdened Legal Teams

Legal staff are trapped in a cycle of low-value, repetitive labor: reading generic NDAs, fixing formatting, or verifying if a clause is up to date.

Real-life situation

The attorneys spend hours of each week poring over vendor contracts for the purchasing department 90% of which are copies from the same template. They are exhausted and behind on strategic, high-level negotiations.

Burnout warning sign: Highly competent legal professionals doing tasks that are automatable.

Solution:

AI-powered contract review can automatically detect risk clauses, suggest optimal wording, and even automatically approve low-risk contracts. 

5. Compliance Risks Multiply

Regulated sectors are only too familiar with the cost incurred in the use of the incorrect clause or antiquated language. But under manual contracting, it is all too common that crews will simply copy-paste outdated contracts without legal review.

Real-life scenario:

A regional manager sends out a customer agreement with a template that hasn't been updated to meet local data protection regulations. Several months later, a dispute crops up, and the firm ends up being non-compliant.

Exposure: Regulator penalties, reputational damage, and loss of customer trust.

Solution:

Having a central library of core clauses means everyone can only access the very latest, legally-compliant ones. Region-specific templates, combined with the dynamic selection of clauses, provides compliance by default, not by chance.

How do you correct the anomaly? 

The good news is that they can all be resolved, typically sooner than you would expect. The answer is Contract Lifecycle Management (CLM) software, which streamlines and automates all stages of the contracting process.

Here's how a modern AI-driven CLM tool can help with your workflow:

Step 1: Have Contracts Ready in Minutes, Not Hours.

    • Create standardized and flexible templates for standard contracts.

    • Intake forms initiate auto-population of contracts from pre-negotiated terms.

    • Party names, terms, and custom fields are automatically filled.

Example: A salesperson enters deal information and gets an immediate draftable-to-send MSA with no legal hurdles.

Step 2: Engage in live redlining and collaboration.

    • Redlining happens within the system.

    • Role-based access ensures that only the right people can edit or comment.

    • Artificial intelligence points out discrepancies from your standard terms and suggests changes.

Example: The platform states the vendor's liability limit is not present and recommends a default of 10 lakhs.

Step 3: Automatic Signatures and Approvals

    • Custom workflows direct contracts to the finance, legal, or management departments depending on the value or the nature of the transaction.

    • Reminders and alerts keep everyone aware.

    • The integration of eSignatures and eStamps facilitates a seamless execution process.

Example: Once approved by Legal, the agreement is e-mailed for electronic signature to both parties, bypassing follow-up.

Step 4: Manage Deadlines and Deliverables.

    • All contracts are one place and can be searched.

    • Key activities and deadlines are tracked using computerized reminders.

    • Renewal notices prevent accidental extensions or terminations.

Example: The system alerts the customer success team three days prior to a client's onboarding milestone due date.

Step 5: Tie In with Your Current Tools.

    • Integrate your CLM with CRM, ERP, finance, and HR systems.

    • Trigger workflows on contract events (e.g., sending invoices or onboarding triggers).

    • Eliminate silos across teams.

Example: Auto-signature on the contract changes the CRM stage and alerts finance to bill.

What is the real impact?

Organizations that transitioned from manual contracting to automation would generally be able to do:

Conclusion:

Effective deal closures and renewals In short, Manual contracting may sound convenient  perhaps even possible  but it keeps your business's progress from moving forward in ways you may not even know. From delayed payments to compliance problems, it all adds up in a hurry. The solution is not more lawyer review, more revisions, or more email. It's intelligent systems, automation, and a contracting process that serves you, not sabotages you. In the business world today, it is not only what is in the contracts, but how one manages the contracts that matters. 

Ready to Leave Hand Processes Behind? If you are still working with email threads and spreadsheets to track contracts, it is time to think about upgrading. 

Find out how Contractzy can help you: Create contracts in minutes Redline smarter with AI Be audit-ready and deadline-proof Close deals quicker, and lower legal risk.

Schedule a demo today.