What does contract versioning mean?
Contract versioning is the process of the giving party writing a new agreement every time they change or renew a contract. It includes making a new document or editing an old one, keeping track of the changes, and storing the documents safely so that everyone can negotiate and sign the most up-to-date copy.
Most of the time, the following steps are needed to draft a contract:
- Write the contract (for a new deal, a partnership with a dealer, or an agreement with a vendor, for example).
- Talk about the details based on the first offer
- Set uprights and access controls
- Work with the people who make decisions on both sides to change the deal.
- To keep track of each version, use a regular way to name things, like a numbering system.
- Save all versions in one place so you can find them again later.
- Regularly audit and look over contracts.
In contract redlining and renewal talks, making new versions of the contract is critical. People who sign an old document might be legally bound to things they disagree with, or even worse, they might not be able to take legal action if they don’t meet certain conditions.
Synonyms
- Executing a contract
- Ratifying an agreement
- Affixing signatures
Problems with controlling contract documents
Many businesses find it hard to keep track of all the different types of sales, partnerships, and employment contracts because there are so many of them. It’s almost impossible to do without process automation.
Here are a few version control problems that businesses have to deal with:
Version control—it’s hard to keep track of the different versions of a document because small changes are easy to miss. This is very important when many people work on the exact text and occasionally make changes.
They control who can see what documents. Big companies with many employees and partners often have trouble keeping track of who can see what. It can be hard to track permissions when contracts are kept in multiple places, like in the cloud or natural filing cabinets.
Document retrieval: It can take a long time to find specific documents among thousands if the method for managing documents is poorly organized.
Security—Keeping private papers safe is always a worry (and a possible reason for not following the rules). This includes physical security (like keeping hard copies safe from people who shouldn’t have access) and digital security (like stopping cyberattacks).
Contract compliance: following company rules and regulations can be complex when hundreds of contracts are spread across many areas. Many businesses respond too late to non-compliance events, like a breach of contract, after the damage has already been done.
Collaboration—Working on papers together can be challenging, especially if team members are in different time zones or work from home. Even small changes can take days if the other side of the contract has more than one person who makes decisions.
Integration—Matching the document control system with other programs (like project management, budgeting, and CRM) can need much IT help. The whole process is thrown off if one piece of software doesn’t work with other pieces.
Training: It can be hard to ensure that all workers know how to correctly use the document control system, especially in bigger businesses.
Audit Trails: It is essential to keep track of who changed what parts of a document and when to be accountable and follow the rules. Since there is no audit trail, it is tough to tell who is responsible for a particular paper.
Why are versions essential for controlling contract documents?
Versioning contracts is vital to managing contracts because it ensures that everyone agrees and signs off on the same terms. Keeping everyone on the same page reduces confusion, helps people avoid making mistakes that cost a lot of money, and dramatically reduces the chance of a relationship getting damaged.
Standardized ways of naming documents
It is easy to find and keep track of papers when they are named in a structured way. There should be a unique ID number, the name of the document, a version number (e.g., v1, v2), the date the contract was made or changed, and any other important information for each version of the contract.
That way, everyone who signed the contract can keep the most recent version in mind while saving all of them.
Enforceability of Contracts
With everyone having their own lives, it’s hard for one person to always hold the other responsible. They can have a way to access the most recent version of their contract and use it during changes and checks to make sure they’re following the rules and disagreements.
A contract isn’t binding if the terms aren’t precise or if different copies of the contract seem to be at odds with each other for no apparent reason. Versioning contracts helps people avoid those problems by clarifying who is responsible for what and when each change was made.
Compliance with Regulations
Contracts must align with current laws and rules, and organizations must have a way to ensure this happens. Companies can quickly find the necessary papers and ensure everyone follows the proper steps if they have reasonable contract document control.
Version control also helps businesses follow privacy and data security rules (like HIPAA). Companies know their personal information is safe because they keep track of which papers can access it and only let authorized team members see it when needed.
Holding on to Records
After being signed, contracts don’t just go away. Disputes don’t always happen during the time of the deal. Sometimes, it could be years or even decades later. In this way, contract lifecycles last a lot longer than the time they are supposed to be carried out.
Version control makes it easy for groups to store and find old versions of documents. This keeps you from looking through hundreds of pages of papers if someone ever wants to claim the contract.
Keep track of Changes Marked in Red.
To redline, both sides will call, text, or email each other back and forth and make small changes to the contract here and there as they negotiate it. Each editor can’t be sure they’re working on the correct text if there aren’t updated and labeled versions. If someone on the team misses some of the talk, they might use the wrong version when they get to work.
Versioning contracts stops mistakes that cost a lot of money when documents are handled inconsistently. It also leaves a thorough audit record for everyone to see, so if necessary, they can review changes to the contract.
Transparency of documents
When everyone involved knows what’s in the contract, fewer expensive contract disagreements could happen, like when one party doesn’t follow through on their obligations because they don’t know what they are.
This naturally makes people less trusting of each other. Versioning in a contract lets all members work together and communicate with each other, giving everyone access to all of their papers at any time.
Best Practices for Versioning for Efficient Contract Management
Versioning is a small part of what’s going on. Several steps are needed to handle contracts, including making, editing, and organizing them.
Here are some best practices for versioning that businesses can use to speed up the process:
Using contract management software to automate tasks
If a company hasn’t already, it should first buy tools for managing contracts. Every tool for managing contracts has features like
Making documents and using templates
- Comparing different versions of contracts ·Tools for managing documents and working together
- Workflows for signature approval • Integration with other tools
Audit trails make it easy to find older versions
All parts of the hiring process are streamlined because it’s in the cloud, and it handles versioning without much help. Teams can work more quickly, avoid mistakes, and comply with contract management tools. Plus, team members don’t need to know much about technology to use it; they can log in and start working together immediately.
Levels of User Access
Companies should set up different levels of access for each user. For example, only certain employees should be able to delete papers or make changes to them. It’s easy to find the place where something went wrong if something does happen.
From the top, users can get to everything. Leaders of companies can set up user groups for their teams and give each person a unique set of responsibilities. Then, they can permit certain team members to edit each deal while others can just watch and give feedback.
Regular Looks at New Versions
The best way to keep up with contract changes is for everyone involved to review new versions daily. No one can work on a different version of the paper than the one reviewed.
Everyone can also make changes to their papers during these reviews, whether they want to add clauses or fix any problems that have come up during the contract lifecycle.
Backing up documents
Businesses don’t lose important data if their contract management system fails or something happens to their on-premises tools because they have backups. Every contract should be backed up in the cloud so businesses can get to them anytime. This is also helpful because any team member from either side can view it, even if they don’t have internet access.
History of Changes
When you use software for contracts or making documents, everything is time-stamped, so no one has to worry about marking their changes. This is very important when connecting to sales or project management tools to track how new deals are going.
Teams don’t have to ask each contributing person to keep up-to-date copies; they can just look at the document history. Users can quickly see the changes made by each member and the times they were made.
Trace of Audit
During versioning, teams use audit trails to find out who changed what, when they changed it, and why they changed it. In case of a dispute, it is helpful for legal and financial teams to be able to trace each contract and update it back to where it came from. Organizations can also follow data privacy rules better because they show who can access private data.
Repository for Contracts: A contract repository makes it easy to find contracts based on keywords, document types, and contract groups (like vendor agreements, sales deals, and partner channels). More security is added when all the papers are in one place.
A central database also makes it easy to find mistakes when comparing different copies of a contract. It’s easy to lose track of what must be changed and what must stay the same when versioning a contract. Teams can work faster and more accurately when they can get multiple papers from the same source and compare them.
