In the realm of business, contracts are the bedrock of trust and collaboration. Yet, many organizations find themselves entangled in toxic contract management practices that hinder efficiency and growth. Recognizing these detrimental patterns is the first step toward fostering healthier contractual relationships.​

1. The Burden of Manual Processes

Relying heavily on manual methods—like drafting contracts in word processors and managing versions via email—can lead to significant delays and errors. According to Oneflow’s research, 66% of businesses still use word processors for contract creation, and 65.67% utilize email for contract reviews. This approach not only slows down the process but also increases the risk of miscommunication and mistakes.​Solution: Implementing automated contract management systems can streamline workflows, reduce errors, and accelerate the contracting process.​

2. Fragmented Systems and Data Silos

Managing contracts across multiple platforms often results in fragmented systems and data silos. Oneflow’s findings indicate that 70.67% of businesses use two to three different tools for contract management, leading to inefficiencies and confusion. This fragmentation hampers visibility and accountability, making it challenging to track contract statuses and responsibilities.​Solution: Adopting an integrated contract management platform can centralize processes, enhance collaboration, and provide real-time insights into contract lifecycles.​

Read also: What is contract management? A complete guide

3. Compliance Challenges and Security Risks

Storing contracts on local drives and sharing them via unsecured channels poses significant compliance and security risks. The same study reveals that 17% of businesses store finalized contracts on local drives, and a substantial portion use email for contract reviews, raising concerns about GDPR compliance and data privacy.​

Solution: Utilizing secure, cloud-based contract management solutions ensures better compliance with data protection regulations and safeguards sensitive information.​

Below is a Oneflow tip demonstrating how to mitigate these risks.

4. Lack of Visibility and Accountability

Without a centralized system, tracking changes, approvals, and responsibilities becomes cumbersome. This lack of transparency can lead to missed deadlines, duplicated efforts, and strained relationships among stakeholders.​Solution: Implementing a system that offers real-time tracking and audit trails can enhance accountability and ensure all parties are aligned throughout the contract lifecycle.​

4. Lack of Visibility and Accountability

Without a centralized system, tracking changes, approvals, and responsibilities becomes cumbersome. This lack of transparency can lead to missed deadlines, duplicated efforts, and strained relationships among stakeholders.​Solution: Implementing a system that offers real-time tracking and audit trails can enhance accountability and ensure all parties are aligned throughout the contract lifecycle.​

5. Resistance to Change and Innovation

Clinging to outdated contract management practices can stifle innovation and adaptability. Businesses that resist adopting modern solutions may find themselves at a competitive disadvantage, unable to respond swiftly to market changes or client needs.​Solution: Embracing digital transformation in contract management can lead to increased agility, improved client satisfaction, and a stronger market position.​

Identifying and addressing toxic contract management practices is crucial for organizational success. By recognizing the signs—such as reliance on manual processes, fragmented systems, compliance risks, lack of visibility, and resistance to change—businesses can take proactive steps toward healthier, more efficient contract management. Embracing integrated, automated solutions not only mitigates these issues but also paves the way for enhanced collaboration, compliance, and growth.​For a deeper understanding of the current state of contract management and strategies for improvement, refer to Oneflow’s comprehensive report: The State of Contract Management Pains.​