SaaS contract management: What it is, challenges, and how to do it right
SaaS contract management: What it is, challenges, and how to do it right
August 12, 20226 min
Author: Olga Asheychik
Senior Web Analytics Manager at PandaDoc
Reviewed by: Keith Rabkin
CEO of PandaDoc
Introduction
As a SaaS company, your contracts likely live in email threads and shared drives, which means your reps are editing MSA templates directly because they don’t know who else can touch them. Plus, legal is reviewing the same redline for the fourth time, and nobody can find the signed version of the agreement that closed in Q3.
This points to a SaaS contract management problem, and when you scale, it gets worse.
SaaS contract management is used in two ways: managing vendor contracts you buy (SaaS spend management), and managing contracts that you issue to customers. This article covers the latter: the contracts you send out, not the ones you buy.
On the seller side, SaaS contract management is the process of creating, negotiating, signing, tracking, and renewing the agreements a SaaS company issues to its customers. This includes master service agreements (MSAs), subscription agreements, order forms, and service-level agreements. Done well, it reduces deal cycle time, protects revenue, and keeps contract terms consistent across every customer relationship.
Key takeaways
- SaaS contract management involves keeping an administrative eye on all agreements with SaaS vendors.
- SaaS contract management helps your business optimize and automate tasks, scale faster, save more money, and improve customer experience.
- The right SaaS contract management tools will help secure your agreements while ensuring you make the best use of available features.
Common SaaS contract management challenges
Managing one SaaS contract is difficult, but proper oversight of multiple SaaS agreements is a complicated balancing act that many organizations let spiral out of control. Here’s why:
Contract sprawl and version control
Reps negotiate based on outdated templates, which means multiple “final” versions of the same MSA end up circulating. When it’s time to sign, no one can say with certainty which version reflects the actual agreed terms. This is unmanageable without a centralized system where you can find every template and redline.
Slow approval cycles
When legal, finance, and exec sign-offs happen over email, every approval means another delay, often stretching into a week or more. Sales acutely feels this when a stalled approval chain knocks a deal out of the period they were planning for.
Missed renewals and auto-renewal exposure
Without a proactive system to flag renewal windows, they close quietly. Sometimes this means being auto-renewed into pricing or terms that it meant to renegotiate, impacting customer relationships.
Inconsistent terms and compliance risk
Reps might make ad-hoc concessions during negotiations under pressure. Non-standard terms can multiply across dozens of reps, leading to substantial risk, especially regarding data protection and compliance.
Poor post-signature visibility
When contracts are signed, they often disappear into a shared drive and are rarely revisited, leading to undetected SLA breaches and missed obligations.
Key components of an effective SaaS contract management system
To manage your SaaS contracts effectively, the software you choose should include:
Centralized contract repository with full-text search
A centralized contract repository stores every executed agreement in one searchable place.
Template library with pre-approved clause sets
Starting negotiations from a legal-approved template reduces legal review cycles significantly.
Automated approval workflows
Automated contract workflows route each agreement to the right reviewer to ensure timely approvals.
eSignature with audit trail
electronic signature software captures a timestamped audit trail of every action.
Renewal alerts and obligation tracking
Automating reminders for renewals and contract obligations helps manage important dates efficiently.
CRM integration
A Salesforce integration or HubSpot integration automatically updates contract data.
How AI is changing SaaS contract management
AI significantly enhances the SaaS contract lifecycle, from drafting to managing contracts. It can generate first drafts based on deal parameters, flag non-standard clauses during review, and automate data extraction post-signature. This technology streamlines workflows, improves audits, and enhances compliance monitoring.
Benefits of SaaS contract management
Effective SaaS contract management can improve efficiency, save costs, and enhance visibility across the organization.
Improve efficiency
Uniting SaaS sprawl reduces time spent on redundant admin tasks, allowing rapid contract creation and signing using customizable templates.
Keep services running
Automation ensures contracts are seamlessly renewed to maintain business continuity.
Increase visibility
Centralized dashboards allow authorized stakeholders to track all actions on contracts, breaking down information silos.
Generate valuable insights
Consolidated data from SaaS contracts provides critical insights into metrics such as renewal rates, churn rates, and engagement, driving better decision-making.
Best practices of SaaS contract management
- Set reminders and alerts: To stay updated about upcoming renewals and reviews.
- Embrace SaaS renewal best practices: Ensure terms reflect actual usage and negotiate before renewals.
- Review contracts regularly: Keep track of contract terms and scope to prevent non-compliance.
- Vet your SaaS service providers: Ensure their SLAs align with your company’s standards before signing.
- Improve security: Employ strong security measures to protect sensitive contract data.
- Perform regular audits: Establish timelines for auditing contracts to adapt to changing business needs.
How PandaDoc supports SaaS contract management
PandaDoc offers a comprehensive suite of tools, from a template library to automated workflows and AI-powered data extraction, enabling SaaS companies to effectively manage contracts. Our features streamline the entire lifecycle, ensuring compliance, enhancing efficiency, and providing valuable insights.
For further information or to start using PandaDoc for SaaS contract management, visit PandaDoc or request a demo.