Contract automation: step-by-step & exact tools needed

Imagine you have a library of books with each book representing a contract you have to manage, including the writing process. 

If you’d want to go about it manually, you’d have to write each book from scratch, pass the book to your colleagues to check if they like the content, erase and rewrite it every time they want changes, walk to their houses so they can sign it, and then pile all the books in a stack for storing.

If you’d need to find a specific book for reference, you’d have to dig through them all.

With automation, managing your library of books, aka contracts, is more like having a modern system that suggests the right wording instantly, lets your friends edit the books’ content simultaneously, auto-corrects mistakes so you don’t have to, allows everyone to sign with a tap from their homes, and stores all the books online for easy retrieval.

Everything is faster, easier, and way less messy—that’s contract automation vs traditional contract management in a nutshell.

But putting poetical contract process metaphors aside—let’s get more realistic and get into the specifics of contract automation. From what actually can get automated, why it should be, how to do it right, example tools, and more.

Article highlights

✅ Contract automation is the process of speeding up the entire contract lifecycle with automated workflows, AI solutions, and ready-made templates.

✅ Organizations may lose up to 9.2% of their annual revenue due to poor contract management practices, such as missed deadlines and unfulfilled obligations. Automation helps avoid that.

✅ A significant 81% of organizations want to start using contract automation, reflecting a strong shift towards digital solutions to manage contracts. 

The cost of poor contract management

Contracts are meant to keep the business moving, but in reality, the associated processes often do the opposite. Sales teams lose deals waiting weeks for approvals. Legal wastes hours fixing the same minor edits across multiple drafts. Vendors walk away because contract negotiations take too long.

Meanwhile, deals stall, revenue leaks, and everyone is stuck in an endless loop of emails, version confusion, and last-minute panic. Our point is, manual contract management isn’t just inefficient—it’s a silent killer of business momentum.

Putting those statements into money, studies show that organizations may lose up to 9.2% of their annual revenue due to poor contract management practices, such as missed deadlines and unfulfilled obligations.

And that’s precisely where automation comes into play.

5 example “uh oh” moments contract automation prevents

Contract automation is more than just a buzzword. It’s a real solution to messy contract management, ultimately helping you save time and money.

Here are common painful situations contract automation can help you avoid.

Lost contracts

Every sales, legal, or business team knows that one deal where no one knows where the latest version of the contract got lost, panic sets in and everyone’s looking for the needed contract everywhere.

The client or business partner is getting frustrated, costing a whole lot of stress to the team and ultimately potentially losing revenue.

Even if handled well, manual contract management and routine contract admin tasks around it can account for up to 12% of an organization's total costs.

Think how that number skyrockets if you add panic, lost documents, and missed opportunities into the picture.

Missed deadlines

Speaking of missed things, missed deadlines are yet another stressful and unfortunate “uh oh” moment that proper contract automation can prevent.

Important renewal or payment deadline that slips through the cracks causes panic and frustration. The last-minute scramble wastes time, leads to missed opportunities, and can even result in penalties.

Contracts losing value

Every sales and legal team knows the pain of watching a contract lose value over time—whether it’s due to missed contract renewals, forgotten clauses, or not keeping up with agreed contract terms.

It starts with small oversights, like not renegotiating pricing or failing to claim agreed discounts, but over time, those gaps add up, resulting in lost revenue or worse—deteriorating business relationships.

Legal loopholes

Sales teams often add terms to contracts without legal’s input, thinking it’s no big deal. But those unchecked changes can create major risks.

What seems like a harmless tweak can lead to unclear responsibilities, unprotected liabilities, or terms that are hard to enforce.

The consequences? The loopholes are time-consuming to fix and could cost the company significantly down the road.

Automation ensures that every contract goes through the proper channels before it's finalized, catching any terms that haven’t been reviewed by legal.

Legal expenses

Each hour an in-house legal team spends on contract-related tasks can cost a business approximately $122.

We’ve already established that manual contract management often leads to costly mistakes—like missed deadlines—forcing legal teams to spend extra time fixing those issues.

Automated contract management system cuts down on these errors by streamlining the process and ensuring every contract follows a pre-approved workflow. Legal only needs to step in when necessary, saving valuable time.

Version chaos

Every team knows the frustration of dealing with multiple versions of a contract—each with small edits of contract data, conflicting updates, and no clear record of what’s final.

What starts as a simple change can quickly spiral into a mess of emails, drafts, and confusion, leaving teams unsure which version is the one to sign.

Without automation and collaborative contract management, version control becomes a nightmare. But with automated contract management, every edit is tracked, and the latest version is always clearly marked.

How exactly does automation help?

You can benefit from contract automation in the following ways:

• Faster contract cycles: implementing contract automation reduces contract approval times by up to 82%, accelerating business processes and decision-making.
• Increased productivity: AI-powered automation specifically leads to a 44% boost in productivity, freeing teams from manual tasks and allowing them to focus on strategic activities.

• Lower administrative expenses: adopting contract management software can cut administrative costs by 25% to 30%. 

• Enhanced compliance: digitizing contracts improves compliance by 55%, reducing the risk of legal issues and fines. 
• Risk mitigation: 29% of companies report that AI in contract management has enhanced their ability to manage risks, helping them catch potential issues early.

Which parts of contract management can be automated?

We get it, you should automate contract management throughout the contract lifecycle, from contract creation to storing. But what can actually be automated and how exactly?

How contract automation actually works + example tools

Okay, but how contract automation actually works?

Let’s get through automating contract management step-by-step, with things to automate and example tools that can help us achieve them.

Step one: legal sets the rules

Contract automation should definitely start with the legal team. They define the terms, conditions, and templates—so that everything stays compliant from the start. No more tweaking contracts on the fly or legal having to approve the same thing 100 times.

Automation, in this case, fixes this by turning legal’s rules into pre-approved templates, workflows, and guardrails that everyone else can easily follow.

For example:

• Legal creates standardized templates for common contracts (NDAs, sales agreements, vendor contracts, employment offers).
• A clause library stores pre-approved legal language so contracts can adapt without needing legal review every time.

💡 Example automation tool: ContractPodAI CLM offers contract automation software features, including self-service contract creation with pre-approved templates and clause libraries.

• Every contract change is logged automatically, so there’s no confusion about who did what.
• Legal can update templates globally when laws or policies change, keeping everything compliant in real time.

💡 Example automation tool: Juro—a contract automation platform—provides a centralized platform for creating and managing contract templates. Moreover, it allows users to set rules and conditions in their automated templates.

Step two: sales, HR, and procurement fill in the blanks

Instead of drafting contracts from scratch, sales, HR, and procurement teams can use pre-approved by legal templates, enter the necessary details (names, dates, numbers), and the contract is ready to go.

For example:

• The system auto-populates the contract with the right terms based on legal’s pre-set rules.
• The software flags risky changes if someone tries to modify key terms (e.g., changing payment terms or liability limits).

💡 Example automation tool: Ironclad—contract automation solution—uses AI to scan contracts and flag modifications to critical terms such as payment schedules or liability clauses.

Step three: approvals happen automatically

The system knows who needs to sign what, so there’s no more, “Hey, does this need the VP’s signature?” emails. If approval is required, it gets routed to the right person instantly.

For example:

• The system knows the rules (e.g., “If a contract is over $50K, the VP needs to sign”).
• Approvals follow a pre-configured workflow (e.g., Sales → Legal → Finance → VP).

💡 Example automation tool: HyperStart streamlines contract approval workflows by automatically routing contracts through predefined sequences.

• Approvers get immediate notifications (email, Slack, or the contract system itself).
• If they don’t act, automated reminders follow up—so no one forgets.

Step four: signatures & storage are automatic

Contracts are signed electronically (no printing, scanning, or chasing people down), and once signed, they’re stored in the right place—no more “Where’s that agreement from last year?” moments.

• Electronic signature software sends the contract to the right person for signing and issues a notification for every needed signature.
• Stakeholders can sign multiple contracts at once, not wasting time going through a pile of repetitive documents.

💡 Example automation tool: Autenti is a comprehensive e-signature software that makes it easy to send and sign documents completely online. It offers all three major e-signature types on one platform, offers notifications, document storing, identity verification, and more.

• With electronic contract signing, version control is automatic, and every signature is precisely tracked with an audit trail.
• Automatic contract repository—no more contracts sitting in random email threads or shared folders.

💡 Check TZMO reduced their contract processes up to 90% implementing Auteti’s e-signature solutions to their workflows.

Step five: AI keeps track of deadlines & obligations

Need to renew a contract? A deadline’s coming up? The system pings you before it becomes a problem, so you’re never running at the last minute or dealing with unexpected penalties.

For example:

• AI scans the contract and pulls out important insights into contract deadlines (renewals, payment dates, obligations).

💡 Example automation tool: HyperStart—contract management tool—offers AI-based metadata extraction to track contract obligations, ensuring that important deadlines and terms are automatically identified and monitored.

• The system sends alerts before deadlines hit (via email, Slack, or dashboards).

💡 Example automation tool: CloudEagle.ai integrates with Slack to automate renewal reminders and improve communication.

• Beyond just dates, modern contract automation helps when AI monitors contract commitments (e.g., “We must provide reports every quarter” or “Client gets a discount after 12 months”).

If you’re not automating, you’re actively losing revenue

Automation isn’t just a legal tool—it’s a business growth strategy across stages of the contract lifecycle, from contract creation to contract execution.

Outdated solutions to modern problems simply don’t work. Go electronic with Autenti—sign, store, and archive documents completely online.

Try Autenti completely free for 14 days straight, with no credit card required for registering.