contract-management What is Redlining?
Contract negotiations can be incredibly complex. Many contracts are sent back and forth between different parties several times before they are finalized. This back and forth is called “redlining” and is critical to developing agreements that satisfy everyone. This process is very important, especially to reduce legal risks in negotiations as much as possible.
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What does redlining a contract mean?
Redlining is the process of editing a contract where two or more parties are negotiating or collaborating. The goal is to produce a joint document that satisfies all parties.
The term redlining comes from the original, physical method of editing a contract, which involved printed paper and red pen. One party would take the document and cross out words and add changes in red ink. That document would then go to the next processor, who would do the same. The red ink made it easy for everyone to see the exact changes that were made. Eventually, everyone would agree on a version of the contract. A clean document was then created at the end to fix the final agreement.
Today, the process is much simpler. With fynk’s contract management software, you can redline contracts in real time, edit them together. Your legal department doesn’t have to worry about sending physical copies back and forth to manage the different versions. This can help you speed up your contract negotiation process by days or even weeks.
How does “redlining” work specifically?
Redlining is more than just editing. It’s a collaborative process where all parties involved in the contract work together to create a document that satisfies everyone. In the past, this was done with paper documents and red pens, but today it is mostly done via computer files.
Specifically, Party A submits a contract to Party B. Party B makes changes. This new version is passed to Party A, which makes its own changes and approves or rejects Party B’s changes before sending the file back. This continues until all parties are satisfied with the contract.
When should you use redlining?
You must use redlining on a contract whenever more than one person needs to agree on the final version. It is most commonly used when multiple groups are negotiating the terms of a new contract, but that is not the only used case where it is used. You may also need to use redlining with contracts where you are creating a new contract template or revising old contracts. Any time you need to refine a contract with others, redlining can be a valuable strategy. Especially if you rely on digital contract management for this process.
The challenges of contract redlining
Redlining is helpful, but it can still have its challenges. With the wrong contract management tool, redlining quickly leads to a mess instead of a cohesive agreement. Some problems you may encounter with redlining are:
Confusing changes: If you edit your agreements using a traditional word processor, it can quickly become difficult to spot differences and read the resulting text. If one party forgets to track their changes, errors can result.
Incorrect formats: If too many people make changes to a document over time, you may find that the formatting is incorrect. This forces you to spend extra time getting it back to your preferred look.
Incompatible file types: There are so many different versions of Microsoft Word that you can quickly run into incompatible file types when you try to edit documents with others. This can damage or even completely destroy the formatting of your contract.
Slow response time: depending on how you send your drafts, you may not receive the revised document back for days or weeks. This significantly slows down the contracting process.
These problems are critical, but they can be solved with the right contract management system.
Manage contract redlining effectively
Depending on your organization, contract redlining can involve dozens of revisions. Your legal department must track each of these changes and work with customers and vendors to arrive at a satisfactory agreement. Providing the right tools can help streamline contract workflow and significantly reduce the time spent redlining.
The easiest way to redline a document is for both parties to work on it together. While this is not always possible in person, it can be easily accomplished through digital contracting. By using cloud-based contract management software, all parties can view the contract at any time to edit it or approve or reject changes. The document is stored in a central location, avoiding the problems of incompatible file formats.
With cloud-based contract management software, you can also track document changes cleanly. The tool automatically tracks changes until the document is approved, giving you a clear view of what changes were made, by whom, and when.
Uncompromising product features that help.
If you’re looking to improve your redlining workflows, fynk can help. The cloud-based solution implements the entire agreement editing process in the browser.
For agreements you send frequently, fynk lets you create workflow templates. With these templates, you can define your agreements with options up front, rather than having to deal with significant redlining revisions later. You can use our workflow designer to offer clauses that have been pre-approved by your legal department, so your sales team doesn’t have to contact legal for every customer request.
You can also implement the clickwrap feature if you use standardized agreements. This immensely reduces the number of contracts you need to handle and speeds up the contract process.
Contract redlining made easy with fynk
Contract redlining is an essential part of any contract negotiation. That’s why it’s important to set up an effective system to manage the redlining process. You can simplify the editing process, avoid costly mistakes, and reduce wasted time.
fynk’s digital contract management software helps simplify redlining. With fynk’s editor and workflow designer, your legal team can streamline the redlining process. You can provide a better experience for your customers and suppliers while giving your team time to focus on more important things.
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