What are document and contract redlining? (The modern way)

What are document and contract redlining? (The modern way)

The term “redlining” commonly refers to the editing and negotiation process during document and business contract management where contributors mark text and track changes collaboratively. As part of the redlining process, one party receives the document and makes additions or annotations, and the redlined text will appear in a special color so the other party (or parties) can easily track changes without needing to spend time searching for modifications.

Redlining was a common practice long before electronic documents existed. The early days of redlining included a pen and a phone call to the other party. Legal documents were commonly redlined — one side would use a different color to make corrections and track changes on a physical document, like using a red pen on a piece of paper, for example. 

Track changes of entire contracts 

Modern redlining solutions use two separate but similar electronic input files like Microsoft Word documents, for instance, to compare one full document against the other. By comparing the largest pieces of text to determine where overlap occurs, contract redline solutions then create a new output document to highlight discrepancies or modified text — no phone call needed. 

Different solutions may use different colors and conventions for indicating the modifications which may have occurred on previous versions. The new or altered text might have an underline, double-underline or be bolded, enclosed in brackets, etc., while text that has been removed from the document might be indicated by being struck-through or otherwise indicated. 

When should you redline?

Document redlining is well-suited when two or more people need a diplomatic approach to collaborate on the review, negotiation and/or drafting of a document or contract.

Contract negotiations will typically involve some form of redlining as each party scrutinizes legal terms and business terms to agree on the contract provisions. Similarly, people higher up the chain of command as a way of indicating desired changes redline documents created under an organizational hierarchy often. 

Common redlining challenges

Redlining is a complicated logistical back-and-forth and as such features a number of common challenges and difficulties that collaborators might face.

1. Untracked changes

Any changes to any portion of the entire contract must be tracked within the document. Forgetting to enable a track-changes feature even after a first glance can break the redlining document comparison process, potentially losing changes in the shuffle and making them difficult for external parties to identify.

2. Reading difficulties

One of the most common problems from redlining is that documents can become hard to read as the number of changes increases. Without clean copy, spelling mistakes and minor formatting errors can become easy to overlook.

3. Broken formatting

Accepting the changes a previous collaborator has proposed to the document can often strip a section of the document of its intended formatting, which then makes it a necessary chore to reformat to return the document to the desired layout. Additionally, sharing documents for redlining between different software solutions can result in lost formatting, as the formatting options in one piece of software might not track with the options in another.

4. Residual metadata

Tracking document changes with a redlining tool frequently results in the creation of undesired metadata that might contain sensitive information, thus making it necessary to remove all metadata before sending the document to another recipient or collaborator.

5. Device compatibility

Not all redlining software functions across multiple platforms, making sharing documents for redlining between desktop computers and devices like tablets fairly hit-or-miss.

How to redline effectively and efficiently

Redlining is all about efficiency; we track the changes we make to documents so that our collaborators can quickly and efficiently identify them, thus saving time in the overall process of contract and shared document creation. Ensure that you’re redlining efficiently by considering the following steps for how best to modify your document. 

Before you even begin redlining, make sure you understand the other parties who will contribute to your document. Get on the same page as to your shared goals with the document. Documents pertaining to transactions such as contracts and agreements have a different focus than things like employment documentation, so it is important to know what you’re redlining and with whom you’re sharing document ownership. 

Do not rush the process. The document needs to be exactly right before anybody affixes a legally binding signature to it, so make sure that all of the details are in order and unimpeachable. A signed document that is later discovered to have an overlooked error in it is still legally binding. 

When creating a legally binding document your first priority should be its adherence to legal and functional standards. Be absolutely certain that the language is legally compliant. Most document and contract clauses can be set up with standardized language, which makes tracking any deviation from the norm much simpler.  

You need to be absolutely certain that all changes made to the document are tracked preserved throughout the whole process; do not leave anything about the editing of the document to assumption.

Offer your collaborator the tools to efficiently perform their own redlining processes by giving them three versions of your document: a redlined version (to track your changes), an unmarked version (for ease of reading), and a copy that is immediately ready for their own rounds of edits

Know your software’s capabilities and limitations. Not all redlining software is created equal, and software that is not cloud-based demonstrates a number of special challenges.

In the case of software like Word that requires collaborators to email files back and forth, make sure you:

  • Track all changes. It is vital that tracking changes is enabled from the outset of creating your document. 
  • Stress to your collaborator or collaborators that they must not turn off change tracking when it comes to their turn to work on the document. 
  • Strip the document of any residual metadata before you send it back to your collaborators for another round of edits or ultimate approval. 
  • Send out a fully marked and redlined version of the document as well as a completely clean version for them to edit. This way they can compare your work with their work mid-process without immediately overwriting anything you have done.

Redlining features deliver value

Redlining contracts is an essential part of the contract process for a variety of industries. More professional and timely documents have fewer mistakes makes prospects more likely to sign.

When your clients get specified contracts, you get less back and forth editing. PandaDoc supplies everything you need from one platform for the entire contract automation and redlining process.

You’re not the only one taking advantage of PandaDoc storage capabilities, Google Drive integration and easy-to-use, automated features:

  • In just one quarter, an office concierge service was able to decrease their time to close by 15% and save over $100,000 in annual software costs.
  • A construction management company was able to boost productivity and 3x the number of closed deals
  • A marketing automation company was able to save $5k in legal fees and decrease they’re sales cycle by 75%.
  • An event management company increased sales prices 10% across the board and still increased sales close rates by 32%.

From SaaS and security consulting firms to creative teams and construction management companies. After wasting staff and legal resources on drawn-out contract processes that extended their sales cycles unnecessarily, these organizations trust PandaDoc to speed up the bottom of their sales funnel and close deals faster.

Alex Zhezherov

Alex Zhezherov Product Manager at PandaDoc

Alex is responsible for Product Management (formerly) at PandaDoc. When he is not busy driving PandaDoc integrations forward, his time is spent traveling the globe, hiking or advising startups on biz dev and product management.

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