Contract Lifecycle Management 101
Contract Lifecycle Management (CLM) can help you avoid costly mistakes while increasing your revenue potential. In this blog article, we'll define an effective CLM system and how it can help you save time and reduce errors.
Whether you run a small, emerging company or a billion dollar corporation, sales and service contracts tend to be one of the biggest and most common obstacles in the agreement process. In many cases, these contracts go through an extensive negotiation process with multiple rounds of revisions which can result in sales miscalculations and contribute to lost deals. Other contracts and legal documents can also be easily forgotten, misplaced or compromised without an effective CLM solution.
Signs it might be time to update your Contract Management:
If your contracts seem to take forever to complete, it is because they are going through an avoidable process that should be reconsidered. Manually handling contracts via spreadsheets, email, or shared drives can increase risk of error and impact productivity.
When contracts are sent back and forth by email, it's difficult to compare versions and track changes, making it easy for unauthorized edits to slip through the cracks. A vital legal document can get lost in the recipient's inbox, fall into the wrong hands, or be forgotten.
Similarly, using shared drives or spreadsheets can be as inefficient and time-consuming. Storing essential documents in these locations, where everyone has access, can disrupt workflow. Files can be hard to find, and they can be renamed or deleted with a single click. These processes make it difficult for members to collaborate and stay on track. Once contracts are approved and executed, there is no way of knowing when contract renewals and other key events are approaching, which can result in lost revenue opportunities.
Continue reading to see how Contract Lifecycle Management can be a valuable alternative to these methods.
The Stages of Contract Lifecycle Management:
Contract Lifecycle Management improves efficiency by automating repetitive tasks and reducing common errors. Establishing a proper CLM will help manage contracts at every stage of the process, from creation to renewal.
- Contract Template Libraries: The lifecycle of a contract begins with its creation. The organization will create an official template of a contract that needs to be executed. These templates are stored in a library and anyone who needs to create a new contract can quickly find a previously approved template with up-to-date terminology.
- Contract Review: Before submitting a contract for settlement, flexible review workflows enable all team members to analyse and make comments on the content.
- Contract Approval: Users should be able to follow the intuitive rules, definitions, and updates, and have transparency into whose approval is needed and when.
- Contract Execution: Contracts become legal entities, and opposing parties can use the platform to digitally sign contracts.
- Contract Obligation Management: CLM offers insights on important information like warranties, renewals, returns, shipping, and discounts. Automated notifications before key events like a contract or warranty expiry/renewal dates should be easy to set up and customize.
- Contract Expiry and Renewal: For expiring contracts, files must be archived in case they are needed for an audit. Renewed contracts initiate a workflow for making revisions and managing approvals for a new contract.
The Benefits of Implementing a CLM:
- Using a CLM platform ensures that all files are kept in a single, secure location where they can be easily found using search and filters.
- All files in the repository will be updated with the correct version at all times, providing reliable version control.
- All edits are audited to avoid errors, and team members may seamlessly collaborate in real time by offering feedback and receiving internal approval before submitting.
- No contract will be forgotten or ignored because members receive notifications when their approval is required, if a deadline is approaching or if someone requests that they must review a certain document.
- Users can quickly look up related files such as previous contracts, Master Services Agreements or NDA’s for context.
Contracts are crucial documents that ensure there are no inconsistencies in a business arrangement. A contract lifecycle management (CLM) is a critical tool for eliminating errors, increasing productivity, and ensuring all contracts are properly created, reviewed and approved for execution. It is a worthwhile investment in the short-term and long-term to reduce risks that can be costly.
📝 Learn more about how Papercurve can meet your Contract Lifecycle Management needs.