Contracts represent the core relationship between a business and its clients. Mismanaging the contract lifecycle with outdated technology and rigid management processes poses a risk to productivity that many top-performing businesses are no longer willing to take. This is why contract lifecycle management services are projected to have a market value of nearly $4 billion by 2032.
To implement effective contract lifecycle management, many businesses opt for contract management software that includes modern features such as standardized contract templates and AI integration. Yet, even with software solutions, businesses must enforce a streamlined contract management workflow. CLM software, like any workflow solution, is only a tool.
Continue reading to learn how leading businesses implement end-to-end contract management processes. With this guidance, you will be better prepared to match CLM software to the needs of your unique infrastructure.
What is contract lifecycle management?
Contract lifecycle management involves any process that handles your business’s agreements with customers, partners, vendors, and even employees. The process encompasses everything from drafting the contract to its implementation and eventual closure. Traditionally, end-to-end contract management relies on now-outdated storage and retrieval methods such as manual spreadsheets, filing cabinets, email inboxes, and Microsoft Excel.
However, modern businesses face unique challenges, including an increase in remote and hybrid employees, which threatens to disrupt contract management communication. Data availability is another major pain point. As contract workflows become more demanding in the digital age, digital tools are needed to centralize and streamline contract lifecycle management.
With 9 in 10 companies reporting improved data accessibility due to new technology implementation, businesses of all sizes should consider a contract lifecycle management tool like CLM software as a way to bring their data management workflows into the 21st century.
What are the steps to effective contract management?
It’s crucial for businesses to evaluate and select the CLM software that will integrate with their current systems and deliver the features that will positively impact their contract management efficiency, data access, and compliance.
These steps represent a summary of the contract lifecycle management process, including how the right contract lifecycle management platform can make the process more effective.
Generation
The contract lifecycle begins with contract generation, also known as a contract request. When performed manually, your legal team creates the contract with the confirmed budget and relevant parties.
The bottlenecks in the conventional contract generation process include delays in creating the template, adding approvers, and customizing fields for the current situation. With CLM software, your team can perform numerous actions relevant to contract generation, including:
- Develop standardized templates
- Add custom fields
- Add approvers, signers, and signature fields
- Add conditional clauses
- Create multiple contract requests
By automating the administrative labor of contract generation, your legal team can focus on the specific demands of the contract with fewer delays.
Negotiation and approval
In analog contract management, negotiation was a labor-intensive process requiring user approval, new drafts, and contract version management. Digital contract management streamlines the process to save time and legal costs while improving your relationship with clients.
Contracts can be negotiated, edited, and sent to the stakeholders for final review while maintaining full legal accountability with a transparent digital paper trail. All relevant parties can be seamlessly integrated into the approval process with updates on the contract’s status and new drafts delivered to their inboxes when they need them.
Related Article: 3 Ways to Speed Up Contract Approvals
Acceptance
Pen-and-paper signature delivery used to be the only method for accepting contracts. With CLM software, esignatures or embedded signature requests can be used to make the process easier. Make sure to select a contract lifecycle management solution with support for digital signatures as many clients expect this convenience.
Fulfillment
Fulfilling the contract, including complying with service terms and payments, requires both parties to remain accountable to the finished document. Successful contract fulfillment is the lifeblood of client relationships.
Contract lifecycle management software helps legal teams identify and organize important terms in all active contracts, including approval dates, payment information, fulfillment terms, service requirements, and any other contractual obligations the business needs to fulfill.
Analysis
Contract analysis is a new step in the contract management lifecycle, enabled by new methods of data collection in contract lifecycle management tools. By maintaining a contract data repository, CLM software can help businesses answer questions about their performance and strategically change their workflows to improve the process.
For example, businesses can learn how many clients choose certain options, which stakeholders cause contract fulfillment bottlenecks, how renewal dates impact fulfillment, and more. Modern CLM solutions integrate with SharePoint Contract Management and other software to help businesses monitor contract performance and manage continuous training and support for their legal teams.
Optimization
Contract optimization has been completely streamlined using contract data repositories. Since businesses now have access to more performance data, they can improve their contract lifecycles in ways that would have overburdened their contract management personnel before.
By observing turnaround times, businesses can locate and fix bottlenecks. They can inform their inventory management strategies using fulfillment data. They can compare the fulfillment schedule to their quarterly budget to make needed adjustments.
CLM software automates data repositories to help businesses optimize contract management for the needs of their workflow. They guarantee data security and privacy by limiting access and storing contract records on secure systems.
Renewal
Businesses that default on contract renewals can accidentally extend unprofitable contracts or lose revenue on contracts that should have ended. A contract lifecycle management solution implements customized autorenewals so that managers can decide how and when to renew each contract as soon as it’s created.
This system includes renewal and expiration tracking to alert your legal teams about each contract’s status. Contract cancellations and terminations used to be labor-intensive processes that CLM software has streamlined into an automated and manageable renewal process.
Related Article: Taking the Confusion Out of Contract Renewal
Learn how contract management software can improve your end-to-end contract lifecycle management process
Outdated contract management workflows can eat into a business’s revenue, lower its chances of maintaining regulatory compliance, and negatively impact its relationship with its trusted partners, clients, and employees.
A modern end-to-end contract lifecycle management tool calls for updated data access and data analysis processes that can streamline contract retrieval. AI-enabled systems can aid in generating, optimizing, and analyzing contracts to continuously optimize a business’s contract lifecycle management process, improving its relationship with its clients as a result.
Contact the team at ConvergePoint to learn how advanced CLM software solutions can improve your contract management process. Learn why major businesses in diverse industries like healthcare, banking, manufacturing, and national defense trust our software with their valuable contract management processes.