Contract management can be a complicated process. It can require multiple departments to review and approve contracts. Then, there are escalation clauses and other provisions to keep track of.
For these reasons and more, a CLM system can make the process much easier. Learn more about this business technology by scheduling a demo with Icertis.
Streamlined Processes
Contracting is often one of the most time-consuming and complicated areas of a business. It can be difficult to keep track of multiple versions, and resolving problems such as missed deadlines or unsigned contracts can cost money, risk compliance, or lead to frustrated vendors or customers.
Despite the complexity, a well-developed CLM solution can make your contract process more efficient by automating and streamlining all stages of the cycle. This can help you reduce manual tasks, improve collaboration, and gain visibility into your data.
The first step of a contract’s lifecycle is the request stage, which allows business stakeholders to gather essential details associated with new or modified contracts. The contract authoring stage involves contract parties putting those details into writing, consolidating standard contract clauses, contract key dates, and contract counterparty information. The negotiation stage allows parties to negotiate the parameters drafted in the previous phase.
Document signing accounts for only a small sliver of the contract management landscape, but it’s arguably the most important: Contract legality depends on the presence of a secure, verifiable signature. Historically, companies have either used eSignature solutions or separate, dedicated contract management tools to accomplish this task.
In the 2010s, a new class of contract management tools entered the market as Software-as-a-Service (SaaS) offerings that combined these functions into a single, unified tool. The resulting solution was a true Contract Lifecycle Management system, a tool that could manage every aspect of the contracting process from start to finish.
Reduced Risks
Contract Lifecycle Management is a crucial part of any business. However, it is often one of the most difficult aspects of business operations – and contract risk is not limited to just a few errors here and there.
For example, the drafting and negotiation stages can be full of risks. If contracts are not properly drafted, they can be open to many potential problems, such as scope creep, dispute resolution, and other legal issues. However, if contracts are drafted and signed correctly, the risk of disputes or non-fulfillment is reduced significantly. Using reusable contract templates and approved language that has been reviewed by lawyers will help reduce these risks.
Once contracts are signed, they need to be managed throughout the lifecycle. This includes amendments, such as addendums and joinders, as well as compliance management and termination and renewal. Contract lifecycle management software enables businesses to track and analyze performance across the entire contract portfolio. This enables legal teams to make more informed decisions that help to minimize the risk of costly mistakes.
In addition, the ability to automatically notify stakeholders of important dates and obligations is a huge risk reduction. With CLM, legal teams can ensure that all parties are aware of scheduled deliverables and deadlines with automated key date and task alerts, compliance and obligation status reports, and user-friendly dashboards.
Increased Profits
Getting contracts right has never been more crucial to business success. Contracts touch every facet of a company from demand planning and pricing to compliance and channel management, so it’s imperative that they be accurate and enforceable. Inaccuracies caused by manual processes or human error can lead to costly rework, legal fees, and lost revenue. Missed contract deadlines, expiration dates, or renewals can result in missed opportunities and frustrated vendors and customers.
A CLM solution helps eliminate these costly errors. Centralized data, transparent workflows, and enhanced collaboration allow teams to work together seamlessly and more efficiently. A robust clause library and reporting enable teams to streamline contract creation and speed up the contracting process while ensuring that legal standards are met. Stringent access controls prevent sensitive information from falling into the wrong hands and a customizable report can quickly show who has viewed or edited each contract file.
A CLM solution also helps to manage risk post-execution. Users can establish an analytical model and leverage internal and external data to identify risks that have the potential to impact business operations or financial performance. An intuitive dashboard and a point-and-click custom report builder provide contract managers with the ability to filter and query reports to uncover hidden insights. In addition, a configurable alert system can help to prevent contract owners from missing important milestones like contract expiry or renewal.
Better Customer Service
Many businesses manage a multitude of contracts on a regular basis, including employee and independent contractor agreements, vendor contracts, and non-disclosure agreements. Managing all these contracts efficiently requires the use of contracting software solutions that are designed to streamline and automate repetitive tasks. CLM helps save time and money by eliminating manual processes, which allows in-house legal departments to focus on more important legal issues that can impact business strategy.
When choosing a contract management solution, it’s important to find one that offers support throughout the entire lifecycle of a contract. It is also a good idea to make sure the company provides a robust library of standard, compliant contract templates and clauses that can be used with ease to create contracts. This allows teams to build and execute contracts faster and more effectively while ensuring contracts are consistent and accurate.
It’s important to choose a contract management solution that automatically schedules review, approval and expiration dates for each contract. This prevents critical contract steps from getting missed and helps avoid costly mistakes that can impact both a business’s reputation and its bottom line. It’s also helpful to find a system that offers an easy to access repository that makes it simple for employees to quickly locate contracts and reports.
Finally, it’s essential to find a solution that can conduct contract compliance audits and provide a variety of analytics features that allow businesses to identify the status of their contracts and whether or not other parties are fully complying with their obligations. This typically requires the implementation of a Contract Lifecycle Management tool with advanced search and analytical capabilities.