Contract Lifecycle Management: Transforming the Way You Manage Contracts

Contracts are a critical part of any business. But managing contracts is a complex task that requires the coordination of multiple stakeholders, including legal and procurement teams, project managers, and human resources professionals.

Many contracting and CLM tools have tried to bring this analogue process into the digital age. But most fail to address the full scope of the challenges.

Preparation

Contracts have a high value for businesses but managing their peaks and valleys can be time-consuming. Many companies find their in-house legal teams getting bogged down by routine contracts that aren’t a core part of the business’s operations.

When contracts come up for review, CLM tools make the process easy by ensuring all stakeholders are aware and prepared through automated workflows that ensure all parties are working with the latest version. This eliminates confusion over what a contract should say or who last reviewed it.

At this stage, a Contract Lifecycle Management solution makes it easy to get everything signed and formally recorded with e-signatures or traditional wet signatures. ContractSafe even allows you to upload documents into the platform for a PDF or Word document to be signed from anywhere on the planet, so that the entire team can participate in the agreement.

Once contracts are in place, a strong contract management system keeps them compliant and in good standing. This involves monitoring performance and obligations, negotiating addendums or joinders to existing agreements, and preparing for contract renewal or expiration.

Negotiation

Contract negotiations and reviews can be complicated processes that require a high level of accuracy during every step of the process. This can be especially challenging when contracts are drafted and redlined by multiple stakeholders with varying perspectives on each agreement. Without the right tools important contract information can slip through the cracks and create risk for businesses.

Contract management software helps ensure all parties involved have access to accurate contract data and information during this critical stage. This can help reduce contract negotiations and reviews to one or two rounds improving the effectiveness of your inhouse legal teams and overall performance of your organization.

During this stage, it’s important to find a digital Contract Lifecycle Management solution with intuitive user interface design and comprehensive features that support your contracting needs from drafting or negotiating to reporting, monitoring, and auditing. It should also include robust security protocols to protect confidential contract data. It’s also important to consider eSignature capabilities to enable the signing of contracts on the go and on any device. This can save time, money, and resources in the long run while improving the security of your contracting procedures.

Approval

Contracts navigate a predictable path through nearly every organization. Understanding how to streamline the process promotes efficiency, while minimizing errors and risks.

Once a draft is ready for negotiation, the internal approval stage begins. Depending on the size of an organization, this may require multiple managers or officers to review and approve contracts before they’re sent to outside parties. This step is critical to ensure everyone understands the terms outlined in the document and agrees on them before moving forward with executing it.

The approval phase can also be a good opportunity to identify any potential issues that might come up during the execution phase, or any areas where further research is required before a decision can be made. For example, if an employer doesn’t follow legal requirements for non-compete agreements or data security, these items could be costly or lead to compliance breaches later on. Keeping track of these issues is easier when everything is stored in a centralized, searchable contract repository. This is what makes systems of record so powerful for organizations.

Execution

The contracting process has evolved over the years, as have digital tools to streamline it. Many solutions once specialized in one or more of the stages of contracting (drafting, negotiation, approval, and execution), but as we enter the 2020s, we’re seeing a shift in the market: as previous specialists merge and rebrand their offerings, we’re seeing solutions like Ironclad build out end-to-end CLM to replace them all.

With a CLM solution, executing contracts is as simple as sending contract drafts to specified internal and external approval parties for review, e-signature, and approval. These systems also offer a cloud-based repository, collaboration tools, automated workflows and alerts, reports, and dashboards.

After contracts have been signed, it’s time to monitor performance and compliance. With a CLM solution, this is as easy as reviewing data-driven contract metrics with intuitive Contract Lifecycle Management dashboards. Ensure teams are working with the most current documents, and prevent the risk of lost or misplaced files, by implementing version control, which tracks all changes to contract drafts for a complete audit trail.

Monitoring

Once contracts are executed, teams need to track performance over time. Having customizable reporting capabilities and dashboards helps ensure that all departments are up to speed with key contract metrics and deadlines—such as contract expiration dates, auto renewals, opt-out windows, and more—to keep business operations running smoothly.

Like bringing along a water bottle while hiking, successful monitoring is built on an easily accessible, centralized repository. Contract management tools with cloud-secure document repositories make it easy to store contracts in a central location, as well as quickly retrieve them when needed.

When drafting a new contract, the process can be sped up with preconfigured templates that automatically populate contracts with pre-agreed language and CRM data. This early stage can also be sped up with automated workflows, which enable contract documents to be reviewed and approved in an organized fashion. Finally, with the help of automated alerts and reminders, teams can be kept in the know about approaching key contract milestones, reducing risk and optimizing operational efficiency over time.