Understanding Contract Lifecycle Management 

Contract lifecycle management is essential for any business which has legal agreements in place. The process begins as soon as you are offered or offer a contract, continues throughout the service delivery period and renewal process until the contract ends. Contract lifecycle management tracks all elements of a contract against agreed outcomes, minimising related risks and saving your company time and money.

Automated contract lifecycle management (CLM) using procurement software streamlines and speeds up the contract process, makes it more secure and less error-prone.

How does contract lifecycle management work?

There are several steps in CLM, starting with the request for a contract and ending with renegotiations.

Request

Here a person or department asks for a contract using a standardised process. This reduces the risk of rogue purchasing or agreeing to onerous contract terms.

Create

A contract is drafted using templates set up in contract lifecycle management software, reducing drafting time and the chance of errors being made. Amendments are made within the software, so all parties see the same version of a contract.

Negotiate

The parties review the contract and negotiate different terms to include. All versions are stored in the CLM software and managed in one place.

Approval

The contract has to be approved by authorised individuals. Using the CLM software, contracts are distributed to the correct people, and all approvals and changes are recorded.  

Sign

Historically, the signing process could be lengthy, but now digital signatures allow electronic contracts to be signed quickly. E-signature functions also improve security.

Store

At this stage, you file and organise your contracts, and store them electronically using cloud storage. You will then have easy access to them when you need it.

Management

This includes tracking contract performance, amendments and renewal. You also need to identify new risks that may arise and have plans in place to mitigate them. Your contract lifecycle management software will allow you to identify problem areas so you can quickly address them. It will also give you instant access to the information you need, such as key terms and dates.

Renegotiate

If you use your CLM software to monitor your contracts effectively, at renewal time you'll have a clear understanding of how the contract has performed. You can use this information to renegotiate terms or make decisions on the viability of the contract for another term.

Don’t forget about security

It’s essential to consider the security of your contracts during CLM. Your contracts are likely to contain business-sensitive and confidential information, so your contract lifecycle management software needs to have robust inbuilt security features. For example, advanced encryption and real-time data backups.

For more information on contract lifecycle management software, download a brochure or contact us today and ask about a free online system demo.

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