Contract lifecycle management is a nine-step process that helps ensure you get the most out of a contract. It does this, in part, by reducing cost and maximizing revenue through careful planning and management through the use of CLM software.
Contract lifecycle management is a vital part of ensuring contracts are negotiated, delivered, and renewed with a minimal amount of risk. And to help maximize revenue, long-term.
The nine stages of contract lifecycle management
A contract’s lifecycle has nine stages. Managing each stage effectively is necessary to ensuring that the following stages are completed on time and (hopefully) to budget.
1. Contract request
A contract request is where you establish exactly what you’re trying to achieve with a contract. Everything from budget through to deadlines. This stage is when a party either makes a request or initiates a contract.
The writing of a contract calls for very specific language.It cannot be in any way ambiguous or open to interpretation as this can lead to problems further down the track.
At the authoring stage, the necessary information is inputted and an agreement document is kept on record.
Contract negotiation can now be completed much faster with contract management software.It mitigatessending contracts back and forth, making changes and then sending them back and forth again. Instead, it can be done electronically, with changes made as necessary, and signatures done electronically.
The approval process is made simpler with contract management software. All that needs to be done is set up an approval workflow that will notify all necessary parties.An approval workflow allows all those who need to approve the contract to view, edit, as well as comment in real time as is needed.
When you use a contract management software, all the changes made, are tracked, kept, and archived for future reference.All parties can sign electronically for faster approval process.
The execution of a contract, also known as signing a contract, can be done quickly and easily with contract management software. Electronic signatures (e-signatures) are just as legally binding as ink signatures.
And by using CLM software, a contract can be executed on time, with all parties notified in realtime. The advantage of this is there’s no worry about missing deadlines with sending contracts in the post.
6. Obligations management
Contractual obligations that aren’t managed properly can be disastrous for the entire deal. Managing contractual obligations also requires whoever is managing the contract to ensure your organization meets their obligations such as deliverables.
It also requires making sure all the important records are secure and safe, while still being easy to access.
7. Contract amendment
Contract amendments are all part and parcel of the contract lifecycle. Keeping track of contract amendments is done easily through contract management software. Notifications can be set up so tabs are kept on changes as they are made throughout the contract’s lifecycle.
8. Audit & reporting
To ensure all the contract’s terms and agreements are being complied with, it’s necessary to run routine audits. Not auditing a contract can result in unforeseen issues, loss of revenue, and missed deadlines.
Reporting with contract management software is as easy as setting up reports for each stage of the contract’s lifecycle.They can be automated to be sent out to relevant departments week, monthly, or as needed.
If you want to maintain good business relationships, it’s important to know when a contract is up for renewal. If you don’t keep up with renewal dates, it can result in a loss of business. Or, having to cultivate new business.
Having all your contracts in cloud-based storage means contracts won’t get lost in a filing cabinet somewhere. It also makes accessing contracts by necessary departments easy to do from anywhere they have internet access.
Contract lifecycle management
Contract lifecycle management done properly with top-of-the-line software is a the most efficient way to ensure a profitable contract lifecycle management.ContraxAware’s contract management software has everything you need for the best CLM.
What is contract lifecycle management?
Contract lifecycle management is a way of managing agreements or contracts effectively. This is done by planning through all the stages of contract management that result in eliminating, mitigating or reducing procurement, financial or legal risks.
What is a contract lifecycle management (CLM) system?
A CLM system streamlines and automates contract processes through important stages.This includes everything from the authoring and negotiating through to auditing and reporting as well as renewal. A system like the one offered by ContraxAware can do all this and more for you.
Why is contract lifecycle management so important?
Contract lifecycle management is so important because it improves productivity and maximizes the value of contract. It does all thiswhile reducing risk, and freeing up staff time to do more productive tasks.