Advanced CLM software also tracks internal approvals and turnaround times to keep contracts on track. It can even integrate with eSignature platforms to make signing a breeze for everyone involved.
Creation
Contracting is a complex endeavor for all involved. A digital platform that can streamline all the different steps of a contracting process is a critical necessity for efficient contract management. That’s where CLM (contract lifecycle management) software comes in. CLM solutions, or contract management software, are a type of digital platform built to automate and extract business intelligence from contracts throughout their entire lifecycle. They’re not to be confused with eSignature software that merely allows signatures to be collected online.
The first step in the contracting process is a request stage, which allows stakeholders to gather key information associated with a new or amended contract. This can include essential data like standard contract clauses, terms, terms of service, key dates, and contract counterparty details. CLM platforms then consolidate the requested information into a draft contract, or parameters.
This contract draft may then be subject to a negotiation between the contracting parties. A good CLM system can allow legal and commercial teams to collaborate on contract documents, ensuring that the right information is included in a finalized agreement. The best-of-breed CLM tools also enable business users to self-service contract creation within line of business systems, reducing the burden on internal legal and sales departments.
Once the contract is ready for sign-off, it can be emailed to the client for their electronic signature. A CLM solution that’s integrated with eSignature platforms like DocuSign or Dropbox Sign can make this step as simple as possible, improving turnaround times for contract approvals.
Negotiation
Contract negotiation is a key stage of the contract lifecycle. The ability to streamline the process and track all of the activities involved with this stage can make a huge difference to businesses and their bottom line. This is particularly true for highly negotiated contracts where the potential to renegotiate can be significant.
Traditionally, Contract Lifecycle Management tools have been highly customized enterprisegrade software systems that required months or even years to deploy. However, as the cost of development has decreased, a number of startups have begun to introduce modular “point solutions” that focus on specific stages of the contracting process.
For example, a startup called PandaDoc has an intuitive contracting platform that allows teams to build, sign and track all of their contracts in one place. Founded in 2011, the company offers a feature-rich, affordable and easy to use solution that helps organizations manage legal and financial risks.
Meanwhile, Icertis offers CLM software with comprehensive workflow automation that can automate tasks and remind all parties of their responsibilities. This helps to eliminate bottlenecks and improve turnaround times for contract approval. Requests for esignature can be automatically sent out and received directly in the inbox which can speed up the review and signature process by a significant amount. A CLM tool with e-signature capabilities can also provide a clear audit trail of all the changes that have occurred throughout the contracting process.
Execution
The contract lifecycle process includes several stages: Requests, Authoring, Negotiations, Approvals, Signatures, Performance, Analysis and Renewal. For most organizations, juggling the contracts that make up their business is an important but challenging task. Contract management software reduces risk, improves productivity and maximizes contract value.
Today’s Contract Lifecycle Management tools are not your traditional document management systems of the 1990s and 2000s. They are fully digitized and automated. They provide the same features you’d expect from modern, enterprise-grade software: a central repository, shared workflows, security and compliance safeguards. They make contracting fast, consistent and accessible to the entire business — not just legal teams.
In the negotiation phase, legal teams can use software to draft a contract from a template or from scratch. They can track changes and versions, as well as share them with counterparties. They can also incorporate eSignature capabilities. This can be a complex and time-consuming process, but new Contract Lifecycle Management tools streamline these tasks for faster contract execution.
Then, once the contracts are signed, a CLM system can monitor them for performance issues. It can alert legal and commercial teams to problems. Users can also access and analyze contract data for insights that can help drive better business outcomes. For example, they can determine if a supplier is performing as expected and proactively take action before contract expiry or renewal.
Monitoring
Contract managers need a tool to help keep tabs on contracts throughout the lifecycle. This includes keeping track of key dates, obligations, compliance standards, and other parameters. CLM software helps make the monitoring process easier by delivering automated key date and task alerts, user-friendly dashboards, and comprehensive compliance and obligation status reports.
Once a contract is executed, parties will need to review its terms and conditions for compliance with internal and external regulations. CLM solutions can help with this by enabling users to view, manage and modify the terms and conditions of contracts with a click of a button. They can also automatically re-route contracts to the appropriate departments for review and provide users with access to an audit trail of document changes, comments, and versions.
Managing contracts is complex and requires an approach that is both agile and data-centric. Unfortunately, legacy tools often struggle to meet these needs. This is because they’re typically slow, lack integration with other systems, and are prone to human error. CLM software streamlines contract processes to make them faster, more consistent, and accessible to the wider business – while minimising risk. As a result, they’re able to improve productivity and enable faster routes to revenue. With the right platform, legal departments can create a contracting framework that drives the entire enterprise.
