Contract Lifecycle Management – A Guide For Beginners
While managing contracts may not be as engaging as some other tasks at a workplace, it’s still essential for an organisation’s success. The problem is that it’s both time-sensitive and time-consuming. How do you streamline it and save time?
If you are just starting out, you should know that there are a few proven strategies you can use to excel at managing contracts in your organisation. Before we take a closer look at those strategies, let’s define contract lifecycle management.
What is contract lifecycle management?
Every contract, no matter its value, can be divided into several key stages:
- Contract creation – during this phase, you will have to draft the contract regarding the arrangement with a 3rd party company such as a supplier of services and goods;
- Contract negotiation – this stage refers to the negotiation of contract terms and responsibilities between people on both sides;
- Contract award – both sides sign the agreement after ensuring that everyone understands the contract commitments;
- Contract administration – during the period of the contract, both parties do everything in their power to comply with the rights and obligations defined in the contract agreement;
- Contract analysis and renewal – at the end of its lifecycle, the organisations involved can renew the contract with the same conditions, renegotiate, or terminate it.
Contract lifecycle management, or CLM, is a comprehensive system that enables you to monitor the progression of a contract throughout its lifecycle. A CLM helps organisations achieve several goals:
- Maintain compliance throughout the contract lifecycle;
- Meet deadlines and the requirements for the quality of deliverables;
- Follow the contract according to the terms.
With a well-planned CLM strategy, you will be able to effortlessly achieve those goals, even if you have to manage dozens of contracts that were at different lifecycle stages at the time.
Challenges of contract lifecycle management
Given how dynamic the workplaces have become and that many organisations use remote and hybrid teams, it’s becoming increasingly hard to be efficient at CLM. Here are some of the most common challenges you can expect to encounter.
Many organisations don’t keep all contract-related documentation in one location. It’s often scattered across departments. Some documents are also printed, while others are on thumb drives, email inboxes, and online storage drives. It makes accessing the documentation very difficult and can take much more time than necessary.
Missing or inaccurate information
One of the key strategies of efficient CLM is standardised contract request or intake. However, many organisations don’t have these standards. When using different contract request forms, you expose your organisation to the risk of missing or inaccurate information. Operating on false premises and incomplete input can result in contract termination.
Inability to track contract status
Managing one contract is easy in terms of tracking contract status. However, the situation becomes incredibly difficult when you have to manage dozens of contracts, each at a different stage. Keeping contracts flowing without being able to track their statuses in real-time is borderline impossible without making oversights and errors.
Collaborating on a contract can help you ensure compliance and meet deadlines. Collaboration becomes difficult when your contract documentation is scattered and you cannot track contract statuses. Things can really get out of hand if you don’t provide a dedicated communication channel and a document version control system to facilitate collaboration.
CLM is time-consuming
CLM is a complex operation that requires a lot of time and effort, especially if you like to run a tight ship. Ensuring compliance with contract terms, meeting deadlines, and keeping track of all contracts simultaneously requires multiple staff members and many work hours. You’ll find this challenge almost impossible to overcome if the number of contracts keeps going up and you can’t hire more staff.
The best CLM practices to help you overcome common challenges
Since you are new to CLM, you probably don’t know where to start. The following best CLM practices can help you overcome the common CLM challenges and prepare you to manage contracts at scale.
Automate as many tasks as possible
CLM encompasses many administrative processes. These processes are the same for every contract – they are repetitive and dull. Most importantly, they take precious time away from your staff. The best thing you can do is speed up this process.
How do you do it?
You should consider automating as many CLM processes as possible. You can keep your staff in charge of competency-based processes while automating document creation, approvals, and contract reviews.
Standardise your contract documentation
While we are on the subject of CLM as an administrative process, it’s important to note that you will need to standardise it. There is no need to copy, paste, and edit walls of text from other contracts – it usually results in many errors, and contracts end up stuck in the review phase.
Instead, have your specialist department build your own or use a pre-built contract template library. It significantly reduces the number of errors, streamlines management, and enables even those less experienced in legal matters to complete tasks error-free.
Next, as the best CLM practice, we have document centralisation. Instead of having documents scattered all over the place, you should standardise your document storage.
Your staff will be able to find documents hassle-free, and if you choose to store them in online storage, your staff can play their role in CLM on the go and from any device they have access to at the time.
CLM benefits significantly from collaboration. With more people on the job, you can speed things up, quickly identify and address delays, rectify errors, ensure compliance, and renew contracts.
There are two ways to do it. You can either centralise documentation using a cloud storage service or invest in CLM software such as Contract Eagle to completely digitise your CLM operation.
How Contract Eagle can help you improve your CLM operation
Contract Eagle is a cutting-edge contract management software developed from the ground up with efficient CLM in mind. It leverages advanced technologies such as cloud computing and Artificial Intelligence to minimise the effort and time of CLM. Here is how it can help you improve your CLM operation.
Keep all your contracts in one location
With Contract Eagle, you will be able to centralise your contract documentation, thus keeping everything secure in a single location. Contract Eagle delivers an advanced database solution that allows you to keep different versions of the same document in one location, including relevant contract documents such as performance reports.
You can choose whether you want to have Contract Eagle installed on-premises or use it as a cloud-based service.
Save countless hours
The Contract Eagle CLM platform can save you precious time. You will have access to contract templates, automated document creation, electronic signatures, and complete visibility of the entire process. All these features will help you streamline your CLM efforts, ensure compliance, and save countless hours of manual labour.
Automate CLM processes
Contract Eagle delivers comprehensive automation capabilities. However, the system ensures that the important tasks are completed using human agent-assisted methods. For instance, the system can automatically escalate tasks if a designated person doesn’t respond, and there is Artificial Intelligence to help streamline legal reviews and automate data entry.
Get important notifications
With a built-in notification system, Contract Eagle will ensure you never make an oversight again. You can receive notifications about deadlines and renewals for every contract. Plus, you get access to an easy-to-use dashboard that features all the key contract information.
Easy onboarding and training
Adopting a new software solution, especially one that streamlines such an important process, such as CLM, can be challenging. Contract Eagle excels in this department too. The company has a team of professionals that help companies identify the best way to use the platform, train and onboard staff, and customise the platform to suit your specific business needs.
CLM is a crucial business process with a unique set of challenges. Knowing how to overcome these challenges is just one piece puzzle. The final, often missing piece is a reliable software solution that can help you automate and streamline CLM in your organisation.