Contract lifecycle management (CLM) software is a solution that helps organizations properly manage contracts from initiation through execution and renewal. By digitizing the contracting process, CLM solutions enable better oversight, compliance and cost savings compared to traditional paper-based systems. Let's take a closer look at the key benefits of CLM and how it streamlines each step of the contract process.
Initiation and Negotiation
The initiation and negotiation phase is where a contract is proposed, drafted and negotiated between parties. CLM software streamlines this process by allowing users to create template contracts with standard terms and conditions. Users can then clone templates for new contracts and easily modify sections as needed for each unique deal. Built-in version control and editing capabilities ensure all stakeholders are reviewing the latest contract draft. Users can add notes, track changes and collaborate in real-time on negotiations. These digital workflows save significant time compared to emailing back-and-forth revised Word documents.
Approval Management
CLM solutions provide visibility and control over contract approvals. Approval workflows automatically route contracts to the appropriate reviewers in a company based on criteria like deal size, vendor, business unit etc. Reviewers receive notifications and can directly approve or reject contracts within the software. Comprehensive audit trails capture all approval activities for compliance. Automating approvals with electronic signatures eliminates lengthy email chains and external approvals that often cause delays. Contract lifecycle management (CLM) software organizations the tools to precisely define and enforce approval processes.
Compliance and Risk Management
Proactively managing compliance and risk is a core function of CLM software. Features like obligation tracking, clause libraries and analytics help users address important issues. For example, users can establish obligations within a contract to remind stakeholders of upcoming renewal dates, KPI reviews or other key tasks. CLM solutions also includes predefined contract clause templates for standard provisions related to areas like payment terms, confidentiality, indemnification etc. Users can then search clause libraries to ensure consistency and proper risk mitigation across all deals. On the reporting side, CLM solutions provide dashboard views of expiring contracts, compliance exceptions and risky contract types. This visibility helps companies avoid costly compliance failures and proactively address risk.
Execution and Performance
After approval, CLM supports contract execution through features like electronic signatures, document management and performance tracking tools. Online workflows allow parties to quickly sign contracts digitally without shipping paper copies back and forth. CLM then stores fully executed contracts along with all supporting documentation and correspondence relating to the contract. Performance-based features let users link contracts to other systems to automate and track performance metrics, milestones or obligations like order fulfillment, project tasks, SLAs or KPIs. Alerts notify when thresholds are approached so corrective actions can be taken. These execution capabilities ensure proper performance and provide evidence for future renewals or disputes.
Renewal and Modification
CLM actively supports contract maintenance through end of term. Renewal date reminders automatically prompt users to begin renewal processes in advance. Users can clone expired contracts as a starting point for new renewals while retaining version history and metadata from prior deals. Any modifications to terms, pricing, scope etc. during renewal are easily tracked. Digital workflows improve responsiveness in renewal negotiations by allowing all stakeholders to review updates simultaneously. Once complete, CLM generates renewal documents including comparisons of changes for approvals, execution and ongoing archiving alongside original contracts. This provides a seamless closed-loop process for maintaining important business arrangements.
In today's compressed business environment, contract management impacts nearly all departments and transactions within an organization. By digitizing the entire contract lifecycle, CLM solutions allow users to standardize processes, gain visibility, ensure compliance and collaborate more effectively. Leading providers offer sophisticated capabilities that streamline contract initiation, approval, execution, renewal and modifications. Overall, CLM is enabling companies worldwide to migrate contract activities from paper files into centralized, digitally-driven workflows. This delivers significant savings in time, costs and risk while supporting better strategic decision-making through real-time metrics and analytics across the entire contract portfolio.
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Vaagisha brings over three years of expertise as a content editor in the market research domain. Originally a creative writer, she discovered her passion for editing, combining her flair for writing with a meticulous eye for detail. Her ability to craft and refine compelling content makes her an invaluable asset in delivering polished and engaging write-ups.
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