What is Contract Lifecycle Management (CLM)?
The term “contract lifecycle management” (CLM) refers to the overall administration of contracts starting from its initiation, termination and further to its renewal by covering the whole of the management span of the contract with the purpose of enhancing business performance and reducing risk.
Why is Contract Lifecycle Management Important?
For every business, efficient contract lifecycle management results in time and cost savings. CLM assists organisations in reducing contractual risks, ensuring regulatory compliance, auditing contracts for performance, and maintaining the organisation from start to finish.
Let’s understand the various stages in the CLM Process.
Contract creation and authoring:
- Planning: Identifying the contracts and relevant documentation to support the objective of the agreement is the first step in the contract management process.
- Authoring: Authoring of the contract is one of the key elements in contract lifecycle management. To draft the agreement that meets the strategy requirements by ensuring that everyone engaged in the process is aware of the goals and at ease with any tools they will be using. Writing a contract by hand takes time, but using automated contract management tools may simplify the procedure significantly.
Contract collaboration and negotiation:
The parties to the contract shall be able to review different drafts of the contract once it is written and mark any differences to shorten the bargaining process.
Contract award and execution:
- Award: The stage that experiences the biggest obstacles is getting managing permission which can be avoided through the process of ‘Contract Lifecycle Management’ by designing customised approval procedures that include parallel and serial approvals and keep decisions flowing quickly.
- Execution: Signing of the draft agreement is the final stage of executing a contract. Through the use of electronic signatures and fax capabilities, the parties are able to manage and expedite the signing process while executing the contract.
- Handover: After the contract is executed, it is important in CLM to ensure that key stakeholders are meeting the deliverables and that the contract’s value is not declining throughout the premature stages of expansion as accounted for, as this calls for intensive project management.
- Amendments: A system of scrutiny checks must be in place to modify the initial contract when issues that were ignored are discovered and are to be revised.
- Reporting: It does not entail creating a contract and immediately filing it away without further consideration; therefore, contract audits are crucial for identifying both parties’ adherence to the provisions of the contract and any potential issues.
Contract close-out or renewal:
The parties to the contract may face financial risk if the agreement is not renewed on time. The contract must be renewed to remain in effect after its expiration date.
Benefits of Contract Lifecycle Management
- Version Control: There are multiple conversations between the parties during a contract negotiation which eventually leads to numerous versions and rounds of amendment to the contract. Through CLM, the tracking of a contract’s versions is simplified to recent versions with the option to track the previous versions and changes.
- Real-Time Collaboration: As the physical execution and delivery of the contract slow down a contracting process as it may take even an eternity for the parties to physically receive the material, examine, approve, and advance it through the contract phases. Contract Lifecycle Management helps the parties to work together on documents in real time through an electronic system.
- Better Security: A contract includes multiple attachments like annexures, renewal documents, amendments, novated clauses, etc., which can’t be kept secured in a data folder throughout a contract’s lifespan, which requires good security. Contract Lifecycle Management offers safe storage and uses more innovative tools like file sync and sharing and electronic signature to secure the data.
- Accessible Templates: Templated clauses in contract libraries make it effective in documentation as pre-approved clauses are already stored in a centralised repository to aid in establishing formal procedures to shorten contract lifecycles and the utilisation of the most recent iterations of templates. CLM will place emphasis on gathering data as processes are completed and templating the contract requests.
- Advanced Analytics: Contract Lifecycle Management will simply get information on the status of contracts and will present a comprehensive picture of all your active contracts by automating the process of manually looking for statuses and producing reports on where contracts are in their life cycles. This can also be put graphically through relevant data grids in real time, enabling users to drill down to the contract records.
- Risk Avoidance: Contract Lifecycle Management is backed by corporate attorneys who assist in contractual compliances and fulfilling obligations by monitoring any legal gaps. CLM may also prevent payment mistakes that result in charges or penalties by using it.
- Automating Approvals: It automates the approval process of all the parties involved by ensuring that contracts are always approved before being applied for its execution.
How will Contract Bazar help you with Contract Lifecycle Management?
Contract bazar is backed by a Legal Attorney who will help you foresee your contractual obligations by creating a source of legal depository for all of your contracts through CLM as:
- Creating a contract repository to keep your data secure, organised, and accessible in a centralised online repository folder with strong security measures.
- Restricting the access and permissions of your contracts to the employees by maintaining the agreement’s confidentiality through administrator-controlled access to the folders and documents they need to self-serve the contract data they require.
- Using the folder-based structure to upload files and directories and to alter the contract management system’s default organisation of your contracts depository.
- Customizing the data reports by opting for milestones alerts to stay ahead of your performance of contractual obligations.
- Using the negotiating tools to allow you to capture the data points in a contractual negotiation.
- Using the extensive search capabilities, you may easily discover the tailored DIY agreements and the customised legal clauses in your depository.
- Get the tailored reporting of tag-based custom reports to store, schedule, and communicate with corporate stakeholders through graphs and representative figures to gain insightful information about your agreements.
- Sign documents anywhere using the e-signature facility provided on Contract Bazar.
Contract Lifecycle Management (CLM) refers to the complete administration of contracts from initiation to termination and renewal, aimed at enhancing business performance and reducing risk.
Efficient contract lifecycle management results in time and cost savings for businesses. It helps reduce contractual risks, ensures regulatory compliance, audits contracts for performance, and maintains the organisation from start to finish.
The Contract Lifecycle Management process involves the following stages: contract creation and authoring, contract collaboration and negotiation, contract award and execution, contract administration, and contract close-out or renewal.
Contract Lifecycle Management provides various benefits like version control, real-time collaboration, better security, accessible templates, advanced analytics, risk avoidance, and automated approvals.
Contract Bazar provides a secure and centralised online repository to manage all contracts, restricts access to employees, customises data reports, and allows negotiating tools to make the contract process efficient. The service is backed by legal attorneys to ensure compliance and fulfilment of contractual obligations.