The last few years have been a tumultuous time for the contract industry. The shift from paper-based to digital contracts, combined with the rise of automation, has created a need for efficient ways to manage all kinds of legal agreements. A contract lifecycle management software is one solution that has emerged as a leading option for managing this transition. In this article, we’ll take a look at how CLM works in practice — what it does, why it’s important, and how it can make your company more efficient.
Negotiation
Contract negotiation is a complex process. Negotiations can take months, or even years to complete. And that’s before the contract is signed and executed. This is where contract lifecycle management (CLM) software comes in. The software provides easy-to-use tools that help streamline every step of the process, from preparing for negotiation to communicating with team members and following up on action items. It can even automate some time-consuming tasks like searching for terms in contracts or negotiating terms automatically with prebuilt templates based on your industry standards, client information, and other details from your system database.
Drafting
Drafting is the process of writing a contract. It is a collaborative process that generally involves at least two parties who may or may not be represented by legal counsel. The drafting phase can be divided into three stages:
Preparation: This includes creating a draft of the agreement based on information provided by all parties, as well as research into existing contracts in related industries and markets.
Review and negotiation: This involves reviewing the draft with all relevant parties to address any concerns about language or details, which could lead to changes being made before finalization.
Finalization: When all involved parties are satisfied with their respective positions within the deal (i.e., no party feels like they’re getting a raw deal), this stage involves finalizing it so that it’s ready for review by someone else outside your organization—like an attorney or other third party who reviews your contracts.
Review and approval
In the review and approval process, the document goes through multiple rounds of revisions before it’s finalized. This prevents errors from being made, as well as ensures that all key stakeholders agree on what’s being produced. If a document gets sent to an employee for review without going through this process first, they may not understand its importance or how it fits into their daily workflow — and could therefore reject it out of hand because of how busy they are.
Reviewing documents is also a good way to spot red flags like faulty logic or poor spelling/grammar before the final product is released for public consumption. In this way, you can avoid embarrassing mistakes that could tarnish your brand’s reputation if discovered by someone outside your organization who didn’t see them coming.
Execution
After the contract has been signed, it must be reviewed by various parties before being authorized for execution. Once that authorization is granted, all parties fulfill their obligations under its terms. By using CLM software, organizations will be able to monitor the performance of contractors, suppliers, and vendors. You will be able to hold them accountable for their work as well as ensure that they comply with legal requirements at every step of the way (e.g., payment schedules). This helps prevent disputes from arising later down the line when both parties don’t fulfill their part of the legal agreement.
The next step involves managing contract performance over time which includes reviewing deliverables submitted by contractors against agreed-upon specifications or standards set out within contracts. This includes monitoring adherence to deadlines established in terms sheets signed during negotiations, evaluating quality control measures put forth by suppliers, vendors, and contractors, and ensuring compliance with industry standards across all stages of a project’s lifecycle.
Tracking and compliance
Compliance is critical for all businesses. It’s the main reason why many organizations use contract lifecycle management software. You must stay on top of your contracts and ensure they are signed by all parties before moving forward with any business deal. This helps prevent problems such as missed deadlines, missed payments, or disagreements later down the line.
With all of these processes automated, you can focus on building and selling your products. Using contract lifecycle management software helps to improve efficiency and reduce the time spent on manual tasks.
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