Have you ever wondered what the term contract lifecycle management means in relation to other terms like contract management or Contract Success? Contract lifecycle management is a process, going through 9 major phases designed to take a contract all the way from drafting to completion and long term management. Executing a contract’s entire lifecycle, including the management phase, from a single platform is what is known as Contract Success.
Nine Phases of the Contract LIfecycle
Step 1: Capture: The first thing to do is bring all of your contracts into a single, central location. Then, capture and store all of the data from those contracts for later reference.
Step 2: Track: Monitor all of the significant data so that you never miss a delivery deadline or a payment. Don’t neglect old contracts, as they may have auto-renewal that you will want to monitor and terminate, should the situation require.
Step 3: Author: Establish templates and clause libraries to standardize legal language and bring continuity into every contract that your company produces. Use our templates, or generate your own for every occasion. Create contracts swiftly in a controlled environment with collaborative input from your entire team.
Step 4: Create: Creating a contract is more than simply authoring it. Creating a contract involves both authoring and reviewing and revising the contract multiple times. It involves careful editing and clarification of terms and clauses.
Step 5: Approve: Certain contracts need to be approved by secondary and tertiary departments, such as legal or management. Find the proper person to sign off on the document, and obtain their signature. This is best done before negotiations begin, just as the proposal is about to go out.
Step 6: Negotiate: Properly negotiate terms and clauses with suppliers and clients, then revise and edit the document thoroughly to incorporate these changes. Review it with the client and continue alterations until a deal is established properly.
Step 7: Sign: A contract must be signed by all relevant parties privy to the contract. It should also be validated by a third party to establish that the final draft of the contract was not altered in any way after execution copies were sent out.
Step 8: Analyze: Analyze live contracts for potential risks, rights and obligations, outcomes, and compliance. Prepare both canned reports and ad hoc reports for executives and legal departments. The more information administrators and contract managers have, the more effectively they can deal with unexpected risks and outcomes.
Step 9: Renew: Renewal is not necessary for every contract, but it can be extremely useful for some contracts. Auto-renewal is an option for renewing contracts, but an effective contract management system can monitor when a contract is coming to a close and renew efficiently.
Benefits of Contract Success for the Contract Lifecycle
Effective Timelines for the Contract Lifecycle
Deadline alerts and timeline planning features helps the contract management team establish and monitor timelines for the contract lifecycle. Increase compliance by careful implementation of efficient timelines.
Create Versatility and Visibility
Integration with other web services increase versatility and visibility by creating both new ways to utilize and spread data, and a visible audit trail for transactions and data disbursement.
Secure All Data and Documents
Documents and data stored in the central repository are encrypted and housed in secure servers throughout multiple countries. Servers are secured from both destruction and breaches, making it virtually impossible for data to go missing or be viewed by anyone not authorized to do so.
Monitor Compliance and Performance of Both Contracts and Suppliers
Gather information and communicate with suppliers and clients to verify payments, deliveries, and other areas of compliance concerns. Monitor your own compliance to avoid unwanted litigation and losses.
Govern and Collaborate Effectively
Use CLM software to track comments, revisions, edits, and ideas in a single, central location. Clients and suppliers can also have input into the contract drafting process. Electronic signatures save time and costs of printing.
Properly Allocate Staff Workloads and Resources
Managing multiple contracts in the cloud is easier than managing them by hand. Assign tasks to various team members to do individually. Because all of the data is in a central location, the process will move along more quickly and efficiently.
The Benefits of Automating Contract Lifecycle Management
Managing contracts effectively is best done through an automated system. Automated systems provide the following benefits to the investing company.
- Improve compliance by 55%
- Increase rebate and discount usage by 25% – 30%
- Reduce material/service costs by 2% – 7%
- Improve contract renewal rates by 25%
- Improve revenues by1% – 2%
- Reduce administrative costs by25% – 30%
- Standardize terms and procedures
- Use advanced analytics to adjust and maximize efficacy
- Integrate with other online services
- Generate reports automatically
Managing contracts is a necessary job, tedious as it can be. Implementing CLM software alleviates some of the anxiety and stress associated with attempting to manage the necessary amount of contracts by hand. The results produced by an automated CLM system are measurable and sustainable. Proper contract lifecycle management provides transparency, governance, risk management, and mitigation, compliance management, cost reduction, and management optimization. It is clear that one of the most significant investments that a company can make is in maximizing its contract lifecycle management, which is best done through automation.