Types of Contracts That Benefit from Contract Lifecycle Management
When an organization relies on contracts to drive business forward, speed and accuracy in the contract lifecycle are vital. But the road from contract generation to a signed agreement can be long, complex and time consuming. When each step is done manually, the process can be prone to costly mistakes caused by disorganization, inefficient drafting and negotiation processes, and human error.
Managing your contracts with contract management software allows you to store all your contracts in one place, automate nearly every step of the contract generation and signing process, and access any contract in moments. This digital, centralized approach also lets you analyze your entire collection of contracts to discover deeper insights into trends that can highlight otherwise unseen risks or opportunities.
Read on to learn about what types of contracts benefit the most from contract management software and how digitalization can improve your contracting process.
What is contract lifecycle management?
Contract lifecycle management (CLM) is software that helps manage how you prepare, sign, store and act on your business agreements. The contract lifecycle consists of five steps:
- Generation. Before a contract can be evaluated for negotiation or signature, it first has to be created. This is sometimes done from scratch but more often relies on templates.
- Negotiation. Once all parties have reviewed the contract, they negotiate for changes to terms.
- Signature. When negotiations are over and terms have been approved, all parties sign the contract. For larger contracts, signatures may be required from multiple people from each party.
- Storage. Once a contract is signed, it needs to be stored in a secure and accessible location.
- Retrieval, analysis, and updates. Over the lifetime of a contract, it may need to be accessed for many reasons, including regulatory compliance, analysis, or to update it with new information or terms.
Types of contracts that benefit from CLM
Any type of contract will see some benefit from CLM. However, certain contracts benefit significantly from the speed and precision of a digital contract process. Complex, high risk and error prone contracts are especially well served by a digital approach to contract lifecycle management.
These three types of contracts see significant benefits from CLM:
Your company’s sales process is only as fast as your contract approval process. But if your sales contract is drafted from scratch, negotiated terms are reviewed by humans, and the signature workflow relies on emails being forwarded to each signee, you lose valuable time to a needlessly complex process.
A digital contract process takes over the most tedious and bottleneck-prone processes, assisting with proposals, automated quotes, contract generation, and approval workflow automation. When all these steps are handled by the CLM solution, employees can focus on negotiating a more favorable contract and delivering better client service.
The procurement process is what allows your business to run smoothly. Inefficient approval processes can cause problems with getting necessary materials on time, while disparate contract storage can lead to multiple business units making duplicate purchases from the same supplier. CLM automates approval workflows and can help reduce excess spending and identify opportunities to combine vendor contracts to take advantage of volume discounts. And if a vendor encounters supply chain disruptions, CLM enables fast and accurate contract renegotiation.
Retail and service contracts
When you have a large customer base, each with their own long term contract, it is vital that each of these contracts be accessible at a moment’s notice. If your business wants to provide quick access to any contract that is still active—no matter how long ago it was signed—storing paper copies in filing cabinets is no longer an option. CLM enables intelligent search and retrieval; think of it as a feature-rich search engine for your organization’s contracts.
By adopting a digital contract process, retailers are able to easily guide their customers through the contract and provide transparency and a better customer experience.
How digitization makes the contract process more efficient
Going digital with contract lifecycle management makes the entire process more efficient in four key ways:
CLM can automate most steps of the contract lifecycle. It can generate contracts based on pre-approved clauses and templates, which saves time for the sales and legal teams. And when the CLM system is integrated with your CRM and other business systems, it can automatically populate customer details, which eliminates the need for manual data entry and sidesteps the risk of human error.
A CLM solution stores all contracts in a centralized location. A best in class CLM tool also has built in collaboration that lets everyone involved in the contract management process edit, comment, assign tasks, track changes, and compare versions without having to make duplicate copies. With CLM, searching for the latest version of a contract is a thing of the past.
The electronic signing process has become more than a preference—it is now generally considered a standard practice. Leading CLM systems use e-signature to further accelerate the signature process. Instead of signing multiple copies of a contract with a pen and faxing or mailing those copies to everyone else who has to sign, each signer only needs to provide one e-signature per signature field.
Even the best legal teams only have so many hours in a day to analyze contracts. A leading CLM solution can collect broad insights from contracts using AI to search through contracts, extract information and find patterns. A well-trained, intelligent contract analytics model can also provide recommendations for the future based on past data. When unexpected events happen, it can comb through contract terms to find, triage and prioritize the relevant information to make decisions in the present.
Ready to see how a leading contract lifecycle management solution can improve your contracting process? Explore CLM with DocuSign.