Navigating your CLM Platform can be difficult if you aren't equipped with a thorough understanding of the contract lifecycle. The contract lifecycle is the process under which a contract is authored, reviewed, sent for signature, executed, and - possibly – renewed. The "lifecycle" is an archetype used to characterize and understand a contract's complex growth. The lifecycle voyage begins with contract requests and ends when said requests are achieved – with the feasibility of contract renewal. With so many complex processes involved in contract lifecycle management, it can be easy to sail toward the treacherous waters of contract mismanagement. With a strong sense of how to leverage leading CLM software, however, you can quickly get your legal operations sea legs! Read on to learn how you can set sail toward better contract management.
To set sail toward better contract management, you need to understand your CLM platform. A contract lifecycle management platform can automate and centralize your organization's contract, agreement, committal/obligation management lifecycle, and vendor management process. It can let legal and business teams manage contracts efficiently and decrease the headache of manual processes.
Stage 1: Contract Requests - Learning the Ropes
Ahoy Matey! Before you set sail, you must learn the ropes when it comes to contract requests. This is the kick-off to the contract lifecycle. In this stage, contract parties and stakeholders can set expectations regarding the contract. The first stage of the contract lifecycle allows parties and stakeholders to gather crucial details associated with a new contract, an amendment, a renewal, etc. The contract request stage can determine whether a contract enjoys efficient processing or is plagued by delays and bottlenecks.
Now that you've learned the ropes about contract requests, you can move on to the next stage of the contract lifecycle.
Stage 2: Contract Authoring - Your Sailing Plan
Hop on board sailors! In this stage, contracting professionals can utilize contract lifecycle management software to author and draft contracts. Existing document templates can be leveraged in contract management software for contract authoring. During this stage, it's essential to keep in mind who is entering a contract, which services are being offered, and which terms have been agreed upon.
You've authored your sailing plan, but have you determined the best time to set sail and start negotiating?
Stage 3: Contract Negotiations – Begin Your Voyage
Begin your voyage with the contract negotiation stage - perhaps the most important stage of the contract lifecycle. During this stage, contract parties negotiate the framework of specifications drafted during contract authoring. After back-and-forth redlining and collaboration, agreed-upon terms and conditions provide clear insight into the expectations of contract parties.
Leading CLM software can supply the tools to:
- Merge contract document data with clauses from a pre-approved clause and template library.
- Assign clause ownership – which permits a resource allocated to a clause to be quickly notified if that clause is interacted with.
- Restrict external resources exclusively to specific areas of the system that pertain to their processes.
- And leverage document version control.
To prevent your contract negotiations process from sinking, make your case for contract lifecycle management software.
Stage 4: Contract Approvals – Don't Rock the Boat
To avoid rocking the boat, your contract approvals should follow a general approval time as they bounce back and forth between both parties.
It's vital to avoid using scattered spreadsheets, infrequent emails, and several shared drives. You should also note that deferred contract approvals can go against business rules and regulatory compliance rules, which may lead to missed opportunities for time-sensitive discounts, pricing options, and special terms.
For a smooth and efficient contract approvals process, contract management software can support intelligent contract workflow automation, robust audit trail functionality, and the ability to authorize or deny contracts with automated email notifications concerning impending contract approvals and other mission-critical responsibilities and requirements. Now that you are on board with a smooth and efficient contract approval process, I think you're ready for the next step!
Stage 5: Contract Signatures - All Hands on Deck
We're going to need all hands on deck for this step!
Your organization may be using signing methods that are out-of-date and sluggish. Not only that, but high costs associated with wet signatures and postage can diminish your organization's bottom line. Lastly, signature bottlenecks can lead to delayed contract execution.
With trusted contract lifecycle process software, your organization can streamline signature procedures with swift and user-friendly electronic signatures. Additionally, your organization can cut send-to-sign time by as much as twenty percent with an innovative document toolbox, various placeholder configuration settings, one-off signatures with an easily accessible document collaboration portal, and rules-based signing configuration options. Your organization needs all hands on deck to follow through with a trusted contract lifecycle process software.
Stage 6: Contract Obligations – Batten Down the Hatches
Inattentive contract obligations management can leave your team at risk, so you should batten down the hatches and find a CLM solution. Overseeing contract obligations with emails, disjointed spreadsheets, and decentralized documents can lead to your team missing key dates, milestones, deliverables, and payments. This can leave your organization vulnerable to breach of contract, lawsuits, a harmed reputation, and wasted revenue. SOS!
A CLM solution can help with automated key date notifications, task alerts, contract obligation status reports, milestone tracking, and highly configurable dashboards for powerful contract analytics. A leading contract software platform can help your team review user-friendly dashboards for contract obligations data such as:
- Contract KPIs (key performance indicators) e.g., the total number of open contracts, pending contracts, and contracts due for expiration.
- Contract key dates pending and resources assigned to contracts.
- Open tasks as per vendor management obligations.
Fortunately, CLM software has come to the rescue!
Stage 7: Contract Compliance - Sailing Close to the Wind
You are sailing too close to the wind! You discover violations of regulatory contract compliance rules and other business rules – which can lead to monetary penalties, lawsuits, citations, or worse.
A solution that supports comprehensive compliance management of ranging regulation types can help your organization steer clear of litigation fees, late fees, and contract compliance process delays. Detailed and perceptive contract compliance can help your team decrease risk and increase revenue while paving the way for future contracts. This contract software solution streamlines compliance with OFAC screening lists, FASB ASC 606 compliance, and other regulations and compliance types.
Luckily, robust CLM software with post-award contract compliance can help you avoid sailing close to the wind.
Stage 8: Overlooked Contract Renewals – Shipwrecked
Your organization can be left shipwrecked if contract renewals are overlooked! Contract renewal failure derives from error-prone, time-consuming, and inefficient contract renewal processes. This can increase risk and decrease the chance of opportunity realization. Your organization can miss renewal dates and in turn, miss out on valuable opportunities.
This last stage of the contract lifecycle can be saved with automated reminders and calendar alerts for contract renewal opportunities. Your organization can leverage a secure and web-enabled contract repository for outdated contracts. Moreover, your team can leverage robust audit trails for contract renewal status changes throughout the contract's lifespan. With contract analytics, you can protect your organization's contract renewal process by providing mission-critical insights putatively. Swift electronic signatures can automate the signing of agreements set for renewal.
It's been a good day of sailing. All eight stages of the contract lifecycle were addressed, and your organization is now equipped for better contract management!
CobbleStone Software – The Head Captain
Now that you know the eight stages of the contract lifecycle, you can set sail toward better contract management with CobbleStone Contract Insight®. CobbleStone Contract Insight CLM software can help you, your users, relevant stakeholders, and others experience smooth sailing with optimal execution! CobbleStone Software's advanced contract workflows include advanced contract tracking, AI-based contract risk management, and so much more!
Book your free demo of CobbleStone Contract Insight today to see all the award-winning tools you can use to set sail toward better contract management and automated CLM!
*Legal Disclaimer: This article is not legal advice. The content of this article is for general informational and educational purposes only. The information on this website may not present the most up-to-date legal information. Readers should contact their attorney for legal advice regarding any particular legal matter.