Contract management is the quintessential function for any business organization that involves collaboration with multi-functional teams, external vendors, and customers. Law departments have a significant role in ensuring that the contract management processes align with the regulatory compliances and the company's internal process as well as business interests. Even with the best of the teams, contractual processes may still continue to plague most legal departments, amidst other workflow challenges that include collaborating efficiently with teams, ad-hoc approaches to manage workflows, and streamlining all the individual functions into one.
This is where an automated Contract Lifecycle Management system can be of immense benefit. The Contract Lifecycle Management (CLM) system ensures, among other things, prompt generation of contracts, timely approvals, and implementation of contracts that help improve the performance of contracts and allow teams to have timely access and control. Some of the key stages involved in the process of Contract Management for teams working on legal contracts are:
Request for a contract- this step marks the beginning of the contract workflow process. This refers to a request for a contract, sent by any of the several means available under the CLM system. This involves:
Some contracts may be pretty straightforward, others may be as complicated as it can get. In other words, each contract or agreement is unique in its way. With teams working in tandem to secure contracts, standardized contract types will typically be the go-to for more reasons than one. That said, there will always be a need for customization of the templates to suit specific business or organization objectives and realities. This is where the contract negotiation phase becomes critical and is vital to the successful achievement of the targeted deliverables.
For every contract, standard templates serve as a good starting point for companies to streamline the contract lifecycle.
Establishing an effective channel for the approval process is crucial at the point of assessment and evaluation, re-drafting, and review of contracts. This is a pivotal stage involving negotiation, redlining, and vetting.
Contract execution, till date was a manual process of getting the wet signatures on the document. This process also caused inevitable delays, logistics issues and operational hassles. With e-signatures fast becoming an established practice today, execution of contracts can be done from any device, safely and securely that allows businesses to standardize business processes and improve overall customer experience. Thus, an e-signature integration enables an organization to gain:
The penultimate stage involves contract renewals upon expiry, negotiations before approvals, and other vetting processes. In a legacy system, notifications and updates had to be tracked and traced manually, which often led to details falling between the cracks. In sharp contrast to the legacy systems, the CLM has features for timely and automated reminders that can significantly reduce the burden of managing contracts during the post-execution stage. This enables:
These five stages of contract automation systems, in other words, Contract Lifecycle Management systems called CLM for short are what help streamline the entire contract process, taking the parties smoothly through contract creation, negotiation, approvals and execution – then taking over and assisting the contract management and administration phase of renewals updates etc. Thus, the net result is a set of streamlined operational processes that tend to give efficiency and productivity benefits over time