Stages of Contract Lifecycle Management and Benefits of Contract Management System

Contract Lifecycle Management (CLM) refers to the end-to-end process of managing contracts from creation to execution and thereafter. It involves the systematic and strategic management of contracts, from initiation and negotiation to ongoing monitoring, renewal, and termination. According to Forbes, implementing CLM allows the business to manage contracts seamlessly but also makes a favorable impression on the parties involved in the contracts.

The Different Stages of the CLM Process

Contract request: The process begins with a request for a contract, which outlines its scope, the parties involved, and the desired terms and conditions.

Contract creation: A contract is created after approval of the request. It involves drafting, negotiating, and finalizing the terms and conditions of the agreement. The parties involved define their obligations, responsibilities, and expectations and agree on the specific details of the contract. This stage can be time-consuming and complex, as the parties may have different objectives and interests.

Contract execution: After the contract creation, it must be signed and executed by all parties involved. This stage comprises formalizing the agreement and the legal binding of the parties to its terms. It may involve obtaining signatures and storing the executed contract securely.

Contract monitoring: Throughout the contract, it is important to monitor compliance and performance to ensure that all parties meet their obligations. It involves tracking key performance indicators, reviewing progress reports, and identifying and addressing issues and disputes which may arise.

Contract renewal: As the contract nears expiry, the business must decide whether to renew or terminate it.

Contract termination: If the business decides to terminate the contract, it must be done following the terms of the agreement.

Benefits of Contract Lifecycle Management Software

Improved efficiency: Leading CLM software like Plexus contract lifecycle management software automates many manual tasks associated with contract management, such as drafting, approval, and tracking. It can save time and reduce errors, enabling organizations to manage contracts more efficiently and effectively.

Enhanced collaboration: CLM software facilitates collaboration among internal and external stakeholders involved in the contract management process. It can improve communication and visibility, leading to better decision-making and more successful contract outcomes.

Increased compliance: CLM software helps organizations to stay compliant with legal and regulatory requirements by ensuring proper drafting, execution, and monitoring of contracts. It can reduce the risk of non-compliance and associated penalties.

Better risk management: CLM software helps organizations identify and mitigate potential risks associated with contracts, such as non-performance, non-compliance, and financial loss. It can reduce the risk of contractual disputes and associated costs.

Improved reporting: CLM software provides real-time data and reporting capabilities, enabling organizations to track contract performance, identify trends, and make informed decisions based on data-driven insights.

Cost savings: CLM software can help organizations save costs associated with contract management by automating manual processes, reducing errors, and improving efficiency. It can also help organizations to negotiate better contract terms and reduce contract-related risks, leading to additional cost savings.

Conclusion 

Effective contract lifecycle management helps organizations reduce risk, improve compliance, increase operational efficiency, and enhance stakeholder collaboration. Organizations can ensure their contracts align with their business goals and maximize the value of their contractual relationships by managing the contract lifecycle effectively.