What is Contract Lifecycle Management (CLM)?

Learn what is Contract Lifecycle Management, its benefits and stages, and how to get started with CLM to optimize your business processes.

It's known that contract management could be a challenge within organizations of all sizes, mostly when it comes to being able to keep up with numerous contracts at once, each at a different point in the contract lifecycle. 

The Contract Lifecycle Management (CLM) process is an essential step for every organization's success. By updating contracts promptly, managing them efficiently, and ensuring to base them on reliable information, you will not only be able to meet the needs of your clients but also generate more revenue for your business.

Now, let's dig deeper into CLM and how you and your company will be able to minimize risk, boost productivity and increase the value of each contract.

What Is Contract Lifecycle Management (CLM)?

It’s the process of tracking every aspect of a contract through its completion. It helps organizations maintain discipline as they work towards the development of satisfactory contracts.

CLM is a management solution that can:

  • Mitigate the risks of unwanted contract terms and risks.
  • Streamline and add structure around several aspects of the contract lifecycle.
  • Impact parts of the process quickly and affordably.
  • Ensure compliance with regulations.
  • Help any organization save costs and time when implemented.
  • Keep you updated on contractor milestone dates thanks to personalized notifications.
  • Help your organization reduce procurement costs, speed all necessary legal reviews and ensure sales deals are closed faster.
  • Create a contract repository with the possibility of searching and retrieving information easily, using relevant keywords and tags.

 These actions are often done via systems based on specialized CLM software. The advantages of said systems are increasingly available thanks to the growth of more contract solutions being offered as a cloud-hosted service (SaaS).

What Are the Benefits of CLM?

CLM software makes organizations worry less about the process of developing contracts. The possibility of automating a big portion of the contract administration process by using software to manage the contract lifecycle allows you to focus on the bigger picture, while knowing all actions will become more efficient for everyone involved.

These are some of its key benefits:

Optimized Contract Signing

The majority of CLM software includes electronic capabilities already built into them, or have the option to be integrated with several electronic signature tools. Thanks to this, dealing with wet signatures and delays that can occur because of them is a thing of the past.

Improved Organization, Access, and Visibility

These software solutions make storing and optimizing all your contracts in one central online location possible. Advanced search functionality makes them easier to find by just typing a key term, instead of having to search through many databases for what you are looking for.

Automated Tracking and Reporting

Being aware of contract deadlines and keeping up with them is easier with CLM software, thanks to the alerts and notification features it  provides. You can configure your CLM solution to send you email reminders when needed, as well as set up, schedule, and share reports depending on the data tagged in each contract by using custom reporting tools.

What Are the Stages of CLM?

CLM is an evolutionary process, which implies that it goes through several stages that have to be taken care of to ensure that a contract is completed. Let’s look at each of those stages:

  1. Request: By using chosen criteria to create a contract, such as pricing ranges, products or regions, the rules engines of CLM software aid in the process of dynamic creation from templates and clauses. This stage sets the tone for the rest of the contract process since it allows the business stakeholders to gather information associated with a new contract and determines if it will go through efficient processing or suffer delays. 
  2. Authoring: The necessary parties will put the terms of the contract in writing by agreeing on clauses, key dates, counterparty information and other essential data. All templates are kept in a library, ready to use at any given time. The automation that this process brings and the auto-population of contract data fields helps in keeping this process streamlined and efficient.
  3. Negotiations: After drafting the contract parameters in the previous stage, the parties will negotiate them through back-and-forth collaboration. The negotiation process provides insight into the expectations that are set for the rest of the process.
  4. Approvals: Parties will review the process and parameters previously discussed. If necessary, special terms, compliance standard procedures and other adjustments will be made during this contract approval process.
  5. Signatures: The contract document is signed by an authorized employee with high clearance at this stage. With the use of e-signatures, signing contracts in bulk or one-off is easier, both at the office and online.
  6. Obligations: All parties must agree on the measurable deliverables they will be responsible for, and appropriate responses for non-compliance must be set.
  7. Compliance: These are all the standards and guidelines that will be required to be followed through the process. Setting up correct and clear compliance expectations will help reduce litigation risks, bottlenecks and late fees while setting a precedent for future contracts.
  8. Renewals and Amendments: Contract renewal is a great opportunity to improve the process and provide a chance to renegotiate terms and engage in further opportunities. Contracts can be set to auto-renew if necessary, but it's important to keep track of these dates and set reminders to ensure a streamlined process.

7 Contract Lifecycle Management Best Practices

As you can see, adopting CLM software can save time for different departments in your company, optimize communication between the parties involved in a contract process and lighten the workload on your team.

Now, it's not enough to just get a good contract management software. Let's focus on tips and best practices when implementing a CLM system in your company.

Standardizing Contract Creation

Having a set of templates and a clause library helps exped​​ite the contract lifecycle management process, these should undergo a thorough review by the legal team to ensure all the language and parameters used to comply with best practices.

Setting Transparent Goals

Every employee must be aware of the goals that need to be achieved to succeed in the performance of the process. Defining and communicating key performance indicators (KPIs) is the best way to ensure everyone can measure their individual and team successes.

Monitoring Contract Approval Time

The shorter the contract workflow is, the more positive the relationship with customers will be. Practicing lean will lead to success by making sure the process is as efficient as it can be.

Reviewing Regulatory Compliance

It's necessary to perform regular checks to ensure contracts are meeting company and security standards, as well as state and federal regulations. This will protect your company from potential risks.

Making Contracts Accessible for Technicians

Providing technicians the opportunity to access contracts in the field by leveraging different software solutions will make it easier to answer any questions and solve any possible minor disputes on the job.

Automating the Process

It is key to automate essential components of contracts: this will optimize the processes and take care of repetitive tasks such as sending renewal notifications.

Implementing CLM Software

Contract lifecycle management software will enable you to take advantage of having a centralized repository of contacts and relevant information, and use mobility and automation to make the process both time-saving and efficient.

How To Choose The Best CLM Software?

You already know the many advantages that contract lifecycle management can offer to your business, but now comes the most difficult moment: deciding which software to adopt.

There are many solutions that will apply differently according to your needs. So, you can start by asking these questions:

  • What is the level of complexity of your contracts?

For example, some businesses work with very complex contracts and others make use of simpler agreements, whose templates are rarely altered.

  • How is your collaboration process?

If different teams need to be part of the process of a single contract, you will need software with more features that allow you to visualize and control changes, without taking away ownership from those involved in the process.

Likewise, there is software that supports specific phases of the contract lifecycle, and others that accompany you from start to finish. At Akorda, we help you at all stages.

  • Do you need integrations to save time?

If your organization, for example, uses CRMs such as Salesforce, you will need a CLM software that integrates with your CRM to save you time. Akorda allows you to integrate with Salesforce and many other platforms, so you can optimize your sales and legal processes.

How to Get Started with Contract Lifecycle Management?

For any organization, change can be challenging. However, when it comes to saving time, CLM is a great investment you can make in the performance of your team and your business. 

With Akorda, you can get started in a matter of hours, and we can help you supercharge your contracts with artificial intelligence. We will help you automate the process and run through each stage mentioned before smoothly, so the contract owners will be satisfied each time.

Get our free demo to start building the future of your business' contracting process. We also invite you to review some of our customer stories or download our case study on how Telos is using Akorda, so you can have first-hand knowledge of how we’re helping companies around the globe.

Derek Schueren

Derek is the CEO and co-founder of Akorda, where he is working to bring the market together to transform how businesses contract. Previously, he founded Recommind, a big data analytics company where he worked with Global 2000 clients, global law firms, and technology partners in the areas of eDiscovery and Information Access.

How Telos is using Akorda

Telos is a 770 person rapidly growing organization that mainly works with governments and agencies. The company is the global leader in enterprise, cyber and cloud security.
THE PROBLEM
Searching through stored contracts
AKORDA'S SOLUTION
The Intelligent Contract Repository
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About Akorda
Akorda is a CLM platform that accelerates the contract process for teams within a unified workspace, using AI to speed up legal review and negotiation time.