Why Using Contract Lifecycle Management Is Important?
Contracts are the foundation of commerce. And managing contracts is a complex task that requires both technical and business knowledge to perform correctly.
Poor contract management can lead to a host of issues that impact your business. Fortunately, new technology can help you overcome the challenges of contract management.
Improved Compliance
Contracts are one of the most important aspects of a business’s operations. Whether it’s contracts with employees, vendors, or third parties, these contracts set the foundation for commerce and establish the terms and conditions that govern all parties.
Managing these contracts, however, can be extremely challenging. Especially for large companies, it can be difficult to keep track of all the documents, deadlines, and milestones involved with each contract. A single slip-up can result in costly mistakes or a missed opportunity.
Contract lifecycle management software can help businesses improve their contract processes by reducing the risk of error, allowing for better oversight, and automating key tasks. In addition, CLM software can reduce the time it takes to execute contracts by removing roadblocks and allowing for a more streamlined process.
Without a Contract Lifecycle Management system, it can be easy to miss deadlines and milestones, leading to frustration with customers and lost revenue. Inaccuracies in contracts can also damage a company’s reputation, but using CLM software will ensure that these errors are minimized. It will also allow you to stay on top of renewals and other key dates, so your business never misses an opportunity or a contract obligation. This leads to better customer service, happier customers, and more word-of-mouth growth for your business. The benefits of contract management software far outweigh the costs.
Improved Accessibility
Contracts are the foundation of every sales process, defining every milestone from negotiating and signing to billing and renewal. Yet, inefficient Contract Lifecycle Management and storage costs the average business up to 9.2% of its annual revenue. An effective CLM solution automates the entire agreement process for greater visibility, speed, and efficiency.
While it may be possible to manage the contract lifecycle manually for small businesses or startups, as companies grow and scale, a digital contract management tool becomes indispensable. It eliminates the risk of errors, and it provides greater security, transparency and accessibility for all stakeholders.
CLM solutions that offer a user-friendly electronic signature process make it easy for commercial teams and legal teams to collaborate on contracts from any location. They also provide automated key date and task alerts, compliance and obligation status reports, and more to help users stay ahead of contract deadlines, reduce risks, and capture revenue faster.
Historically, legacy CLM tools were highly customized for large enterprises and required months, if not years, to deploy and configure. Newer solutions — like Ironclad Contracts — are built to be configurable, user-friendly and scalable, making them much more attractive for commercial teams, legal teams and their counterparties. Moreover, many of these newer solutions utilize API integrations with CRM and ERP platforms to enable streamlined data flow for greater contract performance insights and productivity.
Improved Organization
For any business, contracts are a necessity. They record and guarantee important transactions and agreements. But if you are managing contracts at a high volume, they can be timeconsuming and difficult to manage efficiently. Without a contract management system in place, a few simple mistakes can cause problems for your entire business. Missed signature deadlines and lapses in contracts with vendors can cost you money. Contract inaccuracies can lead to compliance issues that could put your business at risk of legal trouble and lost revenue.
Contract management systems help businesses by automating key steps in the process delivering real-time reports on where each contract is in the process, and making it easy to find and access contracts at any point. They also make it easier to keep track of deadlines and renewals. This can prevent costly mistakes like missing renewals or signing dates, which could result in contract re-negotiations and price increases.
The best contract management systems integrate all of the different elements involved in the contract process, from requesting a new agreement to analyzing its terms and conditions to putting it into print and eSignature. This includes a central repository of standard contract clauses, streamlined sourcing events and efficient approval workflows. The result is a more organized process that can save significant time and resources and improve your bottom line.
Improved Reporting
Contract management isn’t a great dinner party topic, but it’s crucial for business growth. Missing a contract date can lead to a pileup of legal and procurement risk, while contracts that auto-renew without any chance to review or renegotiate can be costly.
CLM is a collection of tools and techniques that help businesses reduce risk, save money, and stay on top of their contracts. The best CLM software streamlines and automates major steps of the process to improve visibility and promote accountability.
The first stage is a request, which can be for a new contract, an amendment, a renewal, or even a cancellation. Contract Lifecycle Management software can help simplify the request process by consolidating standard contract clauses and terms, key dates, and counterparty information. It also provides a collaborative workspace to speed up back-and-forth discussions and redlining.
Once a contract has been drafted, it must be reviewed and approved. Depending on a company’s structure, each contract may need to be reviewed by different departments or individuals. CLM tools automatically track the status of each review and approval.
After a contract has been reviewed and approved, the last step is to execute it. This can be done either in person or electronically with a streamlined, user-friendly contract signing and document collaboration interface. A CLM tool can help reduce the time it takes to get a contract approved and signed, which can be critical for capturing revenue faster.
