The financial consequences of participating in poorly managed contracts can ruin your business for good.
To mitigate this risk, it’s essential that you understand what you are getting involved in at every stage of the contracting process. But, contract execution and fulfillment can be overwhelming when you consider the many different factors that could go wrong. Added to that, the situation worsens when an organization tries to manage key contracts manually or via Excel spreadsheets.
These are common challenges that business owners encounter regardless of their industry or business niche. Thus, gaining better contract visibility and overcoming these challenges has led more and more companies to adopt contract management tools especially digitized contract lifecycle management systems (CLM).
What Is Contract Lifecycle Management?
Contract Lifecycle Management (CLM) is the methodical and proactive management of every stage of a contract from initiation all the way to closeout/renewal. It’s a methodology that aims to deliver significant improvements in contracting efficiency and cost savings.
Also, if an organization can go further to automate its CLM, they can minimize their exposure to the risks of litigation and the impact of non-compliance with legal requirements.
Contract Lifecycle Management Best Practices
But, before you procure a CLM solution, you’ll need to know what the industry best practices are and the core functionalities that a CLM system should offer:
1. A Central Repository For All Contracts
A common challenge among contract managers is the lack of a central repository for all contract information. A modern CLM solution addresses this issue by allowing all contract documents to be stored in one location and accessible in real-time anywhere globally by all authorized users. Some important information to access will include active contracts, templates, contracts history, etc.
2. Standardize Contract Negotiation
People often make the mistake of rushing the negotiation stage because they want to quickly move on to execution. But in fact, taking time to do the right things right at negotiation can alleviate a lot of headaches and set the pace for an overall better contract further along resulting in more efficiency and higher productivity. Best practice in contracts management requires that a CLM offers this vital function.
3. Standardized Templates
Smart and simplified template authoring function that allows users to easily pull industry-specific clauses into new contracts, enter custom text, and tag other essential data, e.g. annexures.
Within CLM software, there are programmed rules that help to ensure that newly created templates must go through pre-approval before becoming available for new contract creation. This helps to:
- Improve overall contract risk mitigation.
- Facilitate quicker contract turnaround without compromising contract quality.
- Ensure consistency and ease of use on other contracts.
4. Monitor Compliance
Despite the best intentions, the risk of non-compliance is always present especially for larger contracts between multiple parties.
A CLM solution should come with functions to help you enforce negotiated terms and receive everything agreed upon at inception.
5. Measure Performance
Allow users to measure performance, track costs, catch any errors promptly, and detect any loopholes or inefficient processes through powerful user-friendly reporting capabilities.
Although we touched on CLM best practices and its most useful features above, there’s still so much more that Axxerion’s CLM software can do for you. For instance, you can conduct indexed searches, receive alerts and notifications, manage renewals and amendments, and so much more!
Is there more that you would like to know about CLM? Or are there specific areas where you are struggling with contact management? Schedule a demo today, let’s talk and see how we can offer you a solution that is just right for your business.Free DemoFree Demo