Contract Lifecycle Management: The Complete Guide
This is a complete guide to contract lifecycle management. In this new guide you’ll learn everything you'll need know about CLM including: key features, business benefits, pricing and lots more.
For today’s businesses, understanding and optimising contract lifecycles is essential to keeping on top of your contractual obligations. Done right, contract lifecycle management (CLM) strengthens relationships, improves workflows, reduces corporate risks, and, best of all, boosts profits.
What is contract lifecycle management?
Contract lifecycle management is the process of managing a contract’s entire life cycle—from creation through execution, modification, renewal, expiration and more. CLM enables organisations to proactively coordinate the many steps required in the contract process, including tracking all related documents and activities, effectively managing change requests, and ensuring compliance with laws and regulations.
By automatically routing contracts for approval using automated workflow tools, CLM is a streamlining of the contracting process. It helps reduce operational costs by providing visibility into current contracts making it easier to manage contract content and obligations and it improves data accuracy by providing a more informed view of contractual relationships. As a result, organisations can better control their contractual commitments while avoiding costly errors or disputes later on. All in all, CLM offers significant benefits for both businesses and individuals who need to manage complex agreements over time.
Who needs contract lifecycle management?
Contract lifecycle management is a tool that can help virtually any business manage the different stages of their contractual processes more efficiently and cost-effectively. If your business involves contractual arrangements, be it HR, sales, accounting or general startup matters, it can benefit from effective contract lifecycle management.
For example, companies in the professional services sector must often negotiate multiple long-term service contracts with clients on behalf of their employees. Through CLM, these companies can easily track legal obligations, draft contracts quickly and accurately, ensure compliance with regulations and manage complex contractual processes. This all helps maximise the value of agreements while reducing or eliminating the likelihood of compliance issues. CLM has been consistently proven to provide greater visibility into terms and conditions related to vendors and suppliers which can help prevent fraud or bribery.
And then there’s the time-saving. By automating tedious paperwork small businesses or startups that do not have their own legal departments can save huge amounts of time—freeing their staff to focus on higher value tasks like developing strategic partnerships or improving client relationships. In sum, CLM offers numerous advantages for businesses of all sizes, across all industries, from simplifying the process of contracting to optimising compliance.
The contract lifecycle in 3 Stages
The contract lifecycle includes three distinct stages: initiation, execution and completion. Each stage has specific requirements that must be met for timely and successful progress.
1. Contract initiation stage
At the initiation stage, the first step is to develop a detailed description of the agreement between parties – this may include details such as payment terms, conditions of delivery, warranty provisions, etc. It’s important that all parties understand each other’s interests in order to create an effective agreement. Good contract negotiation tactics will come in handy.
Once these details are established, then a formal document outlining these terms needs to be drafted. This document should also include any necessary legal provisions or clauses (such as dispute resolution).
2. Contract implementation stage
Once this initial paperwork has been drafted and signed by both parties, it’s time to move on to the execution stage of the life cycle. This involves the implementation of all obligations outlined in the initial contract – such as product delivery or service provision–and/or providing support services where needed.
During this stage, there should be ongoing monitoring of progress towards meeting contracted objectives and ensuring compliance with agreed upon terms. If any issues arise during this stage it’s important to handle them quickly in order to minimise any potential risk or disruption to services/products provided by either party under the contract.
3. Contract completion stage
Finally, at the completion stage all obligations have been fulfilled and all contractual payments have been made (if applicable). Here it’s important that both sides perform a full review of their performance against agreed upon terms throughout the life cycle in order to measure satisfaction. At this point, it’s also important to perform an audit on any closed contracts which can help uncover areas for improvement or identify potential risks if a contract is not properly executed according to terms set out at the beginning of the process.
Overall having an efficient process for managing your contract lifecycle can make all the difference when it comes to resolving contractual disputes, minimising risk & improving overall satisfaction between customers/partners within business relationships. With proper understanding and application of best practices when it comes to contract lifecycle management, businesses can maximise the value of each contract while maintaining healthy relationships with third-party entities involved in day-to-day operations.
Do CLM software solutions make contract lifecycle management easier?
In a word, yes. CLM software solutions make contract lifecycle management a lot easier, and dare we say, smarter, by simplifying and optimising the process of creating and managing contracts. These solutions allow companies to quickly create contracts that are tailored for their specific needs. They also enable companies to easily modify a contract if changes occur at any point in the life cycle. With digital contract management, businesses can ensure all stakeholders involved in the agreement are aware of any updates or modifications and are able to sign off on them quickly and efficiently. Digital CLM solutions also can help businesses keep track of important dates, such as expiration dates, payment deadlines, and other milestones but without the traditional hassle.
Another way CLM software solutions make life easier is when it comes to the problem of missing or lost contracts. Studies show 71% of companies are missing 10% of their contracts at any given time. CLM software solves this with smart archives—dynamic folders which auto-store documents logically and securely, ensuring all relevant information is not only easily retrievable and searchable but also protected from unauthorised access or theft.
Last but certainly not least, CLM software streamlines the process of monitoring compliance with relevant laws and regulations, leading to a substantial reduction in legal risks for companies. This helps companies reduce legal risks by ensuring that their contracts remain up-to-date and compliant with the latest industry standards but at a fraction of the time and cost of managing it manually or on a contract-by-contract basis.
Contract lifecycle management vs contract management
Contract lifecycle management is a comprehensive process for managing the entire lifecycle of a contract from creation to completion. It includes every step from drafting and negotiating the contract to tracking changes, executing payments, and eventually closing out the agreement. CLM addresses all aspects of a contract’s lifecycle and provides visibility into different stages. This can help ensure that all parties involved in a contract understand their responsibilities, such as payment schedules and timeline commitments. CLM also allows organisations to create templates for contracts to streamline the process and create new contracts more quickly when needed.
Contract management (CM) on the other hand focuses on specific tasks across an individual contract's lifespan. This might include collecting data about a particular agreement, overseeing its progress and performance, or ensuring compliance with relevant policies or regulations. Contract Managers generally work with existing contracts rather than creating new ones from scratch. They are responsible for monitoring each contract to ensure that it is meeting its contractual obligations as well as providing guidance throughout the process when questions arise or there are changes in circumstances that require adjustments or modifications to be made along the way.
Overall, both processes play an important role in managing contracts efficiently, but there are distinct differences between them. CLM provides an overall view of multiple contracts at once while CM works within individual agreements already established by CLM. With the right combination of these two processes, any business can capitalise on opportunities while mitigating risk and ensuring accountability throughout every stage of the contracting process.
How much does CLM cost?
Contract life cycle management solutions are becoming increasingly important for businesses of all sizes due to their ability to create value and reduce costs. The cost of these solutions depends largely on the complexity and size of the business, but a well-implemented contract lifecycle management solution can range from tens of thousands to hundreds of thousands of dollars in upfront costs. However, when compared to the potential costs associated with mismanaged contracts, investing in a quality contract life cycle management solution is a worthwhile investment. Not only does it prevent costly mistakes or oversights due to human error, but it also helps limit risk by providing visibility into contractual obligations and better understanding of the financial impact.
For enterprise or businesses with highly specific requirements, CLM software can be customised, helping ensure that they get the most out of their investment while minimising costs. Additionally, contract lifecycle management solutions typically come with support services such as help desk support and account managers to ensure that users are up-to-date on any changes or updates in technology trends and best practices. Ultimately, investing in a quality contract lifecycle management solution saves organisations time and money in the long run by providing an efficient process for tracking contracts and reducing risks associated with mismanagement.
Learn more about Docue’s contract lifecycle management software
Docue is a legal tech startup founded with the lofty goal of democratising legal services by offering businesses an affordable way to create lawyer-grade contracts in just a few simple clicks. With Docue, businesses of any size can access a dynamic library of pre-built, legally binding templates—hand-crafted by lawyers and tailor-made for your needs —alongside our automated clause builder, e-signature capabilities, and smart storage.
Since Docue was founded in Helsinki in 2015, the platform has helped over 30,000 customers achieve the time-saving, profitability and protection that an advanced contract management system brings.
As a customer, here's what's in it for you:
A library of lawyer-made, lawyer-maintained templates
Docue offers a wide range of templates for every part of your business: website legal notices, employment agreements, health and safety policies and much more. Once you've selected your document, Docue speeds up the drafting process by automating it. We’re talking up to 90% faster without compromising on legal quality; thanks to our suite of 100+ plus templates drafted by our qualified in-house lawyers to ensure each document complies with English and Welsh laws. Pretty cool? We think so.
Powerful workflows, yet easy to use
Not only are our templates lawyer-made and maintained, they are also highly customisable and user-friendly. Every template includes clause-by-clause guidance to steer you correctly through the drafting process. And if you are set on using your own templates or legacy documents created on other systems, then that’s ok too! You can import any document into the Docue platform and e-sign, store and manage it according to your needs.
Unlimited electronic signature
With Docue you can e-sign an unlimited number of contracts and legal documents in a couple of clicks. To ensure you stay effortlessly organised, we built an unlimited archive of smart folders to automatically store and manage them all. To top it off, our next-gen search tools let you navigate through your records to retrieve your data in seconds.
Major cost savings
As part of our mission to use digitisation to democratise legal services for the many, we are committed to remaining the most affordable legal content solution on the market. We're constantly looking out for cost savings for our customers: compared to the cost of engaging a traditional law firm, by drafting even a single document in Docue, you get a return on your investment.
So there you have it. A contract lifecycle management system will save you money, and time while protecting your business. It can help to streamline processes, save money, and strengthen data security. It is also cost-effective and simple to implement, meaning businesses of all sizes can get immediate benefits from adopting these systems.
Thinking of implementing CLM at your company? Got questions? Drop a comment on Linkedin. We'd love to help.
Get it in Writing: 7 Contracts your startup needs
Use these Legal Contracts To Safeguard Your Business and Boost Profitability
Discover how Docue can elevate your contract management process and help accelerate and protect your business. Start your free trial today.
Docue Legal Team