Contract lifecycle management popularly known as CLM is the process of managing contracts from requesting a contract to the disposition of the contract. Various tools and software are available in the market to handle this process effectively. Morden-era tools even allow automated drafting, redlining, digital signatures, and compliance management on the tool itself.
Implementing an effective CLM in your company can get the foremost value out of your contracts throughout every phase of your contract lifecycle management. Numerous benefits can be achieved by the use of CLM software which can lead to the company’s effective decision-making, cost savings, and mitigation of risks.
Let us now understand the vital stages present in Contract lifecycle management:
- Contract Request: The first stage in the CLM cycle is contracting to request, a draft is prepared and shared with the other party for their review.
- Contract Negotiation: This is the second stage in the cycle and here come the contract negotiations. All the clauses, terms, obligations, and rights are agreed upon and sealed in the form of the final draft. These terms provide clarity on what is expected from both parties
- Contract Approval: Once the final draft is agreed on, the next stage is to obtain required approvals by both the parties from their respective leaderships.
- Contract Execution: This stage is about the execution of the contract, where the final contract is sent to both parties for signatures.
- Contract Storing/retrieval: The stage defines that when a contract is created and signed it is stored in a database/repository for easy retrieval for future references.
- Reporting: What use of storing a contract if the information in it cannot be used for effective decision making or managing your relations efficiently. The information in contracts can be extracted and stored in a manner that different reports can be generated when required.
- Renewal or Disposition: the last stage in the cycle is the renewal or disposition of a contract. If it is on for renewal then you might like to revisit different terms and pricing.
Forward-thinking organizations are switching to contract management systems to cut costs, mitigate risks, and increase profitability. It is very important that each stage of contract lifecycle management is done in a proper manner with details that will be the key to significant improvements and successful execution of a contract and therefore to your business.