How contract management systems work and why you need one

Managing contracts is a crucial aspect of any business, but it can also be challenging. This is where contract lifecycle management (CLM) systems come in. CLM systems help companies efficiently manage contracts throughout their entire lifecycle, from creation to expiration.

Why do businesses need contract management systems?

Contracts serve as legal agreements between businesses and vendors, employees, and customers. From partnerships to individual contracts, any mistake or oversight in contractual obligations can lead to financial and legal troubles. Contract management systems ensure compliance by automating processes, monitoring negotiations, and providing a secure platform for document storage.

What are contract management systems?

CLM systems are software platforms designed to help businesses streamline the entire contract lifecycle. They are centralized hubs for creating, storing, tracking, and managing contracts. These systems work by automating various aspects of contract management, making it easier for businesses to oversee contractual agreements, mitigate risks, and track performance.

What are the key features of contract management systems?

CLM software encompasses a range of features. Some of the critical features of a world-class CLM include:

Contract creation and generation

Allows businesses to create and generate contracts based on templates, both externally-sourced and self-built.

Automated workflow processes

CLMs automate the contract review and approval process, reducing the time spent on manual tasks.

Document storage and organization

Provides secure document storage and organization, making it easier for businesses to access contracts when needed.

Collaboration and communication integration

With shared access to contract documents and a centralized repository, team members can collaborate in real time, driving efficiency and reducing miscommunication.

Compliance tracking and notifications

CLMs keep track of regulatory compliance and can send notifications when changes occur.

Generating reports and analytics

Analytics and reporting of contracts and their performance, providing insight for organizations to identify areas for improvement.

How do contract management systems accelerate the process of reaching agreement?

CLMs follow a standard contract lifecycle process, including contract requests, approvals, negotiations, signatures, and storage. The core CLM process includes:

• Contract requests: The CLM system allows users across the organization to initiate a contract request, where they can select the type of contract needed and the contacts involved.
• Approvals: The system then routes the request to the appropriate people or departments for approval.
• Negotiations: Once approved, the contract is sent for negotiation and review, where changes can be made and comments added. The negotiation period is centrally managed to ensure all participants have access to the latest developments in near-real time.
• Signatures: After all changes are made, the contract is signed and stored in the system.
• Storage: The signed contract is stored in a central repository accessible to all authorized users.

What are the benefits of implementing CLM?

In a time where every penny counts and every second matters, changing how you work can change the entire organization.

CLM enables businesses to achieve optimal efficiency, make well-informed decisions, drive collaboration, and confidently navigate the intricacies of the business landscape. CLMs provide many benefits to businesses that use them, including:

1. Improved speed and efficiency in contract processing
2. Reduction in manual errors and contract oversights
3. Increased compliance and risk management
4. Enhanced contract performance and renewals
5. Simplified contract negotiations and approvals
6. Better document storage and access

How do I choose the right contract management system?

When considering CLM solutions, you need to remember that not all solutions are created equal. What’s important is finding a CLM tool with the capabilities you need to bolster your operations rather than hinder them.

Choosing the right CLM system for your business depends on your needs, budget, and available resources. Here are some factors to consider when selecting a contract management system:

Integration

Ensure that the CLM system integrates with other platforms you use daily, such as CRMs, ERPs, chat apps, and payment gateways.

Scalability

Choose a system that can grow with your business needs and is scalable enough to handle a growing number of contracts.

Configuration

Look for a system that allows flexibility in customizing workflows to suit your unique processes and without the need to hire or use the services of a programmer.

Security

Consider the system’s security and data backup capabilities to protect your contracts against data loss, hacks, and breaches.

Cost

Ensure that the system suits your budget, offers a fair price based on the features it provides, and doesn’t charge hidden fees.

Contract management provides great advantages to businesses

Using a contract management system provides great advantages to businesses that use them. These systems help businesses to handle contracts more effectively, and efficiently, paving the way for successful business relationships. As you look to streamline and optimize your business processes, consider investing in a CLM software package that is right for your company. With the proper tools in place, your business will see immediate positive results through improved compliance, collaboration, and timely contract negotiations, leading to your success as a company.