Using CLM software to ensure contract compliance

Contract compliance is a critical component that can make or break an organization’s success.

Businesses today operate in an environment rife with regulations, standards, and obligations that must be adhered to in order to maintain integrity, avoid litigation, and ensure smooth operations. Contract compliance involves ensuring that all parties involved in a contract abide by the terms and conditions agreed upon, and it is vital for minimizing risks, maintaining good relationships with partners, and protecting the organization’s interests.

Understanding contract lifecycle management (CLM)

CLM is a systematic approach to managing contracts from inception through execution, performance, and renewal or expiration. CLM solutions facilitate the creation, negotiation, execution, and monitoring of contracts, providing a comprehensive framework for handling numerous contracts effectively. By automating and streamlining the contract management process, CLM software solutions play a crucial role in ensuring contract compliance.

The importance of contract compliance

1. Risk reduction

World Commerce & Contracting reports an 80% reduced risk rate in contract compliance when CLM software is utilized. By ensuring that all compliance requirements are met, CLM systems significantly reduce the risk of financial penalties and legal issues. Automated systems minimize human error, ensuring that all compliance checks are consistently applied.

2. Improved efficiency

CLM solutions streamline contract processes — reducing the time needed to create, review, and approve contracts. This efficiency allows legal and compliance teams to focus on strategic tasks rather than getting bogged down in administrative duties. For example, the 43% of professionals who struggle to find their contracts.

3. Enhanced visibility

With a centralized system, stakeholders gain better visibility into contract terms, status, and obligations. This transparency ensures that everyone involved in the contract management process is on the same page regarding compliance requirements.

Key CLM platform features for enhancing contract compliance

• Automated alerts and notifications: One of the standout features of a CLM system is its ability to send automated alerts and notifications. This ensures that stakeholders are reminded of key dates such as renewals, expirations, and compliance deadlines, reducing the risk of non-compliance due to oversight.

• Centralized document storage: A centralized repository for all contract-related documents is essential for maintaining compliance. This feature allows for easy access, retrieval, and management of contracts, ensuring that all stakeholders are working with the most current versions and can quickly find necessary information.
• Audit trails and reporting: Comprehensive audit trails ensure that every action taken within the contract management system is recorded. This feature is crucial for compliance audits and reviews, providing a clear history of who accessed and modified contract documents and when these actions occurred.

Using CLM software to ensure contract compliance

Here are a few practical tips for implementing and utilizing CLM solutions to ensure compliance:

1. Setting up workflows

Establishing clear workflows within the CLM system is essential for ensuring that contracts go through the necessary approvals and checks. Customizable workflows can be tailored to meet specific compliance requirements, ensuring that no step is overlooked.

2. Reviews and updates

Contract compliance is an ongoing process that requires regular reviews and updates. Regular audits of the CLM system ensure that it remains aligned with current regulations and organizational policies, adapting to any new compliance challenges that arise.

3. Training staff

Proper training is crucial for ensuring that all users understand how to use the CLM system effectively. This includes understanding how to navigate the system, execute tasks, and utilize compliance tools to their fullest potential, thereby maximizing the system’s capabilities.

To sum it up

Integrating CLM into compliance strategies is a strategic imperative for modern organizations. By harnessing the robust features of sophisticated CLM systems, businesses can significantly enhance contract compliance and mitigate risks.

To achieve this, it is crucial to engage stakeholders from the outset, ensure meticulous vendor evaluation, and prioritize comprehensive user training. Laying a strong foundation with accurate data and process mapping will streamline the implementation process, while adopting a phased approach to deployment can help manage the transition smoothly and ensure sustained success.

Learn how European pharmaceutical company Norgine increased compliance and operational efficiency with Agiloft CLM. Read the customer story now.