Contract Lifecycle Management - The Eagle Eye for Your Contracts

Margit Kustor-Neubauer 4/27/2023

This is how you organize, control, and analyze your contracts in no time

Do you have all contract durations of your business in mind or saved in Excel? Do you need to copy contract contents from different documents when setting up a new contract? Do you know which version of the Service Level Agreement is currently valid?

We let you breathe a sigh of relief. Your head no longer needs to be a repository for all these details, nor do your Word and Excel sheets. The answer is: Contract Lifecycle Management (CLM). We explain the basic definition of CLM, what benefits it offers your business, and which software solutions are suitable.

Recommended Contractmanagement Software

You can find more recommended contract management software on our comparison platform OMR Reviews. We have listed over 60 tools for small and medium-sized companies, start-ups and large corporations that support you in all areas relating to the creation, recording of contract documents and approval processes. So take a look and compare the software with the help of authentic and verified user reviews:

What is Contract Lifecycle Management?

Contract Lifecycle Management (CLM) is an important component of business process management, standardizing and optimizing the entire lifecycle of a contract . From contract template creation to contract termination, a contract goes through various phases that can be automated and simplified with an effective CLM system.

Which phases does the contract lifecycle go through?

Picture: CLM Process

An effective Contract Lifecycle Management system supports your business at every stage of the contract lifecycle, enabling a seamless collaboration between the contracting parties and ensures a quick and efficient contract management. Software supports, such as. ContractHero Vertragsmanagement. The contract goes through the following phases in detail:

Contract templates
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⁠Good Contract management begins with good templates or a template library. These enable digital contract document creation based on validated clauses and templates, thereby ensuring swift and legally secure contract drafts.
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Contract creation
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⁠The next phase involves the creation of the contract, the identification of the contracting parties, the determination of the contract conditions, and the definition of key terms and clauses. Rule-based links within your CLM software can automatically assemble the contract. For example, a specific region or service may require special clauses or appendices and link them to the contract.
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Final negotiations and contract approval
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⁠Based on contract management software, the contract document is guided through your company's approval processes. In parallel, updates can be made to reach an acceptable agreement for all parties with the contract. Additional documents can also be assigned, metadata defined, and links with ERP or Office applications supplemented.
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Contract conclusion
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⁠After mutual approval and release between the contracting parties, the final contract document is signed. The signature can be done electronically, leading to seamless data updates at the central repository. In addition to the digital signature, manual signatures are usually also supported, linked to the contract, and subsequent workflows are automatically initiated.
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Execution of the contract
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⁠In the next phase, the agreed contract contents are implemented. Using fully functioning contract software, insights into deviations, deadlines and key figures can be given during this time and thus analyze the respective contract areas and monitor risks. You can determine which data is to be collected and evaluated yourself.
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Contract fulfillment
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⁠Have the contents been fulfilled or do you need to renegotiate? You can now base your decisions on validated information from your CLM software and thus optimally control your contract relationships. Deviations and losses that occurred during the contract term have been recorded and are available for future decisions and contracts, or are incorporated into your risk management.
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Contract termination
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⁠In this final stage, the contract is terminated by mutual agreement or expiration of the contract term. All contract records are archived or GoBD-compliantly secured (GoBD = Principles for proper management and storage of books, records, and documents in electronic form and for data access).

Who is Contract Lifecycle Management suitable for?

If you're considering whether Contract Lifecycle Management could be beneficial for your business, ask yourself the following questions:

Do you regularly conclude contracts?
Do you have a lot of administrative effort with your existing contracts?
Are you active in complex or heavily regulated industries? Such as in finance, public sector, or healthcare?
Do you have multiple locations, possibly spread across several countries, and therefore need to manage large contract portfolios?
Do you want to improve your contract processes to save time and resources?
Do you need to optimize your risk management?

Overall, CLM is a very useful tool for any business that wants to make their contract processes more efficient. Regardless of the size or sector of your business, CLM can therefore mean improvements across your company.

What are the benefits of a CLM solution?

Picture: CLM Benefits

A Contract Lifecycle Management system includes many benefits. Here are the most important ones:

Standardization of contract processes
Automation of contract processes
Centralization of contract information
Improvement of contract administration and monitoring
Minimization of contract risks
Compliance compliance
Acceleration of contract negotiations
Improving the accuracy of contract documents
Optimization of contract lifecycles
Reducing contract costs and expenses
Better collaboration and communication during contract negotiations
Increasing transparency and accountability at contract conclusion
Increasing the efficiency and effectiveness of contract administration in the company.

CLM benefits in the respective departments of your company.

A CLM software, like ContractHero Vertragsmanagement can simplify your legal department's work by automating contract management and standardizing contract processes. The legal department can also store and manage contract documents in a central repository which makes accessing contracts easier. Additionally, the CLM system contributes to making contract negotiations more efficient and minimizing contract risks.

Your purchasing department will also be supported by the CLM tool to minimize risks and accelerate contract negotiations. Your purchasing staff can access a central database of contract information that allows them to quickly read out all the details of the agreement and compare conditions. Also, the CLM solution may help monitor compliance with contract conditions and initiate or prevent extensions in a timely manner.

The financial department simplifies contract lifecycle management by enabling an overview of payment terms and deadlines. The finance department can thus ensure that payments are made only for contractually agreed services. CLM in the Automation and Management of contract changes and additions, saving your colleagues time and resources.

The CLM solution also provides your management with a better overview of contract management. Management can quickly access contract information and monitor compliance with contract conditions. Additional benefits arise from risk minimization and ensuring compliance.

What tools are suitable for Contract Lifecycle Management?

With which systems can the many benefits now be implemented for your company? In this research, we also want to support you and present you 11 CLM softwares based on OMR Reviews in the category Contract Management.

ContractHero Vertragsmanagement

With the help of OMR Reviews you can find out the most important features of the CLM systems with a few clicks, analyze high-quality user reviews or access all manufacturer's information. There is much to discover and surely you will find something.

In addition, we have some articles on contract management that can help you with your research and decision making:

Conclusion: Efficient Contract Lifecycle Management is digital.

The advantages of CLM software cannot be denied in all contract management processes. They contribute to managing all contract processes in the company more efficiently and effectively, increase transparency, improve risk management and the cooperation of the contracting parties. Even during the contract term, important indicators are monitored and documented.

Instead of tinkering with your contracts across several systems and data silos, with a CLM system you can put an end to manual contract martyrdom.

Author

Margit Kustor-Neubauer