Within every business, there are workflows, processes, agreements, and documents. But how this operational infrastructure is managed is crucial to the overall success of the business – it’s the engine that keeps the wheels turning.
This article will cover everything about how contract lifecycle management works so that your business can successfully implement a contract management strategy that promotes business-wide efficiencies.
What is Contract Lifecycle Management?
Contract Lifecycle Management (CLM) refers to the process of the effective and efficient management of contracts throughout their lifecycle. It seamlessly handles the full contact lifecycle, including request, creation, drafting, negotiation, execution, auditing and expiry/renewal. Contract lifecycle management tools are designed to streamline and automate these processes whilst implementing structured processes around aspects of the contract lifecycle. Traditionally, businesses would have manually managed the contract lifecycle (with little success).
Today, AI-powered CLM solutions provide businesses with a structured framework for managing contracts. Digital contract management improves efficiency, reduces risk, and ensures compliance with legal and regulatory requirements.
Summize, for example, is an end-to-end contracting solution for in-house legal teams and business stakeholders that allows users to request, review, store and analyse corporate agreements by incorporating contract workflows in the tools the business already knows and use every day. No business is the same and they all have a unique set of challenges, so it’s important to find software that aligns with your specific situation.
The 8 Stages of Contract Lifecycle Management
Contracts will go through a set of stages throughout their lifetime, from authoring to expiry. The lifecycle begins with the request for a contract and will finish when the request is fulfilled.
To simplify it, we have provided the eight most common stages of a contract lifecycle for a business when it comes to a standard contract. Depending on the size of the business and the current processes and infrastructure, the number of steps can vary.
This is the stage of the lifecycle that is the most crucial because it establishes the groundwork of the agreement between the involved parties.
During this stage, the involved parties must collate the required details and documentation for the new agreement.
Once the request stage has been finalised between the parties, the second stage is contract authoring. Commonly known as contract writing or drafting, this stage establishes the parties' terms and conditions, including clauses, dates and any other key information.
Contract authoring can be a lengthy process, often resulting in delays in cycles and even resulting in lost opportunities due to poor collaboration between legal and the wider business. Summize is designed to be used by the whole business, by powering contract workflows directly inside your collaborating tools to allow legal and business stakeholders to request contracts in 2 minutes such as NDAs or MSAs directly from their Teams or Slack window, without legal intervention.
Once the contract has been generated, the parties will then go back and forth to negotiate the best set of terms and conditions for their organisation. This stage is often time-consuming and confusing, with parties marketing up amends in Microsoft Word before sending it back with tracked changes.
The nature of this process can introduce unnecessary risk and cause delays across the business. With Summize, legal teams can review contracts with a simple task list, redlining and negotiating in Microsoft Word with AI-powered technology. Plus, stakeholders can easily collaborate on the most recent agreement with versioning control, so everyone always has access to the latest documentation.
Often known as signature, the approval stage is when the parties legally enter the agreement.
Once the contract has been signed, it is then legally enforceable, and the parties must adhere to their agreed terms.
Now that the contract has been executed, it's then stored. Today, cloud storage is the most popular method, but many companies still rely on traditional, manual methods. Ensuring that signed contracts are accessible and visible to the stakeholders is crucial to their long-term success.
The auditing stage is often overlooked, but it allows the parties to review their agreement to ensure that its terms are still relevant and that the parties are meeting their obligations.
8. Expiry / Renewal
All contracts have an expiry date. Then, the parties must decide to either renew the agreement or allow the contract to expire.
How does Contract Lifecycle Management work?
In its simplest form, a contract lifecycle management tool is used to make the management of each stage of a contract lifecycle, simpler.
Traditionally, contract lifecycle management was conducted manually and required ongoing efforts between internal and external stakeholders. Today, contract lifecycle management tools create a single source of truth for an organisation's agreements, centralising them in one system to create a simplified end-to-end experience. Automated workflows
put low-value, administrative work on autopilot, speeding up cycle completion time and mitigating risk. Centralised repositories with interactive dashboards surface key contractual data into simple summaries, with comprehensive analytics allowing businesses to make better-informed decisions based on risk and opportunity.
Contract lifecycle management tools offer a connected ecosystem for contracts, promoting an agile and efficient system for managing them across the end-to-end lifecycle.
The Benefits of Contract Lifecycle Management
Businesses often find themselves managing large amounts of contracts, 60 – 80% of all B2B deals are governed by some form of written agreement according to the Institute of Supply Management.
Implementing a contract lifecycle management solution can present a business with a wide array of benefits,
but we have listed the key benefits to CLM for a standard contract.
Faster and improved revenue generation
Enhance your business’ tracking capabilities throughout the contract lifecycle and improve and accelerate your contract negotiation cycles. Automated workflows eliminate delays and bottlenecks in the sales process and get to revenue faster while ensuring compliance.
Enhanced business efficiency
Streamline workflows and improve cross-functional collaboration between legal and the rest of the business. Business stakeholders from sales, procurement, marketing and more can self-serve on contract creation, eliminating bottlenecks in your legal department - feel confident that the correct terms and conditions are being used across the business without needing legal oversight by using preapproved and designed templates.
AI-powered technology allows for smarter and more accurate business decision-making with instant summaries and key date reminders. Legal teams can quickly identify areas that should be renegotiated or flagged to save your business from costly delays and irrelevant partnerships.
What to consider when choosing CLM software
Once you have established to either update or implement your first contract lifecycle management solution, the question arises, what CLM tool is best suited for my business?
Be sure to cover all the grounds when researching. Use Google and comparison sites like G2 to identify vendors and collate critical information. We recommend focusing on features that promote collaboration between legal and the wider business.
Legal front door
Is there a simple-to-use interface that allows non-legal users to self-serve via an existing solution?
Summize incorporates workflows directly into Teams and Slack as the primary user interface. This approach to CLM make contracts useable by business stakeholders, enhancing collaboration and efficiency between legal and the wider business. Legal teams set up workflows with guardrails, while business stakeholders can generate watertight contracts within 2 minutes from Teams or Slack."Summize has been hugely helpful. What used to take half a day to create an NDA now only takes 10 minutes".
Rosie Hawkridge, Legal Counsel at Littlefish
Read the full customer story here.
Does the solution offer a central repository to store agreements and related documents with enhanced search features? Traditionally, legal teams would store contracts all over the place with little visibility into their active agreements.
Summize offers a secure, central AI-powered repository to store your agreements and related files. The enhanced search capabilities make finding contractual information quick and easy. AI automation provides a window into your life agreements with enhanced summaries and key data extraction – you’ll never miss an unwanted autorenewal again!“The calendar functionality has spread the workload connected with renewal dates, allowing other non-legal members of Purple to take accountability and own the renewal process without having to be reminded by legal”. Daniela O’Brien, Head of Legal at Purple
Read more customer stories here.
Effective tools utilise AI-powered automation across each stage of the contract lifecycle to streamline the process. Utilising AI technology to assist with reviews accelerates the process by producing instant summaries of key information. As a result, contract reviews require significantly less time to complete.
Summize utilises AI automation across each stage of the contract lifecycle, including directly in Microsoft Word for faster, smarter reviews. No need to learn a new interface, legal teams can review, negotiate and redline in Word, with a simple task list.
Many CLM solutions offer native contract analytics, which allows legal teams to identify risk across departments. A CLM solution that can highlight risk, track KPIs and produce detailed reports across contract types will enhance the overall value and ROI.
Summize enables teams to leverage analytics to establish and track contract KPIs, with detailed reports across contract types allowing teams to spot inefficiencies in processes across the business.
Start managing your contract today
With regulations changing, technology advancements and the need to reduce operational costs, CLM has become essential for modern businesses. Modernising your contract management process offers businesses an opportunity to promote business-wide efficiencies, eliminating many outdated processes that cause delays and hold businesses back.
Summize is pioneering true digital contracting with a CLM solution that puts the user experience first. Unlock the power of your contracts with a deliberately different CLM that makes contracts useful and useable by the business, not just legal.
Ready to learn more?
Book a demo at Summize.com/book-a-demo