Good contracts are a crucial element of any good business. They represent in absolute terms the actual value of the transaction, and the parties’ promises to each other. The final signed contract is what is relied on in case of any dispute, and hence it is extremely important that all aspects of the contract be reviewed thoroughly by the relevant stakeholders – legal, finance, HR, sales and so on, before making any commitment. Poorly managed contracts result in increased costs for the organization, unnecessary legal and financial risks, and a greater likelihood that the company won’t be able to collect effectively.
To ensure maximum efficacy of all contracts, it is critical that all relevant verticals of a business have an efficient way to collaborate and stay on top of each proposed contract. This is where a Contract Lifecycle Management (CLM) tool can help. Whether it is managing documentation in a centralised repository, drafting and negotiating legal agreements with vendors, or easing the approval process, a good CLM solution can manage it all from end-to-end.
A CLM can help create a centralised database consisting of many sources of disparate information. Contracts and supporting documents can easily be organized into a central, searchable location. Anyone who has access to the database can view and edit the most up-to-date versions of the documents from anywhere, and deliver accurate answers to customers based on real-time information.
When it comes to complicated contracts, the negotiation period usually involves several rounds of revisions and the need to compare previous versions of documents with current iterations. Extensive negotiation periods are among the most common reasons for lengthy contract lifecycles, which can result in reduced value per contract.
A CLM will maintain clear records of edits made by each team to get a holistic view of the entire negotiation period. Each team can see the edits made by the other and weigh in accordingly.
When contracts are handled manually, physical documents tend to change hands multiple times, and the chain of approval may be different depending on specific circumstances. A CLM automates the approval process to ensure quick movement. Approvers can be notified automatically when a document is ready for them to review. Contracts are fast-tracked through the process.
To conclude, a CLM can optimize the processes for different teams to improve productivity, efficiency and maximize business revenue. It ensures maximum collaboration between different parts of the whole business, to achieve the best results for the business.
