Contract Lifecycle Management (CLM) is the planning, structuring and implementation of a contract right from the start, taking care of its functioning and eventually ending at its renewal. CLM works in a sequential manner as follows :
1. Initiation
The firm in need of services usually calls out to the suppliers of these services. This is done to initiate a new arrangement, renew the old one or cancel it. The involved parties evaluate and showcase their requirements and abilities and agree to work together.
2. Authorization
This stage involves the parties writing up and putting forth their expected obligations of the arrangement as per their internal agreement and standard nomenclature.
3. Negotiation and approval
This is the stage where both parties negotiate on the terms of the arrangement. Negotiation requires time and effort as it involves brainstorming to agree on the acceptable legal and financial terms. . This stage ends with approval and finalization.
4. Execution
The two parties then sign the final legally binding agreement. This can be done either on paper or electronically by the concerned authorities. All conditions are to be properly read before signing.
5. Compliance
Both parties must comply with the terms and conditions and fulfil their obligations during the contract tenure. Softwares can efficiently do quality management checks and keep a watch on the performance.
Without proper management, systems can go awry and result in broken supply chain and business and legal problems.
6. Renewal
Once the contract tenure is over, it needs to be stalled or renewed, with new conditions, as per the current requirements of the organization. A software easily keeps track of the contract timeline which also includes prior notifications of its expiry date.
In conclusion, contract lifecycle management is necessary for the proper utilization of an organization’s time and resources. With the advent of the latest technology, it is now easier than ever to organize and work on all the data, obligations, terms and conditions and efficiency. It is necessary to mitigate losses and to allow businesses to prosper.
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