Keep Your New Year’s Resolution: Make Contract Management Foundational to the Business

Perhaps the greatest value that CLM software can offer, though, is visibility into that “gap between strategy and execution.”

In my prior pieces at Legal Reader, I’ve talked about the value of contracts and their importance to organizations’ bottom lines. The good news is that people are listening. According to 2021 research from EY, “92% of organizations are transforming the way contracting is handled, and 60% are implementing sweeping transformational changes.” Unfortunately the bad news, according to the same report, is that “99% of organizations don’t have the data and technology needed to improve their contracting process, creating a gap between strategy and effective execution.” Modern contract lifecycle management(CLM)  software solutions can help by providing visibility into existing processes, as well as provide the information necessary to improve and optimize them. 

CLM allows organizations to automate the entire contract process from initial request and contract generation to execution, as well as renewal, amendment, addendum or termination in the future. It’s a way to eliminate manual, time-consuming and potentially risky processes through a software system that integrates with existing back end operations systems like CRM or financials.  

When a contract is first proposed, users can find pre-approved contract templates and clauses in the CLM software system that include standard terms and language that have already been checked to comply with internal business processes and external standards and regulations. This ensures fewer errors and also provides a detailed audit trail if needed. 

During the negotiation process,  CLM software gives users the ability to seamlessly collaborate within the system and digitally register changes made at all stages of the process. Automating and streamlining workflows also ensures that contracts are routed to the right people and stored digitally.

After a contract is executed, it, as well as all supporting documents, can be stored in a centralized digital repository that is indexed and easily searchable. Users can track all contract terms and automate deadline notifications as well as track when contracts are due to expire so that they can be renewed, renegotiated, or amended. 

Perhaps the greatest value that CLM software can offer, though, is visibility into that “gap between strategy and execution.” Organizations have much more visibility and monitoring of key agreement components, such as; dates, objectives, obligations, and milestones. This can be analyzed to improve contract performance and analysis, leading to greater sustained viability and overall business growth.

CLM needs to be considered an integral part of any organization’s business model in 2022. Improving efficiency, reducing errors and costs, proving compliance and the overall minimization of risk can impact your bottom line.