Contracts are an essential part of doing business. It’s how we formalize and adhere to the agreements we make with our business partners, vendors, and clients.
Contract lifecycle management is, practically, the step of administrating the process of creating, editing, signing, and complying with those contracts. Even in small businesses, the number of contracts active and pending at once can be significant. Contract management makes it much easier to handle them all.
Steps in the lifecycle
Before looking at how you improve your processes, it’s important to understand what the steps of the lifecycle are, to begin with. We are also going to look at the features a successful contract management system includes in every step:
- Request: when a sale is informally agreed to, parties within the business need to request a contract, including specifying the kind of agreements made. Contract management can make it so that the team can quickly review and select different options.
- Generation: when a request is up, the sales, procurement, or legal team drafts the first version of the contract. Templates can help speed up the process, and generation wizards can make those templates more flexible to your needs.
- Negotiation: every stakeholder must have the opportunity to review the contract and address potential problems. You can dictate who has access to the document during this step and track any changes made.
- Approval: after another review, stakeholders must approve the contract. You can use workflows that allow you to keep track of who has accessed the document, who has approved, and who still needs to approve.
- Execution: the individual sets of instructions and service-level agreements are set, and then the contract is signed.
- Search/report: contract management systems create a database of existing contracts so members of different departments (legal, finance, sales, etc.) can access it if they are authorized and can quickly generate reports.
- Comply: you can track the key performance indicators and service-level agreements to ensure that all parties are complying with the agreement.
- Making changes: contract lifecycle management systems allow you to track contracts, see when they are ending or set to auto-renew, and get alerts so that you have time to make changes before a contract ends.
How contract lifecycle management software helps
The right software can ensure that your contract management processes are streamlined, safe, and much more organized. You can see each contract in every step of the lifecycle, as well as setting actionable points so that you can immediately see what needs to be done to get the contract to the next stage.
What’s more, the control over who has access and who can edit can ensure that you don’t have too many changes being made to your documents all at once. You can quickly identify when changes are made and who has made them so you’re not at risk of being caught off guard by an unexpected change.
Contract lifecycle management software can make sure that the process of creating, changing, and completing contracts is much more efficient. Quicker and safer completion of contracts frees up time and increases your return on investment for every new agreement, so don’t neglect it.