By Fan Bi
Contract lifecycle management (CLM) may not be the most glamorous part of the sales process, but it is crucial to the overall health of the organization. When contracts are updated quickly, based on accurate information, and administered effectively, it benefits both the company and the customer. Contract lifecycle management software is an important tool that helps you simplify the process, serve the needs of your customers, and drive additional value for the company.
The contract lifecycle is a complex process with many varying tasks. You have the creation of the contract itself, which can range from a simple, single-page agreement to a massive list of specifications and amendments. Then you have the negotiation process and the approval process. And finally, you must carefully manage the post-approval period, which generally consists of administering the contract, enforcing terms, and data reporting.
Optimizing any one of these processes on its own is a difficult task if you try to do it manually. When you add them all together, it’s clearly too much for any company to effectively manage without the help of a cohesive software solution.
Some leaders may justify their decision to forego CLM software by maintaining that as long as their product provides value for customers and the price is right, the contract details will work themselves out. This is too simplistic a representation of what contracts mean to a company, and this type of attitude can harm a sales unit.
Contracts are among the most important pieces in the sales process. They clarify the transfer of value between customer and business, significantly reduce risks for both parties, and act as living documents that guide the terms of a business relationship. When they are not managed effectively, it often results 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.
Innovative CLM software solutions give you control over the entire spectrum of the contract management process, whether you manage one contract or thousands at a time. With a robust CLM strategy in place, your company can get the most value out of your contracts during each phase of the process. It will also help you control your risk across the board and enrich your relationships with clients through the power of centralized information and increased efficiencies.
CLM software helps you achieve these goals through the use of wide-ranging features, including dynamic databases, automation measures, and advanced reporting. These tools create new possibilities for managing the entirety of the contract process so your salespeople can focus on building value-added relationships with your clients.
Every aspect of the sales process that involves working with clients requires access to many sources of disparate information at all times, and this is especially true for the contract management process. For larger organizations, executed documents often make their way to the sales team via a variety of delivery methods from multiple sources. Even the task of trying to organize all completed and in-progress contracts is daunting without the help of a single digital repository.
With CLM software, those concerns are obsolete. 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.
Authoring contracts is an inherently complex process for many companies. It often involves contracts being passed along to multiple parties, each with their own styles and methodologies. Without a stable and standardized system for creating contracts, you may be at risk of presenting clients with documents that read like they are a collection of disparate elements, rather than a unified statement.
Contract lifecycle management software has the tools to build a standardized contract authoring apparatus and maintain the contract’s integrity, even in the hands of multiple parties. It helps sales teams refine their process as well because it guides them through contract options and enables them to respond quickly and effectively when time is of the essence.
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.
In order to maintain an accurate record of amendments and changes that occur during the negotiation phase, you must have a dedicated CLM software program that simplifies the process. With the right CLM solution, you can access clear records of edits and amendments to get a holistic view of the entire negotiation period. You can also consolidate amendments into a more digestible format so both customers and salespeople can quickly understand the specifics of the terms.
Automation can help many aspects of contract lifecycle management, but the approval process is one area where it truly shines. That’s because contracts can still fall apart after negotiations have finished and all amendments have been made. When the entire process is handled manually, physical documents change hands multiple times, formatting must change, and the chain of approval may be different depending on specific circumstances.
CLM software automates the pieces of the approval process that make the most sense. Approvers can be notified automatically when a document is ready for them to review. Contracts can be formatted instantly into the necessary file type so they are fast-tracked through the process. Additionally, some advanced CLM software solutions feature a dynamic approval capability that automatically updates the chain of approval as changes occur.
Every sales leader knows that the contract lifecycle is far from over once the document has been approved and executed. Terms must be tracked and enforced, milestones monitored, and data from throughout the process collected and analyzed.
The contract management process functions of CLM software let you control all aspects related to contract administration through a single system. You can set up the solution to automatically notify stakeholders when specific milestones are reached, as well as easily track the obligations on both sides of the contract so you can send reminders and prepare for any necessary collection activities.
Contract lifecycle reporting covers many disparate categories, and it can be unwieldy to manually track all functions of the process and aggregate the data at the end. New data points are streaming in throughout the contract lifecycle, and they are typically spread across business units, which makes consolidation difficult.
CLM software has advanced reporting capabilities and progress can be tracked from one end of the cycle to the other. Leaders can quickly access dashboards and high-level reports to get a current view of performance results and platforms summarize more detailed data that is tailored to specific stakeholders. With an advanced contract lifecycle management solution, you benefit from comprehensive reporting and data analysis tools that help you continually refine the process and improve contract value.