Automate Contract Lifecycle Management: 7 Essential Activities to Streamline Your Contract Management Process
Have you spent another day writing the contract terms, manually reviewing the contract approvals and reminding your teams of essential deadlines?
Well, this is not all! You are missing a lot more by clinging to manual contract management tools. You cannot track your contract’s performance or get real-time updates necessary for the contract execution.
The results are obvious! Missed deadlines, contract lapses, messed up information. On top of it – the litigation about contracts keeps on changing all the time. All this leads to lower team productivity even if you manage to employ manual tracking methods.
There is a sure-shot solution for all these problems: contract lifecycle management tools. With these CLM tools, you can get rid of manual tracking & management of contracts, time wastage and insufficient use of resources.
You can ensure your team saves up to 90% lesser effort and time on activities associated with contract management.
CLM Tools – Everything You Need To Know
With such an enthusiastic claim, you must look forward to all the information about the CLM tool and how it can benefit your business. So, here’s everything you need to know:
What Are CLM Tools?
CLM tools are a combination of automation and artificial intelligence designed to help in your contract’s pre and post-signature phases. They include but are not limited to the creation of contract terms, reviewing, approval, streamlining and inclusion of all stakeholders.
Who Should Use CLM Tools?
Any corporate spending a significant portion of its daily routine and time on contract creation and tracking must use CLM tools. Using artificial intelligence and automation, these tools can reduce the time and effort spent on the contract, thus giving your business a sudden boost.
Similarly, organizations looking for a contract performance evaluation tool should get CLM tools and get hold of their strengths and weaknesses.
Legal operations professionals, chief legal officers, procurement department and sales team can also utilize the contract lifecycle management tools for their benefit.
What Are The Benefits of Using Contract Lifecycle Management Tools?
Contract Lifecycle Management tools can be of great help to your organizations. Here are some specific ways:
● Reduction of manual effort – Adopting CLM tools in your organization can reduce the manual effort in drafting contracts. Gartner predicts that using CLM tools in contract review needs half the effort. CLM tools provide businesses with a streamlined contract process that starts with the creation of a new contract and ends with the contract’s termination. The tools enable businesses to store all contracts in a centralized repository, making them easy to access and manage. The system also allows users to create templates for frequently used contracts and automate the creation process for new contracts, saving time and increasing efficiency.
● Cost Saving – You can save costs currently incurred on your contracts. According to estimates, average businesses incur 9.2% of their annual revenue as costs on inefficient contracts.
● Lesser time on contract finalization – The average time spent on contract creation can be reduced to half with the efficient CLM tool. CLM tools can improve contract compliance by ensuring that all parties are following the terms of the agreement. The tools provide alerts and notifications for contract milestones, renewals, and expirations, so businesses can avoid penalties for missed deadlines or non-compliance. With CLM tools, businesses can monitor compliance in real-time and identify potential issues before they become a problem.
● Risk Mitigation – The chances of missing crucial terms and clauses are minimized with an automated tool. CLM tools can help businesses reduce risk and improve security by providing a secure repository for all contracts. The tools enable businesses to store contracts in a secure, centralized location, reducing the risk of loss or damage. Additionally, businesses can set access controls, so only authorized personnel can access specific contracts. This feature helps prevent data breaches and protects sensitive information.
● Increases Productivity – With the lesser time required in the contract management domain, your team can spend resources on more important things. CLM tools can increase efficiency by reducing the time and effort required to create, negotiate, and manage contracts. The tools automate contract workflows, reducing manual effort and increasing speed. Users can collaborate on contracts in real time, reducing the time it takes to reach an agreement.
● Makes you Proactive – With manual contract management, you cannot deal with the issues upfront because of information scarcity and retrieval ease; it is the opposite for CLM tools.
● No missed deadlines – You can set up specific notifications to keep you on track, so contract management with the achievement of all milestones is easy. CLM tools provide businesses with enhanced reporting and analytics capabilities. The system can generate reports on contract performance, compliance, and other metrics, enabling businesses to identify areas for improvement. The tools can also provide insight into contract terms, such as payment terms or pricing, allowing businesses to negotiate better deals in the future.
Activities You Can Automate
1. Manual Data Entry Into Contracts
Using contract lifecycle management tools saves you from manual data entry into contracts. Manual data entry is labor intensive and requires individual effort and time. Besides, there is always a risk of error in manual entry, which can cost your company thousands of dollars.
You can limit all these problems by incorporating CLM tools into your business, and your contract will be literally ready in 30 seconds.
2. Manual Contracts Request Forms
Being one of the important activities in the contract, you cannot waste much time on it. Gathering information about the concerned party, notifying people involved in the approval and even filling out the correct process form is tedious.
But relying on a CLM tool can make it quick and efficient. The tool acquires all the necessary information upfront. So there is no need for back-and-forth communication or manual handling of the contract request forms.
3. Document Redlining
Making changes to the contracts is an integral part of the contract finalizing process. It requires tracking the changes made and the people associated with those changes. The manual approach requires you to download documents, make edits, and send files & messages to the other party. Meanwhile, parties making simultaneous changes can ruin the entire spirit of redlining.
So, using a CLM tool can save you from the entire hassle. All the stakeholders can change terms in real-time and track who made what changes.
4. Manually Reviewing Contracts And Tracking Approvals
You must have observed that the contract approval time has increased with the growth in your business. It is because you have to handle multiple contracts simultaneously. With manual reviewing, contract sharing and getting to the approval stage, benefits (such as price advantage) might not work.
Sometimes, keeping track of contract approval becomes difficult too. This is most applicable in cases where you have a multi-layered hierarchy.
Can your CLM tools solve these concerns for you too? The presence of multi metadata filters and tracking alerts in the contract lifecycle management tool can remarkably reduce the manual effort in the process. Thus, allowing higher productivity and better results for your organization.
5. Version Control
How often has your team put in extra time to find the recent contract version? Such issues will keep growing with your organization’s size. The more the number of contracts in the process, the more difficult it will get.
Your CLM tool can automate the version control problem for you as well. It sequences the exchanged document according to the date, so you don’t have to risk the misplacement of the latest contract.
6. Sensitive Information Redaction
Legal contracts need specific information to be confidential or non-public. So, it is vital to maintain transparency between parties about such information.
But, while editing multiple contracts simultaneously, failing to communicate such confidential information or paragraphs is a standard human error.
But it has severe legal consequences. It might even lead to high monetary penalties.
CLM tools allow you to highlight such sensitive information in each paragraph. So you can feel less burdened and more efficient while drafting the contracts.
7. Renewals and Milestone Tracking In Spreadsheets
Do you spend manual effort using spreadsheets, Google Drive and Word Documents for all the contract-related activities? If yes, then the probability of missing important deadlines and losing track of essential contracts is high.
You can reduce this risk using CLM, which enables you to set rules-based tracking alerts for all your projects. So, finding the contract expiring next month or the milestone awaiting your approval won’t require manual eye-keeping. Your CLM tool can do it for you!
CLM tools can greatly benefit companies in the short-term and long term. Right after the implementation of the contract lifecycle management tool, you can witness a reduction in time required for contract formation, lesser effort in the process and improved employee productivity.
In the long run, you can expect streamlining of your organizational processes with the integration of these tools. It can enhance the chances of organizational growth.
So, now that you understand what is a CLM tool, it is the best time to invest in it and prepare your organization for the future.