What is Contract Lifecycle Management (CLM)?
CLM includes creating, negotiating, managing and analyzing your contracts
Key steps in the Contract Lifecycle Management (CLM) process:
1. Capture: Step #1 for most people is to get all of their existing paper contracts in a central visible place. If you have no clear idea what contracts you have, then you have no idea what your potential risk exposure is. The next step is to capture the data from the contracts.
2. Track: Once you know where all your contracts are, the next step is to track any important data so you don’t miss any milestone. This affects both old contracts and newly signed contracts.
3. Create: Contract creation has two tracks. First, empowering business users with self-service, wizard-based creation using intelligent templates pre-approved by legal. Second, making life easier for legal when drafting complex deals on your own paper, or reviewing and “patching” contracts negotiated on other people’s paper.
4. Approve: Companies need an approval workflow process to ensure that risky contracts are reviewed and approved by the right person. Some risks need to be approved by legal, some by management, some by special departments like credit, etc. Ideally, safe deals are pre-approved.
5. Negotiate: The needs of the typical negotiator include: a checklist of issues for each type of deal; a way of marking up the paper to highlight how it’s different from the original or the last draft; and a way of capturing and flagging those differences (if possible).
6. Sign: When the contract is final and agreed it needs to be signed (either on a hard copy or by e-signature) by all relevant people, and the signed copies need to be stored. Someone also needs to validate that the final signed version was not modified in any way after execution copies were sent out.
7. Analyze: Enterprises with 100+ contracts need to analyze those contracts for potential risks, rights & obligations. Executives, Legal & Risk need canned reports to manage common risks, and ad hoc reports for unexpected scenarios. “Fingertip access” to contract terms and data allows people to react quickly to new scenarios and deal with time-sensitive risks.
To learn about the best practices of contract management and understand the efficiency of your company’s contract management process, download our eBook: Exari Contract Management Marurity Assessment.