The definition of a contract is simple: It’s an agreement between multiple parties in which one or more parties has an obligation (or several) to the others. The physical contract itself is just a record of that agreement, outlining all of the pertinent details.
The process of contracting itself is somewhat more complex, though. Developing a contract requires drafting the actual document (often through several stages of revision as specific terms are negotiated), negotiating terms and formally executing the contract — and then following through on the terms of the contract.
This whole process is known as the lifecycle of a contract and, like any other critical business process, it needs to be tightly managed, ensuring that every contract is thoughtfully drafted, signed, and operationalized. Welcome to contract lifecycle management, or CLM.
Unfortunately, in many environments, CLM is little more than filing contracts, where they will then gather dust until someone needs to review the document. The result is often lost revenue, due to lost sales, breach of contract, and unnecessary risk. Just looking at sales alone, research from the Aberdeen Group revealed that using contract lifecycle management software not only reduced the length of the sales cycle and contributed to higher lead conversion rates, but also increased the number of sales professionals and teams who actually met their sales quotas. Not only that, but the report also revealed that CLM contributes to higher rates of contract compliance (69 percent) and more contract renewals (66 percent).
It’s important to note that he term “CLM” applies whether or not your contracts process is automated. There is complete contract lifecycle management software, like Exari, and there are standalone software systems that automate one or more steps. In either case, the steps to CLM are the same, and all are important.
There are nine key contract management steps for efficiently managing the process:
Contract lifecycle management is a key to effectively leveraging your organization’s contracts to maximize revenue and mitigate risk. By automating these steps using CLM software, you’ll also save time. To see contract lifecycle management software in action, click here to request a demo of Exari. If you still have questions about what is CLM and anything else, contact us today
Ball, Bryan. "Contract Management: How the Best-in-Class Maximize Their Potential." Aberdeen Group 20 Jul. 2017.