What does contract lifecycle management (CLM) technology do?
As a business grows, though, existing methods can quickly become unwieldy, presenting a host of problems.
Contract processes should be straightforward. As a business grows, though, existing methods can quickly become unwieldy, presenting a host of problems. Outdated processes such as pen and paper signatures and using multiple forms of software can create unnecessary delays, confusion and inaccuracies. Contract lifecycle management (CLM) software, on the other hand, is designed to provide a streamlined, accessible and holistic solution that is dedicated to improving every stage of the contract process for businesses.
Let’s look at the three pillars of CLM technology:
Standardised contracts and workflows
If contract workflows aren’t standardised, your business might be wasting employee time and company money, and working with contracts that are inaccurate or non-compliant. DocuSign research suggests that the time absorbed by a typical contract workflow can be in excess of 30 hours for small businesses (5-500 employees), while 59% of businesses report using 2-3 applications for contracts. This can create confusion over which contract template is correct, and inefficiency in the process.
CLM software standardises the processes and workflows for contracts at every stage. Businesses commonly report using software such as Microsoft Word or Google Docs to produce contracts, which requires copying/pasting information, manually adjusting contracts and moving between multiple platforms. CLM creates efficiency by providing a single platform that is purpose-built for contracts, standardised contract templates and a predictable process both pre- and post-signature. With a CLM, contract processes become consistent and repeatable, saving hours on manual labour and producing compliant, accurate documents.
Automated processes
On average, a contract goes through 2.9 versions and 4.4 approvers before being finalised. Using manual processes (such as email), each version and approval stage creates the potential for confusion — keeping track of which version of the contract is current and who needs to approve it can be like spinning plates. Purpose-built CLM technology allows for automated live change audits, giving users complete oversight into the stages and versions of the contract.
CLM creates ‘living’ documents, which is particularly important once it comes to collecting signatures. Using e-signatures, which are digital, means it is no longer necessary to produce copies of a contract if multiple signatures are required. One source of truth — the living document — may be automatically sent to and signed by multiple users in many locations. Using printed, physical contracts and requiring signees to return via fax or scanning presents challenges in keeping track of which version of the contract is current and whose signature is still required.
Other automated processes include:
- Standardised templates with automatically pre filled data
- Reminders and renewals
- Payment notifications
- Conditional approval steps to ensure compliance
- Storage/cataloguing
- Conditional review
Centralised activity
Businesses need a single source of truth when it comes to contracts. As a business grows, keeping track of contracts gets harder and harder — particularly for those businesses still using Excel spreadsheets or Google Docs. DocuSign research shows that, on average, it takes 39 minutes to find a completed contract, and 42% of respondents were unable to locate the contract at all. By creating a central agreement repository, CLM technology makes searching for contract information streamlined and straightforward. A CLM can include a robust capacity for information tagging and metadata, allowing for a simplified way to search a large contract database.
A CLM, like other cloud-based technology, can also be integrated across other applications. For instance, customer relationship management (CRM) software can be integrated with CLM, meaning that sales professionals can retain complete contract oversight without having to jump between platforms. On the other hand, legal professionals unused to using CRM are able to integrate data into the CLM platform, meaning both sides are able to access the information they need without having to navigate unfamiliar software.
Read now: Could e-signatures be the key to improving your procurement process?
