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    Blog Image

    Taming the Contract Chaos: Contract Lifecycle Management Software

    • Contract lifecycle management software centralizes contract management, eliminating scattered documents and improving visibility.
    • Automated alerts and tracking in contract lifecycle management software prevent missed renewals and reduce compliance risks.
    • CLM software streamlines processes, saving time and resources while enhancing overall contract performance.

    July 19, 2024 | Procurement Software

    Contract management is critical to the functioning of businesses, governing each and every aspect of operations — be it legal, procurement, sales, finance, human resources, or partnerships and collaborations. A contract comprehensively defines the scope of work, terms and conditions, obligations and responsibilities, payment terms, duration, performance standards, confidentiality, termination clauses, dispute resolution, warranties and guarantees or assurances, liabilities and indemnities, and compliance.

    Challenges in Contract Management

    Outdated and manual processes in contract management lead to operational silos and increased risks. Contracts are more often scattered across various departments and systems, making them hard to track and manage; missed renewal dates that lead to unfavorable auto-renewals or lost opportunities; compliance issues due to inconsistent contract language; and lost man hours in searching for may be just one clause in the legal document. All of these challenges expose businesses to risks that may be difficult to detect and mitigate.

    The aforementioned challenges are likely to compound with growth in business, but contract lifecycle management software can address them, ensuring streamlined operations, reduced risks, and better business outcomes.

    Do Enterprises Really Need Contract Lifecycle Management Software?

    Business ecosystems worldwide have become increasingly complex, requiring efficient process flow and complete control over what’s going on. A contract lifecycle management software does that, and also opens up opportunities for cost savings and revenue optimization.

    Other benefits of contract lifecycle management software include:

    Benefits of Contract Lifecycle Management (CLM) Software

    Better Contract Visibility

    CLM software centralizes contract data and documents, enabling complete visibility and control over contractual agreements. This also enables companies to cut risk of non-compliance and costly oversights.

    Enhanced Collaboration

    CLM software facilitates easy negotiations and contract approvals with the help of capabilities such as redlining, commenting, and real-time tracking.

    Risk Mitigation and Compliance

    Automated tracking of deadlines, contract obligations, and regulatory requirements enables easy mitigation of risks and ensures compliance.

    Enhanced Decision-Making

    CLM-driven deep insights into contract performance lead to informed decisions and informed contract management strategies.

    Scalability

    Cloud-based CLM software is inherently scalable and flexible, enabling enterprises to easily adapt to changes and futureproof themselves.

    Issues Contract Lifecycle Management Software Can Tackle

    Contract lifecycle management software addresses critical issues in contract handling, enabling enterprises to streamline the entire process from creation to renewal. The centralization ability of CLM software solutions helps businesses tackle issues related to disorganization and inefficiency. This also enhances visibility, allowing easy searching and retrieval of contract information, while also providing valuable insights into contract performance and obligations.

    CLM software significantly reduces compliance risks by tracking important dates and deadlines such as contract creation and renewal, automating alerts for renewals and expirations, and ensuring adherence to regulatory requirements. It standardizes contract creation, reducing errors and inconsistencies, and speeds up approval processes through streamlined workflows and electronic signatures.

    CLM software also tackles challenges in collaboration and reporting. It also facilitates better communication between stakeholders, enables version control, and provides robust analytics for data-driven decision making.

    Security issues come at the top when it comes to risks. CLM software’s enhanced document controls and audit trails capabilities address any possible security concerns that may arise.

    Which Functions Can Benefit from CLM Software?

    Teams such as legal, procurement, sales, finance, and human resources find CLM software particularly useful because they deal with a high volume of contracts or complex agreements that require careful management throughout their lifecycle.

    The software helps these functions streamline processes, reduce risks, and ensure compliance, which are critical aspects of their roles. The specific teams benefiting most from CLM may vary depending on the nature and structure of the organization.

    Let’s take a quick look at the business functions that benefit from CLM software:

    • Procurement teams use CLM software to manage vendor contracts, negotiating terms, tracking supplier performance, and ensuring cost-effective purchasing.
    • The legal department is often the primary user of CLM software which they use for contract drafting, review, approval — ensuring compliance with legal standards and regulations.
    • The sales team uses CLM to create and manage customer contracts, track renewals, and ensure there is adherence to negotiated terms.
    • Finance uses CLM software to track financial obligations, manage payment terms, and ensure accurate revenue recognition.
    • Human resources or HR teams also use contract lifecycle management software to manage employment contracts, non-disclosure agreements, and other personnel-related documents.

    Conclusion

    Contract lifecycle management software is a strategic investment for the future and not merely a technology upgrade. It empowers businesses to address the pain points in contracts, operate more efficiently, reduce risks, and unlock new value from their agreements.

    Explore how GEP’s contract lifecycle management software can maximize value and minimize risks.

     

    Tags: contract lifecycle management software , CLM software

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