What Are the Stages of the Contract Management Process?
The contract management process encompasses everything from the initial request to the archiving of the final contract. In order to optimize the efficiency and effectiveness of your contract management process, it’s important to understand each stage. It’s also important to understand how contract management software makes it easier to administer, provided you have the right solution. That’s because with contract management software you can automate each of these stages ensuring speed, compliance, and control.
8 Stages of the Contract Management Process
The contract management process consists of eight distinct stages, all of which can be automated and streamlined via the use of contract lifecycle management software. The eight stages include:
- Request and intake
- Creation and authoring
- Collaboration and redlining
- Final reviews and approvals
- Signatures, execution, and finalization
- Obligations and commitments tracking
- Reporting and auditing
- Amendments, addendums, renewals, and termination
Stage 1: Request and Intake
The entire contract management process begins with the initial request for a contract. The request should include details about the goods or services involved, delivery dates, the contract’s termination or renewal date, key obligations and commitments, and other important terms and conditions. Using standardized request and data intake forms in contract management software make this part of the process easy and accurate.
Stage 2: Creation and Authoring
After the request and intake have been completed, the first draft of the contract is written. The contract, in this initial form, should include all the terms and conditions initially requested, as well as appropriate legal language. Some companies create each new contract from scratch, although this process can be eased by leveraging clause and template libraries in CLM software that have approved language. In addition, merge fields will take all of the information from the request forms and populate it automatically in the contract.
Stage 3: Collaboration and Redlining
In stage 3, the contract’s first draft is circulated to all appropriate internal parties. These parties review and edit the contract, making any necessary changes and comments. Once the contract is approved internally, it is then sent to the other party for them to review and redline. Any differences or discrepancies between the two parties’ versions are now resolved or negotiated as necessary. With Contract Logix’s Collaboration Room technology, the entire negotiation stage is made fast and frictionless. In addition, all changes are automatically tracked.
Stage 4: Final Reviews and Approvals
The final version of the contract is now circulated to key stakeholders from both parties for final review and approval. This stage should include a review by legal staff. When all appropriate staff sign off on the final version, the contract is ready to be signed.
Stage 5: Signatures, Execution, and Finalization
The contract must be signed by authorized staff from both parties to be legally executed. Signatures can be physical, or they can be digital using an e-signature process. E-signatures allow signing to take place in parallel between the two parties. Traditional physical signatures require the routing of the official paper document between the parties, which can be time-consuming.
Once the contract has been signed by both parties, it should be finalized and sent to relevant personnel and departments within your organization. This informs key staff of all the obligations and commitments within the contract.
Some contract management software solutions like Contract Logix have e-signature providers integrated directly into the platform. This means that you never have to leave the system to get the contracts signed by all parties. Then, once executed, the contract is automatically married back up to the software eliminating any concerns over which version is the latest.
Stage 6: Obligations and Commitments Tracking
To legally fulfill the contractual obligations, it’s important that some sort of tracking system be put into place to notify relevant staff when deadlines and due dates are approaching. It’s important to track not only your company’s commitments, but also those from the other party, to make sure they’re living up to their end of the contract as well.
Contract Logix provides the ability to automate alerts, tasks, and other notifications so that everything stays on track so you never miss another key date or obligation. It’s a critical way to mitigate risk in your business.
Stage 7: Reporting and Auditing
All signed contracts need to be archived while still being readily accessible for any necessary auditing. It’s also important to feed information about the contract into your company’s reporting system so you know the current status of all contracts. With CLM software, you can search, report, and analyze all of your contracts and data in real-time. In addition, support of APIs allow you integrate with other business applications like CRMs, ERPs, and ITSMs.
Stage 8: Amendments, Addendums, Renewals, and Termination
The final stage of the contract management process involves activities that occur after the contract’s execution and fulfillment. This could involve any amendments or addendums to the contract, as well as being aware of each contract’s renewal or termination date – and acting on that notice appropriately. Managing amendments, addendums and terminations is very simple using Contract Logix.
Why Contract Lifecycle Management Software is the Future of Contract Management
While the contract management process may seem complex, it can be simplified via the use of automated contract lifecycle management (CLM) software. CLM software, such as the Premium CLM Platform from Contract Logix, streamlines all stages of the contract management process, providing digital request and intake forms, contract templates with pre-approved terms and language, automated workflows, e-signature technology, deliverables alerts, digital archiving, and detailed analytics and reporting.
By automating the entire contract management process, CLM software speeds up the process, reduces human error, and helps cut contract management costs. (In a classic study, Aberdeen Research found that contract management costs were slashed by up to 30% by automating CLM.) CLM software also ensures that you meet all contractual obligations and deadlines – and that the other party fulfills their obligations, too.
Here are some of the other benefits your organization can realize from adapting an automated CLM software system:
- Greater efficiency
- Shorter negotiation and execution times
- More accurate contracts
- Enhanced regulatory compliance
- Reduced legal risk
- Greater consistency between contracts
For these reasons and more, most experts agree that CLM software is the future of contract management.
Let Contract Logix Automate Your Organization’s Contract Management Process
When you need to streamline your contract management process, turn to Contract Logix. We offer state-of-the-art contract lifecycle management software that will help automate your contract management, speed up your workflow, eliminate errors, and reduce costs. Contact us today to learn how you can easily move your current processes into our CLM platform, so your company can better manage its contracts and contractual obligations.
Contact Contract Logix today to learn more about how CLM software can improve your contract management process.