What is a Contract Lifecycle?
Contracts are signed, legally binding written agreements between two or more parties. A contract lifecycle management defines the steps and stages required to create any given contract, from the initial drafting phase all the way up to signatures and execution. This includes negotiation and redlining, multiple approvals stages, renewal, and more, depending on the nature of the contract or agreement.
First, the contract can be drafted from a pre-saved template. Second, the contract is approved by the assigned users or teams, such as, Head of Legal or Finance. Third, the contract is sent straight to the concerned parties for signature. Fourth, the contract is stored securely in your database. For instance, a standard Non-Disclosure Agreement (NDA) could have a very short contract lifecycle.
Another example is an Employment Contract, handled by a Human Resources team. First, an HR agent will prepare the needed documents and initiate the drafting using a pre-configured template. Second, the contract is sent for approval internally. Third, the contract is sent to the future employee. They may have comments or require changes. This is where negotiation and redlining may come in. The contract is adjusted until all parties and stakeholders are happy with the agreement. Lastly, the contract is sent for signature, stored in a secure repository for later reference, and may be subject to renewal or termination. Read more on Contract Lifecycle Management here.
The basic stages of a standard contract are as follows;
- Initiation: Identify all contracts and pertinent documents to support the contract’s purpose.
- Authoring or Drafting: Compose manually or via pre-designed templates using a smart contract management system that facilitates and speeds up contract creation.
- Process or Workflow: Define and apply a systematic process for different types of contracts. This facilitates collaboration, saves time and reduces bottlenecks.
- Negotiation & Approval: The key here is efficiency. If you have a clear process and workflow, negotiating terms and approving the contract internally should be fast and simple.
- Signature & Execution: Parties sign the contract, and it becomes a legal entity. This can be done electronically using contract management software or e-signature tools.
- Ongoing Management & Compliance: This process is ongoing and includes ensuring all deliverables and terms are met, revising and amending, and auditing and reporting. All contracts and contract data are stored in a secure and searchable repository.
- Contract Renewal: Automate this step to avoid missed renewal opportunities and lost business revenue.
What is Contract Lifecycle Management Software?
Contract management is the process of managing contract creation, execution, and analysis to maximize operational and financial performance at an organization, all while reducing financial risk and costs and improving company performance. Effective and automated Contract Management Solutions are designed to streamline and speed up this entire process while reducing errors and offering greater insight into efficiency and productivity, using configurable dashboards with real-time custom metrics.
Contract Management Systems also often integrate with other applications, such as; email applications, cloud document management solutions, video conferencing applications and much more. For example, Contra integrates seamlessly with 5000+ applications, including; Google Workspace, Outlook, MS Word, Teams, Webex, DocuSign, QuickBooks, and so much more, as well as App4Legal’s Core Software, Client Portal, and Advisor Portal.
The key features of Contract Lifecycle Management Software are as follows:
- Generate & Automate Repetitive Contracts
Draft contracts from scratch or use configurable templates that auto-populate your contract in seconds. Auto-generate contracts from questionnaires. Import and save premade document templates. Drag and drop pre-saved clauses directly into your document. Configure every aspect of the workflow
- Collaborate & Redline in Real-Time
Share and collaborate with external parties and stakeholders using seamless integrations with popular tools and applications. Negotiate and collaborate on legal documents in real time. Assign collaborators specific access based on entity, department, or role.
- Design Workflows and Approval Matrix
Visualize and organize workflows and document lifecycles. Set a defined approval center where you can choose the order in which documents are approved and by whom. Centralize and configure every step in the approval process. Keep track of document versioning and edits. Track and monitor changes made by any collaborators.
- Digitize Signatures & Execute Contracts
E-sign and integrate with tools like DocuSign to provide authentic Electronic Signatures, saving time and effort for all involved in the process.
- Set Automated Alerts and Reminders
Stay on top of key responsibilities such as notice periods, renewals, or automatic increases, and ensure that the right people are alerted at the right time. Stay up to date at every stage. Never miss a deadline again.
- Store Documents and Data Securely in Digital Repository
Store and organize all your documents and contracts in a central, searchable repository, where you can access them securely from anywhere and easily filter or search for data.
- Create Custom Reports & KPIs
Customize reports; expiring contracts, contracts awaiting signature, contract owners, contract values and more – all at the touch of a button. Enjoy full visibility using dashboards to measure performance and productivity. Extract customized analytics for reporting
Who uses Contract Lifecycle Management Software?
This software will primarily be used in departments that directly deal with creating, tracking and signing contracts. Whether you’re working in Legal, HR, Procurement, Finance, Real-estate, Sales, or any other industry or department, contract lifecycle management software can eliminate issues caused by misplaced documents, version control, naming inconsistencies, over-reliance on email for updates and follow-ups, missed renewal opportunities, and lost business revenue.
Below are some examples of the use of Contract Management Solutions for a number of teams;
- Contract Management System for Legal Teams
Anyone in the legal team or law firm can auto-generate contracts – simply by filling out the basic information in a short questionnaire, often removing the need for a lawyer’s intervention or chain of approvals and reducing errors. Mr Balkus, General Counsel and Company Secretary at PayAlly Ltd said in a recent case study, “Having worked in law firms, I know how important it is to have contract and matter management software. Otherwise, you’re just getting lost in thousands of emails that you’re going through. You don’t need a lawyer to draft or generate an NDA. We have templates for that – with explanations; of when to use what. You log in, generate it, and you can send it. It doesn’t have to be approved.”
Additionally, legal teams can track and visualize custom metrics on single-view configurable dashboards. This allows the legal team to make more informed decisions, optimize efficiency, and evaluate risk. Moreover, legal professionals can use this tool to streamline collaboration internally with other departments or externally with legal advisors and stakeholders via integration with popular applications. Finally, legal departments need secure archives and a searchable repository to store and keep track of all their documents, data and contracts, years down the line, to protect their clients and their practice.
- Contract Management System for Human Resources Teams
Contract management has become one of the many hats that modern HR departments wear daily. Proper management of contracts between employees and employer is essential. That said, poorly optimized contract management can be catastrophic for the company, the employee or both.
Using contract management software for HR allows the team to template crucial contractual language for quick processing, mitigate risks, minimize manual effort, integrate with existing applications easily, improve productivity, draft and execute contracts swiftly, and implement workflows to ensure smooth operations, saving costs, time, and effort.
- Contract Management System for Procurement Teams
The procurement contract management process involves managing contracts as part of legal documentation, negotiating the contract terms and conditions, certifying compliance with the terms and conditions, and documenting and agreeing on any changes by both parties.
Contract management software for procurement teams increases productivity, visibility, and compliance while mitigating risk and ensuring compliance.
Procurement teams can create automated, compliant contracts with minimal legal involvement. Configure contract review workflows to speed up negotiations and create more effective agreements. Track the status of contracts in the approval cycle, and never miss expiration and renewal dates.
- Contract Management System for Sales Teams
A major pain point for contract managers working in sales is the inability to access contact information when needed—contract management software, with a smart central repository, stores all contracts in one place. Advanced search and filter options allow users to view and access data from anywhere easily.
Sales teams can derive valuable business insights from contract data. Accelerate contract creation and policy updates using the standard clause library and customizable templates. Standardize workflows and collaborate seamlessly and transparently. Simplify negotiation and signing and automate onboarding. Map all actions with a timestamp to improve visibility and control. Ensure compliance with industry standards.
Turning this time-consuming process into a frictionless experience helps the sales team focus more on selling and meeting targets, thereby improving the bottom line.
- Contract Management System for Finance Teams
For Finance teams, using contract management software helps drive profitability by highlighting lost revenue and cost-saving opportunities, improving compliance by enforcing terms and obligations, keeping accurate records, and tracking key dates, so that no milestones, renewals, or opportunities are ever missed. Additionally, finance teams can track high-revenue transactions, keep tabs on Vendor Costs and Expenses, track slow-pay/no-pay clients, and mitigate financial risks.
Contract Lifecycle management is a simple and cost-effective way to improve any business’s top and bottom line.