The contracts underpin all business relationships. Whether with vendors, employees, or clients, an efficient Contract Lifecycle Management (CLM) process is essential for all and especially great for reducing risk, saving time, and getting more value and less fuss.

Here are some of CLM best practices that can and do help many folks serve their contracts better.

1. Standardize Your Contract Templates

Using standardized templates is one of the simplest ways to cut legal exposure and boost efficiency. 

These templates should use pre-approved language for run-of-the-mill clauses like:

• Payment Terms
• Termination Conditions
• Confidentiality Provisions 

Templates not only speed up contract manufacturing, but they also do a better job than humans of ensuring consistency across organizations.

2. Centralize Contract Storage

A digital, centralized contract repository allows all parties involved to view the most current iterations of contracts. It thus raises the visibility of these important documents, reduces the chance that someone will misplace them, and provides a clear path for those who want to audit contracts. Moreover, using cloud-based tools for contract lifecycle management can offer access to these documents from any secure location, thus opening up the possibility for collaborative work.

3. Automate Workflows

The contract lifecycle is a series of steps that every contract must pass through. If we want to eliminate bottlenecks in that contract lifecycle, we must find and fix the causes of those bottlenecks. The modern CLM tool has a few key features that can help with this: 1. Automated workflows 2. Automated reminders 3. Automated checks for compliance. These features help reduce delays and ensure that no critical deadlines are missed.

4. Establish a Clear Approval Process

Ambiguous approval structures can slow down the execution of contracts. An unclear chain of command can result in a bottleneck at the top, with the powerful and busy people who populate executive suites. In contrast, a clear structure allows approval to run downhill and through those who are prepped and ready to do their part.

5. Track Key Metrics

For the continuous development of your CLM process, performance indicators (PIs) that are key to the process, like contract cycle time, need to be tracked. So do renewal rates, compliance incidents, and any milestones that might be missed for not using a better CLM process.

6. Ensure Compliance and Risk Management

Contracts should be in concordance with internal policies and regulations. Make sure contracts are legally sound and mitigate potential risks by using clause libraries and compliance checklists. Also help yourself to periodic audits to identify outdated or non-compliant contracts.

7. Foster Collaboration Between Departments

The management of contracts is a business function involving an organization’s finance, sales, procurement, and operations, which means that effective communication is a must with all disciplines for effective CLM. Stakeholders should be provided with the necessary tools to grant reviews and approvals on contracts beyond the confines of never-ending email threads. 

8. Autonomously Trace Evolutions and End Dates

Set-back of services and loss of revenue can arise from missing out on updating a contract. Tracking automated alerts and dashboards for particular dates is helpful in proactive negotiation and renewal strategies while avoiding eleventh hour surprise renewals. 

9. Ensure Edited Contracts are Updated

It is paramount to not only keep track of the changes made, but also ensure that everyone has access to the latest version of the document. Real-time tracking of editing, commenting and approval through the necessary tools can ensure legal blunders do not occur and there is clarity.

10. Look for An Adaptable CLM System

The number of contracts is bound to increase with the growth or expansion of a business deal. As such, it is highly pertinent to look for a CLM system that is easily adaptable along with having the capability to integrate with other functions within the organization such as Customer Relationship Management or Enterprise Resource Planning.

Final Words

Managing documents is merely one aspect of effective Contract Lifecycle Management. Having strong, strategic, and compliant relationships within a business and taking steps toward these optimum methods helps save time immensely for an organization.