You might see contract management as something that only pertains to legal or finance. But if you’re responsible for closing deals, you’re more involved with contracts than you realize. Because contracts are binding and govern over 80% of transactions and value, every business should care very much about what they contain.
Contracts & Contract Management is The Lifeblood of Companies
They outline the rights and obligations of the company and its customers, vendors, and partners.
If your contract lifecycle management (CLM) system isn’t integrated within a full, end-to-end business process, you are missing opportunities to streamline sales, standardize terms, increase efficiency, and reduce risk across the organization. This guide outlines the steps of the contract lifecycle and shows how effective contract management can help you maximize deal value and streamline processes.
CLM appeals to companies of all sizes in all industries. Implementing CLM can lead to significant improvements in revenue management, cost savings and efficiency. Understanding and automating CLM can also limit an organization’s liability and increase its compliance with legal requirements.
Contracts Impact ALL Businesses
Contract data determines revenue and costs
Contracts are the roadmap to your business deals. They define what someone is paying you, how long they’ll be paying you, if you are responsible for replacing broken products, when the customer is free to move on, and much more. Any mistakes in this process can increase your liability and have a real impact on your bottom line and on your customers’ experience.
The clauses within contracts are full of business-critical legal terms. Start and end dates, payment terms, service levels, customer support levels, warranty periods, and agreement values are all determined by your contracts. Having insight into these terms is not only critical, but can significantly simplify everyday business for your legal, finance, sales, and executive teams.
Contracts simplify business
Contracts outline explicit expectations and instructions for all parties involved in a deal. Companies with good visibility and foresight can use the data in their contracts to their advantage. Benefits of greater contract visibility include more accurate revenue forecasting, trend analysis to improve selling and negotiation, better risk management, and better coordination of sales and legal teams. When you’re managing contracts appropriately, it’s easy to find places to streamline and optimize both in your sales cycles and your revenue management.
Simplify Your Contract & Simply Your Operations
1) Establish clear expectations for all parties
2) Ensure control of resources
3) Optimize revenue and cost streams
4) Streamline business processes
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Navigate The Contract Lifecycle
Contract management involves much more than just taking care of your documents. Deployed at its most basic level, a contract management solution might be little more than an electronic version of a filing cabinet. But a filing cabinet doesn’t help you understand what’s inside—or help your business get the most value from the agreements that fill the cabinet. To make the most of your contracts, you need to manage the entire contract lifecycle.
The contract lifecycle includes everything from managing your executed contracts in a repository to requests, authoring, negotiation, and execution. Effective contract management requires an understanding of every step in the contract process, including any process that adds, creates, or uses contract data. Here is a more detailed look at the key functions and process steps a contract undergoes during its lifecycle.
The Contract Lifecycle
1) Request
2) Drafting
3) Negotiate
4) Approval
5) Execution
6) Obligations
7) Compliance
8) Amendment & renewal