Contract lifecycle management is important to organizations because it helps them reduce contract risks, make sure they're compliant, and stay organized. Contract lifecycle management can help organizations save both money and time, at least when it's done effectively. 

There are contract lifecycle management solutions that can help businesses stay on top of each phase of the process, and in doing so, they remain accountable for the management of all of their contracts. A flawless CLM process keeps an organization's reputation intact. 

The following are some of the phases and related best practices that come along with CLM. 

Contract Request

The CLM process begins with requests. Any key stakeholders in the contract itself can start to gather the details needed to create a new contract. 

At this point in the process, one party or both are initiating or requesting the contracting process to begin. 

Template Creation

One of the initial steps in CLM is the creation of contract templates, which can also be called template authoring. 

When you have template selection rules in place, then your CLM process is starting out well immediately. 

Look for a CLM solution that will let you pull clauses from a library and put them into a document. Then you can customize them and tag anything that you need to. 

You can also set rules if you use a CLM software solution so that any new template has to go through approvals before it's turned into a contract. 

At this point, all relevant inputs should be included in the contract. This means terms, clauses, and conditions. 

This might also be the phase where the parties who will be signing the contract are determined, and the signing details can then be included in the contract. 

Negotiation

Once a contract is created, that doesn't necessarily mean that's the final draft. Instead, what usually happens is that a first draft is sent to all the relevant stakeholders so they can review it.

The negotiation stage tends to be the most time-consuming because there will probably be back-and-forth. 

This is one more phase of the CLM process that's best managed with software. It can speed up the tediousness that comes with different stakeholders going over a contract and making their own changes before signing. 

Approvals

Next in the CLM are approvals. 

All the parties have to do a review, and there are specific parameters put in place for compliance, obligations, special terms, and milestones. During the contract approval process there should be a record of any changes that are made. 

The CLM software will be able to automatically create an audit trail. 

After approvals from the parties involved, then there should be a legal review. 

Finally, the document, once approved and legally reviewed, can be sent to the parties for signature. 

Execution and Performance

You may think that once a contract is signed, that's the end, but in reality, things are just starting. 

There's contract execution, and then from there, contract performance. That means well after the contract itself is signed, there is the administration that needs to carry on. 

Choosing CLM Software

The importance of CLM software was mentioned several times above, so how do you choose the best platform?

A CLM platform should offer solutions that will allow you to manage contracts' entire lifecycle from the request for proposal through negotiations and then administration and storage of all contracts. 

Things to look for in the selection process include:

• Automation from end-to-end: You want a solution that is going to make every step in the process streamlined. For example, you want pre-approved templates to speedup drafting and reduce the potential for human error. Any time your CLM software can automate repetitive or manual steps in the CLM process, it's going to make things faster and easier. 

• A central repository: The storage of your contracts is important because you may need to refer back to them at any time. Choose a software solution that makes it easy to not only store but also search and retrieve your contracts and related documents. 

• Analytics: A good software solution will offer analytics so that you can identify and then reduce risks. You can use these analytics to strengthen negotiations. 

Finally, you also want a CLM solution that's in line with your business. Your business is going to evolve, so your CLM platform should be able to scale up with you as needed without you have to buy completely new technology or start over. 

You want a CLM platform that's going to grow with you easily.