The ability to create a contract from a template, automatically track review and approval processes and measure the impact of contracts are just a few features in an effective CLM solution. However, the benefits of these tools go much further than process automation and improved visibility.

As the software-as-a-service model evolved in the 2010’s, new CLM solutions focused on configurability and scalability.

Real-time Access to Information

Contracts are fundamental to every company. Research suggests they govern 80% of business revenue, and their workflows span across departments. The challenge is to manage them digitally for efficiency and consistency from drafting through execution, and to minimize risk.

Unlike analogue processes, where contracts are a physical document, CLM tools bring them into the digital world – providing real-time access to their content and a consistent experience across users. These tools enable a holistic view of all contracts, and centralized, secure storage that prevents data silos and enables collaboration.

After wrangling a buddy into an outdoor adventure, and planning the details with your friend, you'll likely send your friend a text asking for final approval on which trail to take and whether they can bring snacks. Similarly, contract creation requires a multi-step approval process that must be recorded for legal compliance and to maintain an audit trail.

CLM tools facilitate this approval process by providing a multi-user platform with customizable best practice templates, clause library and flexible approval workflows. They also have a unified repository and easy search, and can deliver a streamlined user experience through familiar collaboration tools (e.g., Slack, Teams or e-signature solutions). This ensures all relevant stakeholders are looped in on approvals and that the latest version of a contract is always used.

Improved Collaboration

Contracts are a fundamental element of commerce. They govern 80% of B2B revenue, yet they are difficult to manage efficiently and consistently from start to finish. Outdated processes lead to bottlenecks, delays, and costly human error. Moreover, failure to observe contractually-binding terms and conditions can have serious legal consequences.

Digital contract management software makes a huge difference for teams that draft, edit, track and store contracts. Best-of-breed solutions even allow no-touch contract creation within line-of-business systems like CRM, sourcing and procurement. These systems take input and auto-build contracts based on business rules. This improves cycle times and reduces legal operating expenses in the contracting phase of the process.

Contract management tools help teams communicate in real-time and avoid misunderstandings that could delay negotiations or cause compliance issues down the road. Using customizable automated workflows, these systems notify responsible parties of due dates and milestones. They also provide a dynamic to-do list and escalation procedures.

In addition, the most advanced CLM software platforms monitor contracts in-flight and alert stakeholders when key events such as contract expiry or renewal are approaching. This proactive approach prevents unwelcome surprises that can disrupt a company’s operations and finances.

Reduced Risk

Many of the common contract problems that lead to disputes, litigation, and non-compliance are caused by errors or omissions. With a contract management system this type of problem can be prevented or rectified easily. The benefits of Contract Lifecycle Management tools aren’t limited to preventing these problems they also help reduce operational costs and ensure legal compliance.

When the first generation of contract management systems hit the market in the 2010s they were often costly and highly customized. They took months, if not years to implement and were difficult to maintain. On the other hand, there was a growing trend toward inexpensive and limited tools that claimed to be full contract management solutions.

These tools were marketed by leveraging the software as a service (SaaS) model that emerged in the same time period. The SaaS model allows technology vendors to create and deliver a solution without the need for customers to invest in large hardware.

Advanced Contract Lifecycle Management tools are now available that allow users to automate their workflows and processes, creating an integrated and streamlined process for contract creation and management. The result is reduced risk and improved productivity. For example, a CLM solution with built-in artificial intelligence can scan contracts and identify any issues of high, medium, or low risk, alerting the user to possible omissions or misrepresentations. It can even suggest appropriate insertions and deletions for the user to make during drafting.

Increased Compliance

Contract management systems are able to automate and track contract review processes, which significantly decreases the time it takes for contracts to move through their final approval phase. This can be especially useful in larger organizations where a single contract may require multiple functional and regional departments to review and approve its terms.

A CLM software can also help companies avoid contract failure by identifying any problems with a contract’s structure or terms prior to execution. This enables contract managers to correct issues before they become a serious problem and prevents teams from losing valuable opportunities because of poor quality contracts.

Lastly, Contract Lifecycle Management tools can also increase the efficiency of contract authoring by simplifying many processes involved in developing an accurate legal document. For example, a CLM solution can automatically populate contracts with preapproved language or CRM data during the drafting process and eliminate the need for multiple drafts to be reviewed and reworked.

Contracts play a critical role in how businesses operate and are sold, and the best contract management tools support best practices for both buy-side and sell-side processes. For this reason, newer contract management solutions like Apttus and Icertis focused on delivering comprehensive suites with fully customizable best practice functionality including repository and templates, clause library, flexible workflows, built-in AI and security and compliance safeguards. They also offer seamless integration with the most popular CRMs, so sales teams can create, sign, track and store contracts without leaving their own systems.