Contract lifecycle management: The 5 steps of CLM
Our vision: Contract lifecycle management makes your business go around!
The fundamentals of contract management process
Even with the best intentions, creating and completing on a contract can be difficult. The process can be labor intensive and time consuming. Plus, with input needed from many different parties almost simultaneously, it can be a difficult balancing act for any contract administrator to get right, all of the time. However, by fully understanding the process of contract management from the outset, effective and powerful contracts can be produced - and in less time too. The result are contracts that become assets to companies that can be leveraged to add even more value to a business.
In our guide to the contract management process, we look at what the fundamentals are to get right to ensure that the very best result for all involved is always achieved.
What is a contract management process?
The contract management process is the overseeing of a contract from its inception to when it is signed. Importantly, it also includes what should happen to the contract after it has been completed. This takes into account where and how the contract is stored. Plus, it also involves what actions are required by the relevant parties after the contract has been signed. The post completion step in the contract management process is key. By alerting both sides of the contract as to what is required of them, it can make what comes from the contract as excellent as possible.
That is the difference that effective contract management processes can make. By documenting and recording what is required of each party through the contract, the result is that relationships are strengthened as all involved know where they stand and what is required of them. Even within the contract management process, if everyone knows what they need to collaborate, the result will be a far better contract for both parties to adhere to. Plus, it should also help prevent disputes in the future as well as reducing legal risks overall.
Steps to contractual agreement
Getting to a contractual agreement is more than just writing a contract and asking both parties to sign it. It requires many steps to achieve that final contractual agreement between parties. Firstly, two parties need to identify that they want to enter into a contract with each other. That can be for a wealth of reasons. For example, a potential employee has been offered a job at a company. Or, it could be an instance where two companies want to do business together.
In whatever remit it sits, if a contract needs to be drafted up, the terms to be included must be identified first. That requires a great deal of collaboration from all parties involved in negotiations. If one party had to bid for work and won a project with a company, the terms within their bid will be a good starting point. However, the contract will also need to include how certain terms are met. Certain targets will be set that need to be reached for the contract to be upheld. Working together through a capable contract management process will ensure that both parties are comfortable with the terms set out. In practice that means any targets set are achievable and provide value for money to both sides.
In the terms of an employment contract, the potential employee will outline what remuneration they would like and after negotiation both parties will agree on a final amount. Additionally, a contract will also be the place that a company identifies to its potential employee what is required of them. As a result, the negotiation stage in the contract management process is fundamental to the health of the future relationship between two parties. By working together to come to a mutually beneficial agreement through effective collaboration, all involved will know where they stand and what is required of them in the future.
It is then that the contract can be reviewed for any final changes before being agreed and signed. From there, it is down to the parties involved to decide how to follow up on what is included in the agreement as well as how that contract is stored. More and more companies are employing the use of digital or cloud storage as it is more efficient in terms of filing and finding documents.
Post completion, digital contracts can also be used from cloud storage to help data flow in the future. Contracts often include huge amounts of data that can be leveraged by firms to help inform future business decisions - so it is important to look past a contract’s completion and plan for what happens after a contractual agreement is signed.
Overall takeaways of the contract management process
The contract management process is a tricky one as it involves collaboration from many parties to ensure that any final contract is mutually beneficial to all - not to mention legally sound. It is therefore helpful to use technology in the process, like ContractBook’s contract management software. Contractbook helps streamline the lifecycle of a contract as well as ensuring that contracts are optimized after they are signed. The whole process becomes easier and more effective, freeing up employee time to dedicate their energies better elsewhere.