What is Contract Lifecycle Management Software (CLM)?
Contract lifecycle management (CLM) automates and facilitates contract processes during critical stages. These stages encompass initiation, authoring, process and workflow, negotiation and approval, execution, ongoing administration and compliance (within the repository), and contract renewal. By establishing a shared language, fundamental templates, unified terms, and consistent, repeatable conditions, buyers and suppliers can reduce errors and save time. The majority of contract management software is intended to reduce administrative costs, enhance the efficiency of the contract process, and provide a more comprehensive understanding of corporate expenditures.
Advantages of CLM
Steps Involved in Contract Lifecycle Management
#1 Document and Data Collection
This process entails the initial research and resource compilation that will be used as reference material for the contract template. Historically, this process was manual and time-consuming; however, AI can be employed by CLM platforms to identify and accumulate this data.
Contract drafting – The document is drafted after the requisite information has been collected. Through the utilization of a subset of artificial intelligence known as natural language generation (NLG), this manual process can now be automated. A CLM tool that integrates NLG can automatically incorporate the resources it collected in the preceding step and generate a draft based on natural language prompts.
#2 Editing and Negotiation
Following the authoring process, human teams typically work together to enhance the draft. The provisions are reviewed and negotiated between stakeholders after they have been finalized. Relevant team members can view, edit, and remark on the contract without the need to create duplicate drafts or exit the platform by utilizing a well-designed CLM tool. The workflow can transition to negotiation once the revisions are finalized, ensuring that the contract is sent between stakeholders until all parties reach a consensus on its contents.
In general, the contract must be approved by the leadership prior to its finalization. CLM automation can automatically route the contract to each authorizing party as part of an automatic workflow once negotiations have been completed. Even alerts and reminders can be automated at this stage in the process, thereby reducing the amount of time that is squandered.
#3 Signing
In the past, a finalized contract was required to be manually signed by each party, and subsequently scanned and submitted to a digital database. This was altered by electronic signatures. By incorporating signatures into a centralized workflow, CLM automation elevates this convenience to a new level. Firms have the option to configure their workflow to automatically distribute the contract to the consenting parties upon the completion of the approval process.
#4 Ongoing Management
The contract must be stored securely and in compliance with regulations to facilitate retrieval in the event of investigations or amendments. Amendments that are required can be automated in a manner that is comparable to the original workflow.
# 5 Reporting, Retrieval, and Search
Legal professionals may require consultations with prior contracts in order to address new cases, clients, or audits. They have the ability to efficiently locate and analyze these documents through AI-driven automation, just as they would have done during the data gathering phase of a contract lifecycle. They can also have AI generate custom reports that summarize critical information at a glance in the event of an audit.
#6 Contract Renewals and Terminations – Certain contracts may be subject to renewal or require explicit termination. Teams have the ability to automate their renewal and termination workflows in the same manner as they do for a new contract.
Read: Top 10 Accounting Automation Software Features
How to Pick the Right Contract Lifecycle Management Software?
Seeing is Beelieving
Firms are discovering that automation offers robust support for managing their entire contract lifecycle through automated workflows.
With Docubee, teams can take advantage of RPA enhanced with targeted artificial intelligence for even more streamlined workflows.
Docubee can help the contract management lifecycle fly smoothly through:
- Streamlined, AI-driven contract generation
- AI-enhanced RPA for even more intuitive workflow automation
- Centralized, compliant database you can easily search with natural language processing (NLP)
- Natural language generation (NLG) for automated contract drafting
- Centralized collaboration and contract negotiation
- Integrated e-signatures
- Integrations with existing tech stack
- No-code workflow customization
- Compliance with HIPAA, CCPA, and SOC2
How CLM Supports Sales and Revenue Growth?
- Enhance the pace of deal closures: CLM software can expedite the contract process from draft to signature and expedite the turnaround of deals. This efficacy can result in increased renewal rates by simplifying the renewal process for your clients. Faster deal closures also result in increased cash flow, which can be allocated to the pursuit of additional sales opportunities and the generation of new prospects.
- Enhance the precision of contracts: Standardized processes and automated templates assist in the prevention of errors that can impede or compromise transactions. Not only do accurate contracts contribute to cost savings, but they also help establish the trust and satisfaction of customers, which are essential for establishing long-term relationships and recurrent business.
- Improve the consumer experience: Contract lifecycle management (CLM) software simplifies the contract management process, ensuring that it is fluid and effortless. A more efficient process results in a more enjoyable experience for all parties. Great experiences foster trust, maintain consumer satisfaction, and may facilitate additional sales.
- Give your team strategic insights: By examining the results of various contract terms, your team can determine which ones are most effective. For instance, your team can prioritize the inclusion of QBR clauses in future contracts to fortify client relationships and boost renewal rates, if data indicates that clients who consent to quarterly business reviews (QBRs)opens in a new window are 50% more likely to be renewed.
Read: AI for Retailers : Improving Customer Experience
FAQ’s
How does CLM software improve contract drafting?
CLM software often utilizes natural language generation (NLG) to automate contract drafting, making it quicker and more efficient while reducing the risk of human error.
What are the benefits of electronic signatures in CLM?
Electronic signatures simplify the signing process by allowing contracts to be signed digitally, which speeds up the execution phase and eliminates the need for physical paperwork.
How can CLM software help with compliance?
CLM software ensures that contracts are stored securely and can be easily retrieved for audits. It also helps organizations comply with regulations by tracking contract terms and renewals.
Can CLM software integrate with existing business tools?
Yes, many CLM solutions offer integration capabilities with existing software, such as CRM systems, accounting software, and other business applications, enhancing overall workflow.
How does CLM software facilitate contract negotiation?
CLM tools provide collaborative platforms for stakeholders to review, edit, and comment on contracts in real-time, streamlining the negotiation process and reducing the risk of errors.
What role does AI play in CLM software?
AI enhances CLM by automating data collection, improving document drafting through NLG, analyzing contract performance, and generating insights that inform strategic decisions.
More Fintech News:
Neo Financial Partners with CI Financial to Launch Suite of Cutting-Edge Financial Solutions
Ripple Brings Bank-grade Custody Solution to Crypto Businesses
Top 15 Tax Software Solutions For 2024
Thanks for reading!
