Contract Lifecycle Management

Contract Lifecycle Management (CLM) Contracts are the foundation of any business in today’s era and every contract has a lifecycle from drafting to execution to expiration. For streamlining the management of each contract, CLM can be used by the companies for managing huge number of crucial contracts which affect their business and expose them to risk.

In simple terms, Contract lifecycle management can be defined as a process of managing the lifecycle of contracts from development through the completion. It helps companies to improve contract performance and at the same time to save money.

Stages of CLM: 1. Contract Request- The First and foremost stage of Contract Lifecycle Management is Contract request where one party initiates the contracting process and subsequently uses that information for drafting the contract document.

2. Author- Authoring the terms of contract is an important stage where parties pay attention regarding the specific usage of wordings as ambiguity leaves contracts up for interpretation. Country norms will also need to be taken into consideration, especially if two parties are in different locations.

3. Negotiation- This is the contract drafting stage where legal needs are analyzed to weigh what terms and conditions are required in final contract. In this stage contract document is generated with all clauses, terms and conditions wherein approver and

signing parties negotiate the contract and signing details are captured in the contract document.

This stage of contract lifecycle management includes 2 services: 1) Red lining services 2) GAP analysis 4. Approval- Approval is next to the negotiation in which the document prepared is further submitted for availing sanctions of different departments so that contract document can proceed to the next step in the Contract Lifecycle.

5. Execution- For closure of any deal, the parties must sign the final agreement. The signing is the simplest part of a contract, which signify official authentication of a contract document. This may be achieved either by digital signature on an electronic document or by wet signature on a paper document.

6. Amendments/Revisions- In long-term Business relationships, revisions and amendments are common in practice. We need a reliable process to keep track of original terms in addition to the added amendments. It is important to have everything available in one repository to provide a consolidated view so that parties can stay ahead of the changes and make sure that they are fully aware of the agreement or any revisions.

7. Contract Database- Once the final contract document is prepared it is stored permanently and with contractual Meta data fields, which is saved for future references. This stage enables business users to quickly search, apply filters and retrieve relevant documents from the contract system.

8. Contract Administration- This is the most important stage of CLM after the contract has been executed. In this stage, the contracts, which are uploaded into common repository, are further streamlined through contract management. This involves contract summarization, tracking contract obligations, creating files, alerts, renewals and generating assessment reports.

In addition to this, it also notifies the clients about the present status, contractual obligations and the risk analysis relating to its each and every contract.