How Important is Contract Management and Contract Lifecycle Management

How Important is Contract Management and Contract Lifecycle Management

Published on : 09/08/2023 09 August Aug 08 2023

Contract Management is the proactive, methodical management of a contract from initiation through award, compliance, and renewal. 

The Contract Lifecycle

At its core, Contract Management involves the systematic handling of all stages of a contract, beginning with its inception. During the initiation phase, key stakeholders collaboratively outline the terms, conditions, and objectives of the contract, establishing a solid foundation for the partnership or engagement. Clear communication and alignment of expectations at this stage are essential to avoid misunderstandings and disputes down the line.

Once the contract is awarded, Contract Management shifts its focus to meticulous compliance. This involves monitoring the performance of all parties involved to ensure that contractual obligations are being met in a timely and satisfactory manner. Through continuous oversight, potential risks or deviations from the agreed-upon terms can be identified early, enabling proactive measures to be taken to mitigate or resolve issues.

Renewal of contracts is another pivotal aspect of Contract Management. Rather than waiting until the last moment, effective Contract Management involves strategic planning for contract renewals well in advance. This allows for ample time to assess the performance of the existing contract, gather feedback from stakeholders, and negotiate any necessary adjustments to terms or pricing. By taking a forward-looking approach, organizations can streamline the renewal process and ensure the continued success of the partnership.

In addition to these core stages, Contract Management also encompasses tasks such as document storage and retrieval, risk assessment, and performance evaluation. With the advent of technology, many organizations are leveraging Contract Management software and tools to enhance efficiency, accuracy, and visibility throughout the entire contract lifecycle.

The Importance of Contract Lifecycle Management

Implementing CLM can lead to significant improvements in cost savings and efficiency.

Contracts are a crucial component of every business. That's something everyone can agree on. But they can also slow you down because they're often complicated, time consuming, hard to finalize, and even harder to track.

With our AI powered contract lifecycle management software solution for your corporate organization, it's easier than ever to draft, negotiate, approve, store, and analyze every agreement.

Many companies have not taken steps to update and optimize their contract management processes. This includes:

  • Contract requests,
  • Tracking and managing of contracts and terms,
  • Measuring to ensure compliance,
  • Mitigating recurring challenges,
  • Reducing potential risks. 
In fact, less than 10% of organizations have implemented digital systems to streamline contract management, and over 50% have no current plans to do so.

Like many business processes, relying on paper-filled filing departments or rudimentary online systems to house contracts is inefficient and creates significant risk.

In fact, a significant percentage of all contracts are lost, essentially ensuring that terms and conditions will not be monitored and carried out. For legal and procurement, in particular, noncompliance and performance violations are the essence of significant risk.

There are 4 primary advantages to be gained from bringing robust contract management processes to your business:

  1. Greater efficiency and productivity
  2. Increased visibility
  3. Effective compliance to manage risk
  4. Gain and retention of control

Ultimately, Contract Management is not merely a bureaucratic necessity but a dynamic and strategic practice that contributes to the overall success and growth of businesses and institutions. 

Check out more information regarding the powerful Artificial Intelligence generated contract and contract lifecycle management solution from Legal Suite: Contract Management Solution


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