Contract management seems to be one of the most overlooked and neglected aspects of running a business. Sure, it’s not as exciting and thrilling as understanding the ins and outs of your sales lifecycle, but having a good grasp of your organization’s contract lifecycle management is equally, if not more important. After all, contracts are essentially the backbone of your business.
Today’s article will walk you through some of the most essential things you need to know about contract lifecycle management. We will discuss each of its stages and what you can do to improve this aspect of your workflow.
Table of Contents
- What is contract lifecycle management?
- What are the stages of contract lifecycle management?
- How to improve the contract lifecycle management process?
- The Bottomline
What is contract lifecycle management?
Contract lifecycle management is the process that each contract goes through from conception to implementation. The lifecycle starts from the moment a contract is requested and ends when it is terminated or has expired.
At first glance, contract lifecycle management is pretty straightforward. After all, how hard can managing contracts be? For this reason, many businesses neglect this aspect of their operations and downplay the role it plays in the overall health and performance of their organization. But knowing each stage of your contract’s lifecycle is vital to ensure that you can perform what is stipulated in the agreement and receive the compensation you agreed upon, and vice versa.
An effective contract lifecycle management can ensure that you avoid any legal disputes caused by breaches and mishandling of contracts.
What are the stages of contract lifecycle management?
A standard contract lifecycle management process has seven stages. Let’s take a looking at each one of them:
1. Contract Request
The first stage of contract lifecycle management happens when one party requests for or initiates the contracting process. In many cases, a party will submit a customized contract intake form containing important information that needs to be stipulated in the agreement, such as contract start and end date and milestones.
2. Contract Authoring
Once the other concerned party has received the request and vital information, they can already begin drafting a contract. To make this part of the contract lifecycle management process, it is highly recommended that you keep copies of preapproved contract drafts on file. This can speed up the contract signing process.
During this stage, both parties may discuss contract matters back and forth. They might make changes to the contract if deemed necessary.
3. Contract Review
The contract author has to submit the draft contract to external or internal reviewers to ensure that everything looks good and that there are no critical errors. Some organizations also have software that takes care of the approval process. If you want your contract lifecycle management to be at its most efficient, consider investing in said software.
4. Contract Execution
Both parties have to sign to initiate and render the contract legally binding during this stage. With the growing prevalence of electronic signatures, you can get this stage done and dusted in just a matter of minutes. With the help of applications like Fill, you can quickly and safely share the contract through links–no need to rely on courier services to deliver the documents safely.
What’s so great about Fill is that you can set a deadline to ensure that the contracts are signed promptly. The other concerned parties will receive reminders as the deadline approaches. Moreover, Fill also allows you to keep track of the progress of your contract through their real-time audit trail and logs.
To know more about Fill and all its features, click here.
5. Record Management
One of the most important stages of the contract lifecycle management is the record management stage, as it ensures that all concerned parties follow all the obligations and stipulations during the duration of the contract. Part of this stage also involves storing the documents for easy retrieval.
6. Contract Performance
The contract lifecycle management does not end when both parties have signed the contract. There are a few more steps that you need to take care of to ensure that you do not breach your agreement. This is where this stage comes into play. You need to oversee and revisit your contract to assess whether you have fulfilled the agreement or not.
7. Contract Expiration or Renewal
The contract lifecycle management ends when the contract either expires or is renewed. Many businesses find this quite challenging, especially those with hundreds of contracts to manage. The best way to ensure that you keep tabs on all the expiration dates is to invest in software that automatically informs you of impending expiration.
How to improve the contract lifecycle management process?
Here are some of our top tips to help you improve your current contract lifecycle management process:
- Standardize your contracts by creating contract management templates. As mentioned earlier, this saves you a lot of time during the contract authoring process. Having a template means that you do not have to write contracts from scratch. You just need to supply the necessary information and make necessary changes, and that’s done.
- Adopt a digital environment. It is so much easier to keep track and manage your contracts digitally. Not only is this solution more efficient, but it also proves to be more cost-effective than the traditional, paper-based contract management system. Recent technological advances have also introduced a handful of tools and software that can help you with contract lifecycle management.
- Hire a contract manager. When you have an employee whose main duty is to oversee the contract lifecycle management process, you can ensure that your process can go smoothly. It always pays to invest in hiring someone to be the champion of this process.
It is high time that you pay enough attention to how your contracts are being handled–from the moment it is requested down to its expiry or renewal. Understanding each stage of the contract lifecycle management ensures that you fulfill your obligation and will not breach any of the terms.