CLM FAQs: Your Contract Management Questions Answered
Contracts are ubiquitous in virtually all businesses today. The ability to properly manage all aspects of the contract lifecycle is essential for the smooth running of the business, which is why an increasing number of organizations are turning to contract management software to replace traditional contract management methods such as shared drives, spreadsheets and even filing cabinets.
Understanding Contract Management
Contract management, sometimes referred to as contract lifecycle management (CLM), involves tracking and managing a contract from its initial request through its possible renewal or termination. Effective contract management can help an organization realize significant improvements in efficiency and result in lower costs and less business risk. Ineffective contract management equates to unnecessary risk such as missed obligations, slow processes, and lost revenue as well as inefficient use of resources in an organization.
Frequently Asked Questions
Many companies have questions about contract management and contract management software, especially those interested in improving CLM processes and digitally transforming the way they manage legal agreements. Here are answers to some of the most common contract management questions.
Who Should Be Responsible for Managing Your Company’s Contracts?
In most companies, procurement, sales, finance and legal departments are involved in negotiating and executing contracts. For example, in a sell-side agreement, typically sales, finance and legal would be involved. For buy-side agreements, procurement, legal and finance may be involved. After a contract is executed, the legal department is typically responsible for securely storing the contracts, controlling access to those agreements, and monitoring key dates and obligations. Often, there is a Contract Manager or Contract Administrator who handles those activities.
What is the Contract Lifecycle?
The contract lifecycle refers to the 8 stages involved in the pre-execution, execution, and post-execution phases of a contract. These stages include:
- Request & Intake
- Creation & Drafting
- Collaboration & Redlining
- Reviews & Approval
- Signatures & Execution
- Obligations & Commitments
- Reporting & Auditing
- Amendments, Addendums & Terminations
What are the Risks of Not Properly Managing your Company’s Contracts?
A company that poorly manages some or all stages of the contract lifestyle puts itself at an operational disadvantage. The most common risks involved with poor contract management include:
- Deteriorating relationships with suppliers and customers
- Inability to successfully negotiate favorable contracts
- Delays in contract approval
- Missing contractual due dates and obligations
- Noncompliance with governmental and industry regulations
- Not properly updating contract terms
- Creating multiple inconsistent versions of contracts in multiple locations within your company
- Not being able to locate specific contracts
- Unintentional contract renewals
- Allowing access to contracts by unauthorized individuals
What are the Benefits of Effective Contract Management?
Effective contract management helps a company gain better control over the entire contract lifecycle. This can result in the following benefits:
- Greater efficiency
- Shorter negotiation and execution times
- More accurate contracts
- Enhanced legal, regulatory, business process, and contractual compliance
- Greater consistency between contracts
- Faster time to revenue
- Reduced legal, brand, financial, and security risk
- Lower costs.
What is Contract Management Software?
Contract management software (also known as CLM software) automates and manages the entire lifecycle of the contract process from beginning to end, including storage, reporting, and disposition. Contract management software, such as Contract Logix, should include:
- Request & Intake Forms
- Data-centric repository
- Clause & template libraries
- Automated and visual workflow builder
- Automated alerts, tasks, and notifications
- Real-time collaboration
- Automated version tracking and control
- Digital execution via e-signatures
- Sophisticated search and reporting tools
- “No code” configurability
- Feature-based and rules-based permissions
- High-level of application security
How Do You Onboard Contract Management Software?
The onboarding process varies from company to company and depending on the approach, can be simple or complex and timely or lengthy. Contract Logix provides the experts and tools that make it easy to onboard its contract management software into any business and quickly begin realizing business value. This includes the ability to control the support and enforcement of your organization’s internal processes. Additionally, you will be paired with a dedicated Customer Success Manager to walk you through the process of onboarding the Contract Logix system and applying best practices.
Does Contract Management Software Integrate with Existing Apps?
Contract Logix software seamlessly integrates with all other business applications and platforms. The REST API enables the bi-directional sending, receiving, and synchronization of data between Contract Logix and other applications, including key CRM, ERP, HRSM, and ITSM platforms.
What Do I Do with My Existing Contract Data?
Contract Logix does not require massive upfront data migration before its contract management software is onboarded. You can migrate your existing contract records at any point in the process with the easy-to-use import template to upload your contracts in bulk. Contract Logix also provides Data Migration Services should you need additional assistance.
How Are Contracts and Related Documents Stored?
Traditionally, paper contracts are physically stored in filing cabinets – and lots of them. Contract management software digitizes all contracts and related documents and stores them in a secure, searchable, and dynamic cloud-based repository. This digital storage frees up valuable physical space and makes it much easier to find specific contracts and other content. All digital data is regularly backed up to protect against damage, theft, or accidental deletion. It’s important to store your contracts in a data-driven repository as opposed to a document-driven one so that you can search, filter and report on your contracts and data by any relationship such as vendor, contract type, contact, or any other datapoint.
How Can I Search Contracts and Create Reports?
By storing all contracts and supporting documents in a data-centric and digital repository, it’s easy to search for specific topics and phrases because all of the data contained in those legal agreements is fully searchable. This is another reason to use data-centric, not document-centric contract management software. You don’t need to manually enter keyword tags to search for. The data is automatically and completely searchable. Finding a particular document or group of documents is as easy as using your keyboard to type a query. Searches can be filtered via the use of metadata that describes aspects of the source documents. In addition, pre-designed reports can be generated with the press of a button and you can easily customize reports to include only the data you select.
What is Metadata?
Metadata is information about the contract that accompanies the digitally stored contract itself. This can include data such as the execution date, parties to the agreement, contract type, specific obligations, compliance requirements, and more.
What is an e-Signature?
With contract management software, most contracts are executed not via physical signatures but rather via e-signatures. An e-signature (short for electronic signature) employs various technologies that enable all parties to affix their signatures without having a physical contract present, typically using some sort of touchscreen device or digitally stored signature. E-signatures have been legally binding since the E-SIGN Act of 2000.
What is Version Control?
As contracts move through the negotiation and approval process, it’s common for changes to be made by various parties. Version control helps to distinguish the various iterations of the draft document by tracking comments, redlines, messages and other edits and feedback. This enables all parties to easily identify what changes were made by which party, and when. Version control is necessary to enable collaboration during the contract lifecycle. It’s also important to ensure compliance and accuracy. Contract Logix provides the ability to conduct real-time collaboration and negotiation through its Collaboration Room technology. This includes automatic version control for compliance and audit purposes.
Is There Training and Support Available?
Contract Logix provides extensive training and support for its contract management software. There are multiple training services available, including live, online, and video-based classes, an extensive library of video tutorials, and a built-in help system. U.S.-based Customer Success and Support representatives are available via phone, email, and online forums to provide ongoing support and technical services. Support staff is extensively trained to answer all administrative, technical, and end-user questions. In addition, every customers is assigned an experienced Customer Success Manager for the life of their relationship with Contract Logix.
Turn to Contract Logix to Answer All Your Contract Management Questions
Founded in 2006, Contract Logix is an established and leading provider of data-driven contract management solutions. Contract Logix empowers legal, procurement, IT, finance, and sales professionals to automate and more completely manage all aspects of the contract lifecycle. The experienced specialists at Contract Logix can answer all your contract management questions and help you choose the best contract management system for your needs.
Contact Contract Logix today to learn more about contract management and contract management software.
