How contract lifecycle management (CLM) works

Contracts are essential to business operations, governing relationships, terms and expectations. But managing them effectively can be a complex process. This is where Contract Lifecycle Management (CLM) plays a role in many businesses’ contract processes.

CLM is a strategic approach to streamline every stage of a contract’s journey, ensuring efficiency, compliance and value extraction. In this blog, learn how CLM works, its key stages and the many business benefits.
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What is contract lifecycle management?

Contract Lifecycle Management (CLM) refers to the process of the effective management of contracts throughout their lifecycle. It seamlessly manages the contract lifecycle, from creation to expiry/renewal. Today, many businesses opt for CLM software, just like Summize, which provides an end-to-end solution.

"Contract lifecycle management is becoming a vital tool for in-house legal teams. No longer do legal teams want to be known as the bottlenecks in their organisation and instead wish to position themselves as strategic partners and collaborators. All of this is possible with the right CLM tool, offering an efficient end-to-end contract solution, enabling legal teams to demonstrate their true impact and value to the business.” Leanne Hayes, Product Owner at Summize.

How each CLM operates is different, depending on the features and functionality of each provider. However, the process and overall end-to-end workflows of contract management is essentially the same. Keep reading to explore how it all works.
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How does contract lifecycle management work?

In its simplest form, a contract lifecycle management tool is used to make the management of each stage of the contract lifecycle simpler.

Traditionally, contract lifecycle management was conducted manually and required ongoing efforts between internal and external stakeholders. Today, contract lifecycle management tools create a single source of truth for an organisation's contracts, centralising them in one system to create a simplified end-to-end experience.

Organisations using contract management software report an 80% faster average cycle time from bid to signed agreement. LLC Buddy.

Automated workflows put low-value, administrative work on autopilot, speeding up cycle completion time and mitigating risk. Centralised repositories with interactive dashboards surface key contractual data into simple summaries and comprehensive analytics allow businesses to make better-informed decisions based on risk and opportunity.

Contract lifecycle management tools offer a connected ecosystem for contracts, promoting an agile and efficient system for managing them across their lifecycle.
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The 6 stages of contract lifecycle management

To simplify how contract lifecycle management works, we have provided the six most common stages of the contract lifecycle process.

1. Creation: In the contract creation stage, parties collate the necessary information and documents to establish the terms and conditions, clauses and key dates for the new agreement.
2. Negotiation: After the creation stage, parties engage in negotiations to agree on the terms and conditions. Using CLM software, this process can accelerate, using AI review and AI redlining functionality.
3. Approval: The approval stage is when parties legally agree. Once everyone is happy, the contract receiver signs the contract.
4. Execution: Once the contract has been signed, it is then legally enforceable, and the parties must adhere to their agreed terms.
5. Management and renewal: Once a contract has been executed it is then managed and stored. CLM solutions often provide a secure and central repository, making it easy to find any contract.
6. Reporting and analytics: Reporting and analytics, also known as contract auditing, is a vital part of the contract management process, often overlooked when first reviewing the best CLM software.
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Head to our CLM Hub to explore the stages and full CLM process in more detail.
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The benefits of contract lifecycle management

Businesses often find themselves managing large amounts of contracts, 60–80% of all business-to-business (B2B) deals are governed by some form of written agreement according to the Institute of Supply Management.

Implementing a contract lifecycle management solution can present a business with a wide array of benefits. Explore just some of the many CLM benefits.

• Faster and improved revenue generation: CLM software creates automated workflows and enhances contract tracking. All features which help eliminate sales delays, ensuring compliance and faster revenue generation.
• Enhanced business efficiency: Selecting a CLM provider that offers self-serve contract creation for non-legal users reduces the legal team’s workload while empowering other departments to manage their own contract processes.
• Reduced risk: CLM tools powered by AI technology streamline business decisions by providing instant summaries, flagging key dates, automating redlining and highlighting renegotiation opportunities. All of which help legal teams reduce risk and avoid costly delays.
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Check out our CLM Hub for even more contract lifecycle management benefits.
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What to consider when choosing CLM software

Once you have established to either update or implement your first contract lifecycle management solution, you will start your search for the best CLM software.

Be sure to cover all the grounds when researching. Use software comparison websites such as G2, explore CLM provider’s customer testimonials and make sure to understand the CLM vendor’s implementation process.

In addition to these three areas, it's also essential to identify the CLM features and functionalities that are critical for your business needs. Consider the following key factors.
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Front door to legal

Is there a simple-to-use interface that allows non-legal users to self-serve?

Choosing a CLM provider that provides a self-serve approach for non-legal users will enhance internal collaboration and reduce any legal bottlenecks. At Summize, we take a decentralized approach to CLM which enables non-legal users to carry out simple contract processes in the tools they are already familiar with – such as Outlook, Teams, HubSpot and Slack.

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Not only does this approach empower the likes of sales, HR and procurement to carry out easily trackable contract creation and request tasks, it ensures your CLM is used across the whole business, as the team does not need to learn an entire new way of working.
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Central repository

Does the solution offer a central repository to store agreements and related documents with enhanced search features? Traditionally, legal teams would store contracts all over the place with little visibility into their active agreements.

“Summize has allowed us to have a cleaner contract repository, better handling of supplier renewals contracts, better ability to pull data on legal risks and obligations in aggregate.” Rosie Hawkridge, Legal Counsel at Littlefish.

With Summize, you can store and easily find all your contracts in our secure CLM repository. Using our AI-powered functionality and automation, access enhanced contract summaries and key data extraction, meaning you will never miss an unwanted autorenewal again!
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Automation

Effective CLM tools utilise AI-powered automation across each stage of the contract lifecycle to help streamline your contract processes. Utilising AI technology to assist with your contract reviews will accelerate the process by producing instant summaries of key information.

“The integration with Word makes redlining a much cleaner process and the basic contract summary is one of the best time-saving tools I have. Now I can review 25 contracts each week compared to 4.” Tabitha Studebaker, Director of Presales and Contracts at Day Wireless Systems.

You can benefit from faster and smarter contract reviews with Summize’s AI-powered automation integrated directly into Microsoft Word. There's no need for your business to learn a new system, when you can review, negotiate and redline contracts within the tools you already know – but in a fraction of the time.
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Analytics

Many CLM solutions offer native contract analytics, which allow legal teams to identify risk across departments. A CLM solution that can highlight risk, track KPIs and produce detailed reports across contract types will enhance the overall value and ROI of your CLM.

Using Summize, your legal team can leverage analytics to establish and track contract KPIs. Accessing detailed reports across contract types allows your teams to spot inefficiencies in processes across the business.
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Start managing your contract processes today

With regulations changing, technology advancements and the need to reduce operational costs, CLM has become essential for modern businesses. Modernising your contract management process offers businesses an opportunity to promote business-wide efficiencies, eliminating many outdated processes that cause delays and hold businesses back.

Summize is one of the best CLM solutions on the market, one that puts the user experience first. Unlock the power of your contracts with a deliberately different CLM that makes contracts useful and useable by the business, not just legal.

Ready to learn more? Book your demo today.