Contracts are a central part of nearly every organization, but they are often mismanaged. Mismanagement of your company’s contracts quickly creates inefficiencies that drag out the contracting process and impact revenue, customer experience, and brand reputation. However, one of the latest and greatest achievements in legal tech, contract lifecycle management (CLM) solutions, can drastically decrease the revenue cycle, pushing your business’s contract processing to the next level.
Visibility is an essential part of any contract process. In order to make the necessary changes and contributions to a given document, all parties involved in a negotiation need to have access to the most recent version at all times. A huge problem with many organizations’ contracting processes is that they lack this visibility, with current versions of documents being exchanged through email. With these manual methods, an old version of a contract can easily be confused for the most recent one without proper communication explaining otherwise, leading parties to waste time making changes to an outdated document. This eats up valuable time in the contracting process and fosters misunderstandings that could end up in losing sales or even litigation in some cases.
A CLM quite easily solves problems related to visibility. Most CLMs will offer a contract repository that houses every necessary version of a given document. Those with access to the repository will be able to view the latest version of the contract from anywhere, as the repository is typically cloud-based. In a world where remote work has become the new norm, this is extremely important to prevent miscommunications both internally and externally. Not to mention, this level of accessibility opens up the company to performing business worldwide without the need for travel. Cutting back on miscommunications and increasing opportunities certainly makes the increase in visibility provided by CLM tools a necessity in the modern business realm.
Another problem faced by many organizations is inefficiency in their contracting processes. Inefficiency can take many forms including employees wasting time on small tasks, miscommunications occurring between departments, and approval deadlines not being met. All of these pieces work together to drag out your contracting process, in some cases drastically lowering the company’s potential annual revenue by slowing down sales.
CLM tools can eliminate inefficiencies in a variety of ways. Automation is often a key aspect of streamlining your company’s contract efficiency. Many small tasks that are currently being handled manually by employees can instead be automated, freeing up extra time in the work day for both legal and sales teams to spend on more pressing tasks that require their attention or bring value to the business. Automatically tracking approval deadlines also ensures that the process keeps moving without being bogged down by unnecessary waiting. Not to mention, by keeping the entire contracting process in one space, all parties involved always know the status of the contract and can communicate effectively about the most recent version.
Before a CLM tool can really start to help improve your company’s efficiency, however, you will need to reevaluate the contracting processes you already have in place. Are there any pieces of the puzzle that are unnecessarily complex? Try to find ways to simplify your processes as much as possible before looking to technology as a potential fix, as automating clunky contract processes will do nothing for your overall efficiency or revenue cycle.
In the case of contract management, standardization involves making sure that all company contracts utilize language that both accomplishes the organization’s business goals and has been approved by the legal team. Problems with standardization tend to occur during manual contract drafting, with miscommunications, bad version tracking, or simple human error resulting in outdated or risky clauses appearing in a contract. When this occurs, the company may stand to accidentally make a deal that does not adhere to its business goals or even be at risk for litigation, so standardization of contract language is essential, especially for organizations that manage a large number of contracts.
CLM solutions help with standardization in two ways: templates and pre-approved clauses. Your CLM repository, while home to all your company’s contracts, will also house various templates that can be used to draft new contracts. Templates will look different from company to company and should contain language that has been approved by both sales and legal. Drafting new contracts from templates instead of from scratch saves time in the contract authoring process and allows teams to move into negotiations much faster. Most CLMs also offer a library of clauses that have been pre-approved by the legal team. These clauses can be swapped in to take the place of others during negotiations without resorting to asking the legal team for help. This empowers sales employees to push deals along more quickly and ensures that the legal team can prioritize their most important tasks first.
For many organizations, customer experience is important for more than just healthy business relationships. Providing a good customer experience may mean the difference between your company being recommended to a client’s peers or not. If doing business with your organization takes a long time or feels unnecessarily complex, other parties may be less likely to back you with word of mouth recommendations, slowing the rate at which your business grows and potentially dampening your reputation. Not to mention, unhappy customers might drag out the contracting process even longer with extra questions and concerns.
Customer experience hinges on time and communication. A CLM solution improves business in both of these areas. As we mentioned in previous sections, it has the ability to speed up the contract lifecycle by automating certain tasks and making both drafting and negotiating much easier. It also provides a secure place for all parties to communicate soundly with one another and access the most recent versions of necessary documents. Cloud-based technologies like CLMs make it easy for third parties around the world to do business with your organization, utilizing eSignatures and avoiding unnecessary travel costs.
A good CLM tool improves not only the customer experience, but also the experience of your employees. It frees up more time in their day to be spent on meaningful tasks as opposed to menial work, and it allows them to have more control over each aspect of the contracting process. Sales teams will be empowered by their newfound ability to edit contract language risk free via the clause library and close deals faster while legal teams will have a more organized way to keep track of requests from other departments and lessen their workload. CEOs and other stakeholders will also gain access to vital information about company statistics that allow them to see which aspects of the contract lifecycle are working effectively and which need to be renovated. Overall, the value of a CLM system in the modern business world cannot be understated, as it immensely boosts the capabilities of employees, increases the efficiency of the revenue cycle, and helps company leaders build a more successful future for the business.