Contracts are more than just a source of revenue for an organization. They are also a linking point for a number of internal departments, especially the commercial and legal teams. The only problem is that commercial and legal professionals often have different priorities when it comes to contracting.
The commercial team focuses on generating high-earning contracts quickly enough to close deals within a reasonable amount of time. The legal team, on the other hand, typically prioritizes risk management. This disconnect can lead to delays and inefficiencies in the contract lifecycle.
Join us as we examine the benefits of adopting a more interconnected approach to contract management facilitated by integrating CLM and CRM solutions.
The Fragmented Approach to Contract Management
We’ve already briefly touched on the challenges that arise from allowing commercial and legal teams to attempt to approach contract management using separate tools. Let’s examine a few more of those challenges in greater detail.
Information Silos
Contracts are typically managed by the legal or procurement teams using CLM tools, while customer-related data is housed in CRM systems managed by sales and marketing teams. This division often results in critical information being scattered across platforms, making it difficult to gain a comprehensive view of the customer-contract dynamic. This lack of cohesion can impede decision-making and hinder the ability to respond promptly to customer needs, effectively slowing down the contract lifecycle and sucking the momentum out of deals.
This disconnect between systems also makes it nearly impossible for commercial teams to generate or manage contracts without assistance from the legal team. As a result, legal professionals end up with a long list of requests and inquiries from the commercial team that they have to handle before they can move on to more high-value tasks. The legal team shouldn’t be spending their time on repetitive work that could be automated or handled by sales reps directly in a unified contract tool.
Communication Gaps
The disconnect between CLM and CRM systems also leads to communication gaps within individual departments. For instance, the sales team might not have real-time insights into the status of contracts, making it challenging to provide accurate information to clients. Conversely, the legal team may lack visibility into customer interactions, hindering their ability to properly anticipate the evolving needs of clients and align contract terms accordingly. These communication barriers can result in missed opportunities, delayed responses, and an overall disjointed customer experience.
Compliance Risks
Disconnected contract management raises the risk of compliance issues. Without a seamless integration between CLM and CRM, tracking and updating contract terms to meet changing compliance requirements becomes an increasingly error-prone process. Some teams may even resort to rogue contracting out of frustration or lack of information. These actions expose the organization to unnecessary legal risks and consume valuable time and resources in the form of manual compliance management.
Operational Inefficiencies
Operating with separate CLM and CRM systems can result in duplicated efforts and other operational inefficiencies. Teams may find themselves re-entering data, duplicating work, or navigating between different platforms to retrieve information. This redundancy consumes valuable time and introduces the risk of errors and inconsistencies in data, compromising the reliability of both contract and customer information.
Benefits of Integrating Your CLM and CRM
The synergy generated by integrating the CLM and CRM systems allows organizations to adopt a more holistic approach to managing both contracts and customer relationships, ultimately driving better operational performance. Let’s go over some of the key benefits to expect.
360-Degree Visibility
Integrating CLM with CRM eliminates the information silos we mentioned earlier, providing a 360-degree view of both contracts and customer interactions. This comprehensive visibility offers teams across departments real-time insights into contract statuses, customer preferences, and historical interactions. Backed by this unified understanding of contracting, organizations can operate with greater efficiency, make informed decisions, and proactively address customer needs.
Streamlined Workflows and Collaboration
Integration also enables commercial and legal teams to collaborate more effectively. Sales teams can initiate contracts directly within the system, and legal teams can access customer data without switching between platforms. This eliminates redundant data entry, reduces manual errors, and, most importantly, accelerates the contract lifecycle. In this way, cross-functional collaboration occurs within one system, and both teams can work in tandem toward their common business goals.
Improved Compliance Management
With information flowing freely between the CRM and CLM, it becomes much easier to make sure that all contracts align with current compliance standards. The system can provide pre-approved templates or clauses to sales reps seeking to generate contracts on their own, allowing them to speed up their deal cycles without fear of running into legal trouble. Automated alerts and notifications can further assist in staying ahead of compliance deadlines post-signature as well, ensuring that all post-signature obligations are met.
Data-Driven Decision-Making
The flow of data between the two systems also enables better decision-making. By leveraging analytics and reporting functionalities, businesses can derive unique, actionable insights from both contract and customer data at the same time. This enables strategic planning, identifies trends, and facilitates continuous improvement in contract processes and general business practices.
Faster Revenue Cycle
Intertwining the CLM and CRM functionalities drives up the speed of the revenue cycle as well. With CLM access, sales teams can access up-to-date contract information and customer histories, enabling them to better understand the needs of the customers and tailor their negotiation process accordingly. They can also provide timely renewals and communicate proactively about any contract changes, contributing to a more responsive contracting model that allows deals to reach signature faster.
Managing Contracts in a CRM
So, what does it actually look like to manage contracts in an integrated system?
The legal team will remain in control of the contract terms and processes. They can create templates and workflows that dictate the terms of the contract as well as the processes themselves, including who is in charge at each stage of the contract lifecycle and what tasks they need to complete. This ensures that all contracts generated within the system will comply with the risk management standards set in place by the legal team.
The commercial team can then use the templates to generate self-service contracts without needing to submit requests to the legal department. They can enter all the necessary data themselves and watch the contract appear in real-time. No more waiting!
The system will also keep track of the status of each contract, even providing reminders and notifications that prompt action from sales reps that will drive the deal forward. In this way, commercial teams can focus wholly on negotiations and close deals at a much faster rate. Some CRMs like Salesforce even offer search functions and allow reps to sign or approve contracts directly within the system.
Incorporating contract management capabilities within a CRM system transforms the way organizations handle contracts. By providing a unified platform for managing both contracts and customer data, businesses can streamline contract processes, improve interdepartmental collaboration, and speed up the revenue cycle, cultivating an environment that enables commercial and legal operational efficiency.
