Does your high-revenue or fast-growing business manage a high volume of contracts but need more support with improving efficiency? Optimising your contract lifecycle management (CLM) process can significantly boost your business productivity, reduce costs, and minimise risk.
Our article on contract life cycle management for start-ups considers the benefits and implementation stages of effective CLM tools to position your business well for future growth.
In this article, we explore how optimising your CLM processes can significantly enhance productivity, minimise risks, and streamline contract handling through automation, standardisation, efficient negotiation, faster approvals, and comprehensive tracking of contract obligations and expirations to support your larger business as it scales.
This can ultimately contribute to better overall contract management and business outcomes.
Our commercial contracts team are ready to support your business with your lifecycle management process to ensure you keep on top of and get the best out of your commercial contracts.
Contents:
How can you optimise each stage of your contract lifecycle?
Optimising and strengthening your CLM processes can help you improve productivity and manage your contracts better, thereby reducing risk across your business.
Here are some key ideas you can adopt for optimising your current CLM:
Use automation, templates, and clause libraries
Your business can produce a repository of pre-approved contract templates and clause libraries specific to your industry and legal needs. This will eliminate the need to draft contracts from scratch for each negotiation, which can help save you significant time. Over time, you will need to ensure that any pre-approved clauses and contracts remain effective and check for any necessary updates you need to implement.
As part of this process, you’ll need to identify which contracts can be standardised based on factors such as the project frequency, value, and the approval levels required. Certain bespoke or higher risk contracts may not be suitable for standardisation, and you’ll need to give this process careful thought.
Using a central repository will allow easy access to these templates and ensure that everyone who needs access has it quickly and with ease.
Cloud-based tools can help facilitate collaboration between your sales or procurement teams and in-house or external legal counsel. This can accelerate the drafting process and help reduce errors.
A commercial law firm can help you ensure your standardised templates are watertight and legally sound. Your commercial lawyers can draft, review, and update your templates and clause libraries to reflect current legal rules and effectively protect your business over time.
Streamline your negotiations
Streamlining your negotiation process can further improve efficiency. Consider how you can speed up negotiations by adopting a process to automate tasks such as sending out documents and edits, tracking changes, and using real-time collaboration features and shared workspaces.
You can use audit trails and version controls to avoid confusion and bottlenecks in contract negotiations. You should also have an internal process for quickly escalating matters to your commercial lawyers, when necessary, for instance when a complex or high-risk contract review arises that you don’t have the skills or resources to handle.
Gain faster approvals
A strong CLM process can help automate the contract approval process by sending documents to the designated approvers based on predefined rules. This removes the need for manual routing and chasing approvals which could otherwise hold things up.
You should ensure that only authorised personnel can approve contracts to maintain control and accountability over the approval process. You could also integrate this with e-signature platforms to allow swift and easy electronic signing of contracts.
Track contract obligations, renewals, and expiry
CLM software tools and platforms can help you manage contracts by sending automated alerts and reminders about upcoming contract key dates, renewals, and expirations. This will ensure you don't miss critical dates and can take timely action to avoid problems such as breach of contract scenarios arising.
A central contract repository will make it easy to find relevant information about renewal terms, expiration dates, and any other critical obligations.
Reporting and analytics tools can provide insights on any upcoming renewals and expirations, allowing proactive management of your contracts.
By focusing on and improving these processes, you can optimise each stage of the contract lifecycle, which can help improve efficiency, reduce risks, and contribute to better overall contract management and happier customers and business relationships.
What are the benefits of a CLM platform?
A CLM platform can help streamline the key contract stages, including creation, negotiation, review, execution, and ongoing management. A robust CLM platform will help give you better control and oversight over your contracts, such as accelerating the signing process through features such as e-signatures. Advanced CLM platforms can also leverage AI and automation tools to help manage obligations and monitor contract performance. Investing in an effective CLM platform can help your business work quicker, reduce errors and manage contracts successfully.
How do you assess, justify and select a CLM platform?
To assess the need for implementing a CLM platform, you should start by documenting any inefficiencies and risks in your current contract management processes. For instance, look out for areas where manual handling causes delays, errors, and compliance issues, which could be streamlined by a CLM system.
Conducting a cost-benefit analysis is critical. You should compare the cost of a CLM system with the potential savings and risk reductions it can offer. Consider both direct financial savings and the value of improved compliance, faster contract cycles, and reduced legal risks.
It would be sensible to initiate a small pilot project to demonstrate the CLM platform's value. Here, you can track performance metrics and gather data to show the impact on efficiency and risk management. This evidence will be crucial when presenting your findings to key decision-makers.
When pitching the product, emphasise the strategic benefits of the CLM platform, including how it aligns with your business goals and enhances overall operational efficiency.
When selecting a CLM platform, your business should consider several factors to ensure it meets your needs. The platform should be user-friendly and intuitive, ensuring that all team members can use it effectively. It should offer customisable workflows and templates to meet your business’s specific needs. Additionally, the platform should integrate smoothly with your existing systems for effective workflows. You should ensure that your existing IT infrastructure can support the CLM platform and determine if the solution can scale up with your business growth.
Given the often-sensitive nature of contracts, robust security features to protect confidential information and personal data are vital when using a CLM platform. When considering implementing a CLM platform, seek input from your commercial lawyers. They can assist in identifying legal risks and areas for improvement and ensuring that your CLM strategy aligns with legal rules (such as privacy laws).
How can you improve your contract processes after implementing a CLM platform?
To get the most out of your CLM system and platform, make sure it benefits your business as much as possible. But remember, you should continually focus on reviewing and improving it for maximum value.
Steps you can take include the following:
Training your team: You should make sure that all relevant staff are well-trained to use the CLM system effectively and know it well. They should learn how to create and share contracts, manage approvals, and use reporting tools. Training should also cover tasks such as correctly uploading documents, entering data accurately, and tracking agreements throughout their lifecycles. Encouraging your staff to collaborate easily through tasks, messages, and tracking changes will help you work together and with third parties more smoothly.
Listening to feedback and using data to improve: You should gather feedback from users to identify what is working well and what needs improvement in your CLM system and processes. Surveys, interviews, and discussions with users can help identify problems and ideas for new features.
A CLM system often collects high volumes of data that can show how well your contract processes are working. Tracking metrics and analysing data, such as how quickly contracts are finalised and how often they’re changed, can help you find ways to make things work better and smarter in the future.
Checking processes regularly: You should conduct regular checks and reviews on your CLM processes. These audits will help you find ways to make your operations smoother and more efficient.
By focusing on these steps, your business will keep getting better at managing contracts. Ongoing improvements will help ensure your CLM platform gives you maximum benefit, making contracting easier and more efficient for your team.
Collaborating with your legal team: Engaging a commercial law firm can provide many benefits in optimising your contract management processes. Your legal team will offer expert knowledge and insights, providing an objective view to identify risks and areas for improvement. They can help to ensure that your contracts comply with relevant legal and regulatory standards, reducing the risk of non-compliance. They can help you handle busy contract workloads efficiently and help with strategic advice on complex contracts and negotiations when necessary.
For expert advice and support with optimising your contract management processes, contact our commercial law team who are happy to help and have supported several businesses with implementing an effective CLM process.
Our procurement playbook article looks at streamlining your supplier contract negotiations to mitigate risks and facilitate efficient negotiations.
