What is Contract Lifecycle Management?
Previously we have highlighted, that Agrello is a great tool for digitally signing all your documents, but over time our product has evolved and we have added a bunch of new features, that can make your life easier throughout the whole contract lifecycle. Digital signing and Agrello signature will still remain one of our key features as it is also a central part of contract lifecycle. With our new blog series on the stages of Contract Lifecycle Management (CLM from here on out), we’d like to introduce you to other stages as well, explaining the ins and outs and giving you little tips along the way on how Agrello can help out.
What exactly is contract lifecycle management?
Simply put, it is the process of managing the creation, execution, and administration of contracts throughout their entire lifecycle. This includes tasks such as creating and negotiating the contract, storing and maintaining the contract, and monitoring compliance with the contract's terms and conditions.
There are some basic stages to the contract lifecycle, demonstrated in the flowchart below.
Step 1. Contract Negotiation
This step is where the contract starts its life. For there to be a contract in the first place, there needs to be an agreement of some sort. This could be anything from an employment agreement, to a sale of goods agreement.
Step 2. Contract Creation
This is the part where the contract and its terms agreed in stage 1 are actually written down. This is usually done in a word processor of some kind, such as MS Word or Google Docs. Usually it’s done by a lawyer but could be done by another legal professional or from pre approved templates.
Step 3. Review and Approval of contract
Before the contract gets signed, it has to be approved within the organisation by lawyers, managers and other involved parties. This ensures that the contract is correct, and reduces liability and risk to the organisation.
Step 4. Signing the contract (electronically)
When the contract is ready, it can then be signed by all parties. This can be done with a variety of methods. Some organisations may choose to sign on wet ink with pen and paper, whilst others may opt for digital signing tools. Note that preferences and laws vary by country, so this will dictate in large part what signing method a company may choose.
Step 5. Administration of contracts and documents
Administration can involve various things, mainly pertaining to the storage of a contract. It can also mean searching an online CLM system for the contract, or checking its analytics on a dashboard. It could also mean setting reminders for various milestones, such as setting a reminder near to the contract renewal or end date.
Step 6. Review of obligations and Renewal/Cancellation
The last stage is where a company may choose to review the contents of the contract. This could be because it is ending or renewing, or there is a procedure in place to review contracts every month or quarter. Once a review has taken place, the company may choose to renew and continue with the contract, cancel the contract, or re negotiate. In the case of re negotiation, the contract lifecycle would start over again with the new re negotiated terms.
In explaining step 4, I alluded to the fact some companies may choose to sign contracts on paper. As you can imagine, managing these flows on paper would make it much more difficult.
That’s where a cloud based online CLM system can come in really handy. CLM systems allow you to do various tasks and flows such as:
- Request a contract
- Create a contract
- Manage the negotiation and approval workflow
- Store contracts
- Search contracts
- Conduct advanced analysis (e.g., automated contract review and risk scoring)
- Update or renew a contract
Choosing the best CLM system for you involves considering your organisation size, number of users of the CLM system, your contractual volume, and your budget.
In this series of articles we will go into details of each stage of the CLM process, sharing tips along the way about how Agrello can help you out with these processes. Agrello is a contract hub that can help you organise contracts and documents and manage document flows.
Keep up with us on the blog or on social media to see the rest of the series, or contact Laura, our Customer Success Developer, on firstname.lastname@example.org for more information on how Agrello can help your business.