Contract Creation
Whether there’s a dozen or so contracts coming through the door or thousands under a company’s roof, the contract creation process begins with a simple contract request. During this step, a requester (e.g. a salesperson) initiates the process by providing key information, such as the legal entity involved, the contract type, and supplemental information necessary for a legal agreement (think: pricing, comments, or additional attachments). The legal team can then take action on the request, and the nice thing is, since they have all the pertinent information, they can move faster!
The combination of effective CLM processes with advanced CLM software takes the contract creation process to unprecedented heights. When the legal team is editing and drafting the contract, they can leverage the clause library instead of hunting down certain clauses and language in other agreements. This ability to flag down key terms and clauses makes the editing process faster and easier. Plus, with standardized clauses, the legal team doesn't have to worry about using outdated language. Additionally, if legal team members are editing in a Word document or reviewing an imported third-party contract, they can save clauses to their personalized library and use this language for future contracts.
There are even more ways companies can expedite the contract creation process. Legal teams are undoubtedly experts in creating these documents, but with the right contract management tools, even non-legal professionals—like sales, finance, operations, and more—can draft contracts with legal-approved terms and clauses. How is that possible? The answer is simple: self-service contract creation.
With self-service contract creation, non-legal professionals can draft contracts with the legal-approved terms and clauses and draft agreements using pre-approved templates. This is particularly important if your sales team relies on high-volume, repetitive contracts to drive revenue. Feature-rich CLM software also offers automation, enabling these non-legal teams to avoid tedious, manual intervention when creating contracts, ensuring they get it right the first time, every time by reducing human error.
While procurement teams are not necessarily the main contract creators, they are still a huge part of contract lifecycle management and have a hand in the contract creation process. They work closely with legal teams to create contractual agreements and ensure contract guidelines are always followed. Procurement departments are particularly conscious of having complete visibility into pricing and billing information to use for future renegotiations.
Let’s revisit the advantages of having an effective CLM process backed by advanced CLM software:
Who Benefits?
Legal teams can ensure that all stakeholders, who may be involved in contract creation but are not themselves legal professionals, can “paint within the lines” for any contract created. Additionally, the legal team can take action on the sales team’s request and can create contracts quicker since they have the necessary information as well as a clause library.
Sales teams can create legally-compliant contracts without any hassle or delay. This enables them to close deals faster and accelerate their companies’ revenue recognition.
Purchasing/vendor management departments can pass incoming proposals to in-house counsel and collaborate with these lawyers to create contracts as needed.
Import Contracts
Contract management can be a messy and overwhelming process. Contracts are stored in numerous places, making disorganization common throughout companies. Contracts may be stored locally on work computers, internal portals and intranets, or physically within filing cabinets. This chaos makes it essential for companies to be able to easily import contracts, especially third-party contracts, to one centralized location where documents are easily accessible for the sales, procurement, and legal teams. By having all contracts within one place, teams get full visibility into each and every document; they can even classify contracts upon upload.
But after contracts are imported, that’s where the magic really happens. Artificial intelligence (AI) has turned traditional CLM software on its head in recent years. AI-based CLM platforms are able to read terms and clauses that are most important to your organization's success.
Imagine this: Your company receives a 100-page third-party contract and the AI identifies the most pertinent language to your firm’s success within minutes, not hours. With so much time saved during the contract import process, your teams will avoid the tedious, manual methods of combing through hundreds of pages to review individually. By shaving down review time, procurement can accelerate the buying cycle. Furthermore, procurement can also find suboptimal terms quickly with machine learning. That way, they can find opportunities to renegotiate discounts or better rates. In addition to accelerating the buying cycle, the procurement team can also save the company money and keep costs low.
Procurement doesn’t get all the glory with optimized CLM processes and advanced CLM platforms, however. Sales can quickly see all of their client contracts within the platform. Furthermore, by organizing contracts in one place, all teams can employ a more rigorous review and approval workflow. By having this information readily available upon importing contracts, it reduces the need for back-and-forth between teams, boosting productivity as a result.
That was a lot of information to take in; here’s a quick refresher on how optimized CLM platforms and processes breathe new life into your organization:
Who Benefits?
Legal departments can upload contracts to a singular place, minimizing the number of locations they have to use for contract management. Additionally, by classifying contracts upon import, there’s a greater sense of organization and structure to your contracts, since they now are stored in a centralized repository.
Sales teams’ ability to import contracts provides easy access to these contracts without needing to go through the legal department to access all of the documents. Furthermore, by setting certain permissions within your CLM platform, the sales team can see all contracts immediately that are most applicable to their roles.
Purchasing/vendor management can use AI to review agreements within minutes, rather than hours. This makes it easier to spot opportunities to renegotiate better terms. Furthermore, they can organize their third-party contracts in a singular location.
Contract Review and Negotiation
Contract negotiations can be poetry in motion or pure chaos depending on which tools and processes are in place. Without advanced CLM software at the helm, achieving optimal contract organization is anything but easy. Every team member involved in the contract review and negotiation process must be able to collaborate and track changes to the contract to ensure legacy details are easily findable. The contract review and negotiation process should ensure all clauses are consistent throughout the contract. Both parties can make redlines to the documents, and the constant back-and-forth is minimized to reach a signature faster.
Another key piece to the contract review and negotiation puzzle is the ability to trigger approval workflows. If the sales team and a client are negotiating a contract and the client proposes an unfavorable term, the CLM platform will trigger an approval workflow to the necessary approvers (in this case, likely the finance or legal teams). Approval workflows enable your team to catch and flag any unfavorable terms to ensure that the contract review and negotiation processes go seamlessly and in your favor—without burdening the process by involving all stakeholders at every step.
There’s no cure-all for contract reviews and negotiations; parties’ minds change and updates to contract language are bound to occur. But if contracts are constantly hitting obstacles, it means that teams are wasting time, energy, and resources that they could otherwise allocate to other mission-critical tasks. Such objectives include crafting future agreements, ensuring their organizations are solvent with their assets, and establishing stronger relationships with potential clients. The right contract management tools and processes will put all of these challenges in the rearview mirror for good.
Who Benefits?
Legal teams are able to easily make redlines to create transparency and limit the amount of back-and-forth with other parties.Furthermore, CLM platforms trigger approval workflows that flag any unfavorable terms and are sent to the appropriate approver (e.g. the legal or finance teams), freeing up the legal team from being involved in every step of the process and empowering sales and procurement.
Sales departments minimize the constant contract tug-of-war, thereby shortening the sales cycle. Sales teams are also saved from potentially acting as the middleman while redlines are passed between parties.
Purchasing/vendor management teams play a large part in the third-party contract negotiation process. With increased visibility and transparency into the workflow, this team will avoid any unnecessary delays with the contract lifecycle by having full access to contracts awaiting reviews or signatures, or nearing expiration.
Contract Approval and Execution
Organizations that have replaced manual contract management methods with standard CLM software still face challenges that can sink their investments. On top of potential technical challenges with these tools, companies must ensure that contracts are always sent to the appropriate approvers, both internally and externally. Similar steps are needed when executing contracts; both parties need to sign contracts in an efficient manner to avoid any unnecessary roadblocks.
This end result is easier said than done, however. Internally, certain CLM tools demand high levels of user proficiency to deliver results. Externally, clients may not have e-signature accounts, further delaying when contracts can be executed. AI-powered CLM platforms minimize these demands altogether by organizing a disorganized process and offering third-party signer accounts; all you need to do is create an account for third-party signers and they can sign agreements directly from an email address. This process provides a smooth and convenient user experience. Finally, certain tools even offer unlimited electronic signatures, meaning you aren’t paying thousands of dollars for e-signatures capabilities for your team.
Who Benefits?
Legal teams can designate and send contracts to the appropriate approvers easily and without confusion. In the case of client paper, the executed contracts benefit everyone since this likely ends in a sale. When it comes to third-party contracts, efficient turnaround means that the parties for whom the product or service is being bought can get to work more quickly. In either instance, the legal team has done its job in executing a contract with favorable terms and can now turn its attention to the next contract.
Sales teams can easily see when contracts are nearing completion without relying on the legal department for status updates. They’ll love knowing when clients have signed a contract, which means a sale for them.
Purchasing/Vendor Management teams can be incorporated into the approval and execution process seamlessly; they ensure an accelerated turnaround time for contracts.
Contract Organization
Any CLM platform or contract management process should work toward a common goal of organizing contracts, both during and after execution. Unfortunately, companies face challenges that make such objectives difficult to accomplish, directly impacting their contract organization. Whether by poor interdepartmental communication or ineffective CLM tools, teams may struggle to sort, classify, and aggregate information effectively. When more contracts enter the fold, the process may break down even further, stressing the systems and employees responsible for managing these contracts.
A central repository or database can come to the rescue, enabling all teams to keep executed contracts in one place. By having all documents within a single source of truth, sales, procurement, and legal teams can ensure that contracts remain consistent. Certain AI-powered CLM tools offer searchable repositories to easily identify, extract, and analyze key terms and clauses in your contracts. This means comparing previous terms and clauses and analyzing frequency patterns is a breeze and doesn't have to be manually done by employees. It’s a win-win.
Who Benefits?
Legal teams are able to improve their overall organization by keeping clauses and contracts consistent.
Sales departments also remain organized, as the contracting process as a whole can be streamlined. If the overall process is accelerated, the sales cycle shortens.
Purchasing/vendor management groups ensure the contracts are organized by parties. They can also easily check back on agreements throughout the contract term to monitor contract fulfillment and upcoming renewals.
Contract Renewal and Reporting
Contract renewals should be an easy form of sustainable revenue for businesses — emphasis on “should be.” Companies often rely on manual spreadsheets to keep track of contract information, while the contracts themselves are siloed across different departments. This is a recipe for disaster, as organizations are susceptible to losing out on potential revenue from contract renewals and the opportunity to increase rates if these dates are lost in the shuffle between departments or spreadsheets.
Cost mitigation can also be problematic with ineffective and inefficient CLM processes and platforms. Procurement teams may be unaware of auto-renewals with their third-party contracts, miss out on getting ahead of built-in rate increases, or miss out on consolidation opportunities to ensure different departments are using the same software under the same plan.
An optimized contract management process and advanced CLM software are a recipe for success. This powerful duo enables sales teams to stay ahead of contract renewals and identify opportunities to renegotiate favorable terms. Departments have complete access to analyze and set risk ratings for terms and conditions for statement-of-work (SOW) moving forward.
Amendments are also improved through optimized contract management processes. For example, if you’re looking to sell your company during a specific time frame, your teams can find all master agreements without assignability clauses. From this point, you can identify which contracts require these amendments prior to any potential acquisition.
Who Benefits?
Legal teams are able to improve their overall organization by keeping clauses and contracts consistent.
Sales departments also remain organized, as the contracting process as a whole can be streamlined. If the overall process is accelerated, the sales cycle shortens.
Purchasing/vendor management groups ensure the contracts are organized by parties. They can also easily check back on agreements throughout the contract term to monitor contract fulfillment and upcoming renewals.
The Future of Contract Management is Here
The contract management process has been disjointed for too long. Although the introduction of CLM software has alleviated some of the issues that manual recordkeeping previously caused, these tools only go so far. There’s far more possibilities waiting to be explored. A comprehensive AI-powered CLM platform can redefine what’s possible for your sales, purchasing, vendor management, and legal teams.
Gone are the days of scattered internal communication between departments. Gone are the days of missing key deadlines or contract renewal dates because of poor organization of your contracts. With an innovative CLM platform that includes add-ins and integrations for some of your favorite tools, such as Microsoft Word or Salesforce, you can achieve a completely optimized CLM process from start to finish. Want to see how IntelAgree can be the missing link in optimizing your contract management process? Schedule a demo now to check it out!
