Top 11 Contract Lifecycle Management Best Practices

Top 11 Contract Lifecycle Management Best Practices

In this blog, we are going to discuss best practices to streamline contract lifecycle management for a competitive edge over your contenders. This strategy helps to keep your company compliant and efficient in this new business environment.

In recent posts, we have discussed the stages of contract lifecycle management and the definition of contract lifecycle management to unpack exactly how critical it is to strategize your business in contract lifecycle management (CLM) initiatives.

Using a manual method for managing contracts could be practical for 3-4 contracts, but when it comes to managing a variety of supply chain contracts, with various workflows, due dates, expiration dates, and renewal terms, the manual method will likely fail to prove efficient. Studies have found that over 14% of businesses are affected by supply chain issues due to the ongoing pandemic.

Digitalizing the contract management system is an important step in achieving maximum efficiency in the process. Contract managers need to have an accurate understanding of every step involved in the contract management process. This will allow them to make informative decisions that could minimize risks and efficiently manage the process. An effective and streamlined contract lifecycle management can be achieved by using an automatic contract lifecycle management system. Especially for enterprises that deal with several contracts every month. 

Here at Dock, we are leaders in contract lifecycle management and are partnered with Microsoft to help empower businesses in their contract management objectives. Now, let’s deep dive into the common mistakes made in CLM and how we can optimize the whole process.

Content-

 

Common Mistakes in Contract Lifecycle Management

Effective contract lifecycle management requires strategy, practice, and precision. To get the most out of every agreement, your team should be aware of the most common mistakes made during the contract lifecycle. Don’t encounter common bottlenecks and delays when they’re completely preventable. Instead, gain an awareness of what not to do during contract management so that you set your team up for contract success.

Let’s take a look at some of the most common mistakes made during contract lifecycle management.

1: Forgetting important dates and deadlines

Contracts contain critical obligations, deliverables, and payment timelines that must be followed and adhered to. With insufficient contract management, you fall prey to letting these critical deadlines slip through the cracks unnecessarily. An intuitive contract management solution can assist you and your teams with automated contract reminders, where you can configure these reminders to alert your teams of all time-sensitive contract responsibilities. This way, you have enough time to prepare ahead and get the best deals. Automated reminders are commonly used to keep teams up to date on upcoming auto-renewing contracts and approaching expiration dates.

We highly recommend steering away from calendars because these are prone to mistakes and inaccurate data entry. For more information on what automated reminders can offer to your organization, click here

2: Using a manual contract storage system

How do you currently store your organization’s contracts? Do you store them in more than one place? If the answer is yes, then it’s time to change that! Keeping your agreements in a disjointed contract storage system will only make it more difficult to keep track of where your contracts are at.

So instead of misplacing your contracts or spending hours or weeks searching for a specific document, keep all of your documents protected in a cloud-secure digital repository. There’s no need to store your contracts and associated documentation in local hard drives, shared drives, computer desktops, filing cabinets, email chains, and other methods. What a digital contract repository has to offer is more than just organization and security. You won’t need to stress about backing up your software because all contract metadata is kept in the most updated file formats and versions. Contract accessibility is also a star feature of a digital repository. The cloud infrastructure means that authorized users can read contracts at their convenience on their digital devices at any time, in any location. Some solutions, like ours here at Dock, store your contract data inside of your very own Microsoft 365 tenant so that you never have to give an outside vendor access to your private data.

Want more reasons why manual contract management is not the way to go for managing your contracts? Then give the link provided a read.

3: No contract manager

Does your company have a person dedicated to managing contracts and overseeing the success of your contract lifecycle management strategy? Many companies do not.

Assign a contract manager to take control of the many deadlines and responsibilities associated with modern contract lifecycle management. In this way, you have a dedicated point-person to go to when you have inquiries regarding contract statuses, performance, and other questions. The contract manager can be the key to confirming that every contract maintains compliance and is in good standing.

4: Difficulty in finding contracts when you need them

When it takes far too long to retrieve important contract to retrieve contracts from your storage system, then you run the risk of missing out on opportunities that might come your way. By keeping contracts stored in a variety of places, it takes up more time to locate and retrieve contracts at the times you need them most for immediate access. A digital repository allows you to find exact keywords, clauses, contracts, and associated files within seconds using custom filters and text-based search functions. Now, you can have the exact information you need on the spot for your negotiations. Today, many contract lifecycle management services are fully integrated with text-based search features and customizable, savable search filters.

5: Minimal permissions settings and suboptimal contract access

Have you ever had someone on your team delete a critical file or contract that they shouldn’t have? Poor user permissions settings are often the root of this common problem. To prevent this issue, determine which access controls need configuring to ensure that only users of a specified role can access your documents.

If your company still uses manual contract storage, then permissions settings are essentially null and void. Instead, you can control which individuals can access and remove documents from your contract storage system. Now, you’ll eliminate unauthorized contract access and decrease the chances of your sensitive contract metadata and files being deleted or edited. In addition, contract lifecycle management software allows you to restore deleted documents, a commonly overlooked feature of these software solutions.

For more information on user permissions settings in contract lifecycle management software, then click here.

To learn all about the different security features offered by modern contract lifecycle management solutions, click here.

6: Forgetting contract amendments

Store your amendments along with their contracts so that when you prepare for renegotiations, you ensure that you have the most up-to-date contracts and associated amendments. Within contract management software, you can identify exact amendments and associated contracts. Upon review, you’ll see the master contract connected with specific amendments as well as the amendments that have been signed.

Top 11 Contract Lifecycle Management Best Practices

 

#1 Use a centralized cloud-based repository for tracking and managing your contracts

A digital contract repository helps to security track, manage, and store your company’s contracts. Rather than storing contracts across various shared drives and files or in physical storage, a centralized repository allows you to organize documents in a single place where you can use filtered searches to locate exact contracts and clauses within seconds. Secure contract storage results in risk mitigation, as you’ll reduce the likelihood of contracts being accessed by the wrong people.

 

#2 Use Microsoft integrations to optimize contract lifecycles

Several Microsoft integrations and apps like Microsoft Teams, SharePoint, Power Automate, Dynamics, and Power BI help streamline contract management processes. Collaborate on contracts in a centralized contract lifecycle management (CLM) solution with Microsoft integrations and apps with Microsoft Teams so you can review and approve contracts faster. Productivity apps like Flow allow you to create automated workflows to increase the efficiency of your contract processes. Drive results with business applications provided by Microsoft Dynamics 365s so you nurture leads and close deals faster.

Webinar Recording CTA: How Office 365 Helps Companies Track Important Contract Data

 

#3 Expedite approvals with electronic signatures

With electronic signature integrations like DocuSign, Adobe Sign, and Sertifi, you can send off contracts for signature with a simple click to you can sign and execute contracts within minutes. Speed up approvals and allow clients and vendors to sign contracts at any time, any place, on any mobile device. Increase the security of your contracts by implementing e-signatures that ensure the authenticity and validity of every signature.

 

#4 Enable automated notifications to avoid missing contract expiration and renewal dates

Mitigate legal and financial risks by enabling automated notifications to remind you of every incoming contract expiration and renewal date. Customizable automated alerts allow you and your team to stay on top of obligations, tasks, and everything pertaining to critical deadlines. Tracking dates and obligations via Gmail, Outlook, or spreadsheets is a risky and outdated approach that only increases the risk potential.

With CLM software, you can easily associate these customized notifications to each contract and tag appropriate contract stakeholders so you can manage risk and stay proactive. An automatic contract renewal can cost your company thousands of dollars, so why not use automated notifications to keep your whole team aware and in the loop.

 

#5 Standardize contract authoring with preapproved template and clause libraries

By standardizing your contract authoring process, you increase contract accuracy and the speed of contract life cycles. Pre-approved contract templates and a library full of pre-approved clauses allow you to mitigate risk and prepare contracts quickly so you can send them off for approvals and negotiations faster. By easing contract authoring for your company's legal department, you increase organizational efficiency and productivity by using pre-approved legal language that creates standardization in all of your company’s contracts.

 

#6 Automate contract collaboration and communication

With a cloud-based CLM solution, you can collaborate and communicate on a centralized platform and conduct contract negotiations and reviews in real time. This allows you to reduce risk and boost the efficiency of your processes. Your cloud-based centralized repository allows multiple users to access contracts simultaneously so you can discuss contracts easily and stay on the same page. Version tracking is an additional benefit of CLM software that creates an easier process of editing your contracts. Audit trails document all collaborative efforts of your team that help with contract accuracy and version control.

E-Book CTA - Key Factors to Acquire a Successful Contract Management System

 

#7 Conduct regular audits and review compliance

With a centralized repository, you can review key contract data and contract history profiles to achieve better compliance rates. In addition, automated reminders of contract expiration and renewal dates as well as automated workflows allow for a systematized auditing procedure. We also highly recommend generating detailed contract reports so you can analyze areas of improvement in your systems.

Review all areas of compliance routinely – federal, state, and compliance to contractual terms. The majority of organizations are required to follow strict compliance policies and procedures. Failure to do so will result in financial penalties, fines, or even the loss of your business license. By taking all of these key actions to mitigate risk and ensure compliance, you protect your company from unnecessary penalties.

 

#8 Automate and streamline your contract approvals

With an automated contract approval process, you can eliminate bottlenecks and increase the efficiency of your organization’s contract lifecycle management. Various CLM software features give contract administrators the ability to enable automated reminders to send to contract approvers to speed up this process. In addition, the development of electronic signature integrations also helps with getting your documents signed quickly and processing them through their lifecycles faster.

An optimized contract approval process provides companies with several key advantages. For example, you can save time and money by receiving contracted services at an expedited rate – simply due to streamlining approvals. In addition, reduced contract lifecycle times (from contract requests to executed agreements) help improve relationships by increasing the convenience of your contracting process. Lastly, the faster your turnaround times are, the faster and easier you will attain opportunities.

 

#9 Configure customizable contract workflows to boost compliance and automate systems

Create flexible and customizable automated contract workflows so you can improve productivity and contract accuracy and compliance. Now, you can send off your contracts in a pre-configured workflow consisting of a standardized sequence of steps that notifies the right people to take the right actions at the right times. From contract requests to drafting and approvals, to contract execution and renewals, every stage of the contract’s lifecycle is efficiently managed with a CLM system that you can rely on. Your business can customize every workflow according to your unique needs and objectives so you can ensure that your business is optimized through your contracting process every time.

 

#10 Leverage SSO, data encryption, and permissions features for increased security

Keeping security in mind is one of the most important elements of effective contract lifecycle management. You want to keep your business protected at all costs and keep client and vendor data confidential. Single Sign-On (SSO), data encryption, and permissions-based accessibility features all contribute to the security of your business’s contracts. With the right contract lifecycle management (CLM) software, you can configure role-based permissions so that only authorized individuals have access to your contracts. Keeping data secure and keeping contracts accessible to the right people are keys to effective and reliable contract lifecycle management.

 

#11 Report on contract progress with a comprehensive dashboard

Top 11 Contract Lifecycle Management Best Practices

 

With a proactive and all-encompassing contract dashboard, you can access valuable contract-related insights on-demand so you can measure contract performance and assess where bottlenecks might be occurring. Develop detailed contract reports so you can inform your team of the hows and the why’s of your contract strategies and business initiatives. In this manner, you can collaborate effectively and determine which KPIs are most critical to the future success of your business’s contract lifecycle management processes.

What to Look For in a Contract Management System

Conclusion

Contracts are essential to every organization, business, and enterprise – no matter the size of the company. Effective management of the entirety of contract lifecycles is crucial to organizational efficiency and to reaching key business objectives. By reviewing these 11 contract best practices, we hope you will have learned perhaps where you can improve your own contract lifecycle management processes. These contract best practices will aid in many improvements for contract lifecycle management success across your organization in all phases of contract lifecycles. Today, you can begin to enhance business productivity and mitigate risks by partnering with Dock 365 for all of your contract lifecycle management (CLM) needs.

For more information, we welcome you to schedule a free demo with us today.

Book a Live demo

Schedule a live demo of Dock 365's Contract Management Software.