A contract is a written and legally bonded agreement listing out the details of an agreement between two or more entities. The contract mainly includes information such as the transfer of products or services, timelines, financial specifics, and other terms to be executed between individuals/ companies.
However, in uncertain times (pandemic, weak economic conditions, and so on), tricking customers may try to disregard the commitment and break away from their obligations. In such situations, a strongly drafted contract can future proof businesses and protect interests against unkept promises. A report by World Commerce & Contracting observes that companies that actively invest in contract management capabilities are better positioned in effectively anticipating and managing risks, guarding against disruption, and contributing towards growth and revenue.
In this blog, we will find out how consistent, accurate, and transparent contracts can save organizations from unfulfilled obligations and financial repercussions.
Why Are Contracts Important?
To be successful, Organizations must not only limit their focus on acquiring new businesses but also be vigilant and control their transactions through clearly defined contracts. An unequivocal and unambiguous contract can turn a threatening situation from “What will happen now?” to “Let’s fix this”.
Whether a company is unable to deliver the goods or services, make timely payments, or finds itself in the middle of an unavoidable circumstance, a contract can be an effective solution. Businesses can find a way out of tricky circumstances by renegotiating terms or acting as necessary. But none of the parties can break the written obligations without dealing with the consequences.
In a way, we can say that a sharply defined agreement shows a company’s ability to anticipate adverse situations and accordingly design the terms and conditions. Yet, managing the entire process of contract management manually from bid to signed agreement can take weeks and months of time, and we know that the speed of delivering goods/services directly impacts time-to-revenue and profitability.
Therefore, in uncertain times like today, switching from manual contract management to adopting technology and investing in Contract Lifecycle Management (CLM) software can be one of the best decisions.
What Is CLM?
CLM is a software application that methodically manages all the stages of a contract’s lifecycle from initiation to renewal or termination. CLM software can streamline processes, reduce cycle time, increase consistency and accuracy, reduce delays, and speed up approval and signing steps.
Apart from automating the entire process, CLM can also reduce an organization’s liabilities, minimize risks, and enhance regulatory compliance.
No matter the size of the company or the complexity of an agreement, each contract goes through all the stages of the contract lifecycle. The different stages are:
- Request – request is sent for a contract
- Creation – an initial contract is drafted
- Negotiation – terms are discussed and agreed
- Approval – final review and approval from all the stakeholders
- Execution – the approved document is signed and put into effect
- Obligations – entities are obliged to meet the contractual requirements
- Compliance – meet the legal, regulatory, and other requirements
- Amendment/ Renewal/Termination – change, renew, or terminate contracts
According to a study by EY, big organizations, on average, administer 350+ contracts a week – and the value of each contract varies from a few thousand dollars to hundreds of millions. Navigating these many contracts each week through different stages of the lifecycle and creating accurate agreements at a higher speed is putting tremendous pressure on the contracting teams. Yet, a robust CLM from partners like Conga will automate contract generation, eSignature of the documents, comply with requirements, analyze hidden risks, and alert stakeholders for renewals.
Top 4 Benefits of CLM Solution
Beyond faster processing time, increased accuracy, and minimal risk, we are listing out some of the other advantages of implementing the CLM software.
CLM as a SaaS platform increases flexibility to collaborate across different functions of a business and expedite the contracting process. Get inputs from multiple reviewers or enterprise-wide on a single platform to address issues immediately, send reports to stakeholders, and quickly finish the process with high accuracy.
Drive your entrepreneurial growth and increase value by fully optimizing and utilizing your CLM solution. A reliable partner like Forsys helps its customers realize the full potential of CLM and its strategic value by providing E2E services. Don’t just invest in contract management to automate the process but use CLM as a part of your strategic plan to mitigate risks, close deals faster, and look for newer opportunities for growth and revenue.
CLM platform brings buy-sides and sell-sides on a single platform to understand, review, negotiate, and finalize details of agreements. Enable your teams to handle even the most complex processes on a single platform and reduce friction. This confluence of different teams reduces investment in different technologies and results in increased return value on investment.
CLM solutions with AI & ML capabilities can quickly process the vast amount of data withheld in hundreds of contracts and result in consistent and accurate agreements. Automation of the process vastly reduces the manual work, but for higher efficiency, AI & ML are a “must-have” recommendation to simplify the complexities of contracting documents.