The challenges that pertain to effectively managing your contracts are plentiful, and many have been discussed recently in this blog. While it is known that Contract Lifecycle Management (CLM) solutions play a major role in overcoming these challenges, you may be wondering just what you can do with your CLM solution to turn potential problems into successes.
Here is a sample of some of the ways a CLM solution adds value to your organization:
Automate the creation of your contracts - Tools designed to define terms and templates that pertain to specific contract types can help automate the contract authoring process. While most businesses use such templates as a starting point for their agreements, CLMs can provide a single, central template repository where all templates with pre-approved language can be maintained. This gives those tasked with developing any contract a strong starting point. For example, if an organization works with overseas contractors in China, a template with built-in mandatory clauses or language can give both sides of the negotiation a head start. Similarly, if an organization manages contracts with organizations in a certain industry with their own set of rules and regulations, industry specific contract templates can speed the creation and negotiation process. Some CLM also provide the ability to create and manage “clause libraries” whereby pre-approved clauses can be accessed and/or collected and assembled ad hoc to create a contract from scratch.
Improve collaboration/reduce negotiation times - There are a myriad of factors, including globalization that can impact the contract development and negotiation process. When supporting international business, not only do you have to break through cultural and language barriers, but the time it will take to complete a negotiation is typically longer. When you cannot simply pick up the phone to resolve and issue, because your customer works in a time zone significantly different than your own, things take more time. The standard for most companies is to use email. Unfortunately, emails frequently become lost or misplaced and you never quite know you’re a looking at the most recent version of a contract. An effective CLM solution can bridge that gap by providing a secure location where all contract iterations can be centrally accessed and by creating custom workflow and messaging that informs everyone that a document is ready to review, directly linking them to the document. The loss of face-to-face communication can be compensated by impeccable organization, which a CLM solution can provide by giving each stakeholder access to documentation that is only pertinent to them, defining a process to follow during the negotiation and approval process and to send out reminders and notifications to keep everyone on point.
Contract auditing – Contract auditing takes many forms on both buy and sell side. Does the contract contain acceptable “approved” language (B&S side), is the version you are signing the same as the final version you approved (B&S side), are you delivering against all the obligations of your contract (sell-side), and have you received all the deliverables required by your contract (buy-side). The complete list is much greater than these few items. When managing many contracts simultaneously, tracking all items that require auditing can be a monumental task. Enabled CLM solutions make auditing tasks more manageable. Template and clause libraries assure that approved contract language is used. Side-by-side document comparisons assure that the contract you approved before signing and the contract you are signing are identical. Linking all contract obligations to events and reminders assures that no obligation is unknowingly missed on the sell-side. Similar capabilities on the buy-side provide ssurance that all contractual obligations are delivered as required.
These are just a few examples of how CLM solutions can overcome contract management challenges. They assure that potential risks to your organization or supply chain can be easily spotted and that potential problems can be discovered in advance, assuring that when problems do occur, they can be identified and corrected quickly.
Tags: Knowledge Base