A software-as-a-service business will enter into dozens, if not hundreds of contracts annually. These contracts include those with vendors, customers, partners, employees, contractors, and more. This makes contract lifecycle management (CLM) increasingly important. Efficient management of these contracts is crucial for business success, ensuring compliance, minimizing risks, and maximizing operational and financial performance. This post will give you a high level overview of the importance of contract lifecycle management.
Contract lifecycle management refers to the manner in which contracts are handled from initiation through award, compliance, and renewal. CLM includes monitoring and managing the contract for performance and efficacy, ensuring that contractual obligations are fulfilled, and safeguarding against potential risks or compliance issues.
The Importance of CLM
- Risk Management: Maintaining a view of key contractual terms and conditions allows your company to identify, mitigate, and overall manage risks such as penalties for non-compliance, missed deadlines, or regulatory requirements.
- Revenue Operations: Efficient contract management can lead to significant cost savings by avoiding unnecessary expenses and penalties, staying on top of upcoming renewals, and unlocking opportunities to maximize revenue through sales and renegotiation.
- Compliance: With increasing regulatory requirements, CLM ensures that contracts are in compliance with current and upcoming laws and regulations, thereby avoiding legal and regulatory complications, fines, or worse.
- Efficiency: Setting up a CLM through the contracting process can streamline negotiations, reduce errors, and speed up the process while reducing legal, operational, and technical costs.
- Collaboration: CLM can allow for seamless collaborations between parties involved, sales, legal, finance, product, and more – leading to a cohensive and smoother vendor or sales process.
- Technical Integrations: CLM solutions now implement artificial intelligence features that allow you to quickly look into specific terms in your contract, statement of work, order form, or any other agreement you enter into. CLM’s can also integrate with your customer relationship manager (CRM) and provide your team with reminders when you need them.
Let Us Help
This post is providing a high level overview of contract lifecycle management, and is not to be taken as comprehensive overview. There are many more nuances and specifics, and you should have an experienced attorney assist you. Kader Law can help you set up an efficeint contract lifecycle management system. If you’re interested, feel free to contact us.
This post is not legal advice, and does not establish any attorney client privilege between Law Office of K.S. Kader, PLLC and you, the reader. The content of this post was assisted by generative artificial intelligence solutions.