Contract lifecycle management (CLM) software improves business revenues and profitability by accelerating contract reviews, reducing risk through better compliance, streamlining renewals, and improving privacy and security. The best CLM solutions offer powerful contract intelligence that uses AI to deliver new insights to your team. Together, these factors improve your company’s bottom line, helping your organization maximize the value of its business relationships.
From a CFO’s perspective, software investments should always be viewed through the lens of ROI. Clearly, technology offers advantages when it comes to organizing and retaining information. Nevertheless, the true test of its value lies in the contributions it makes to the bottom line. By automating repetitive tasks, streamlining processes, reducing human error, and providing valuable data insights, business applications ensure that users throughout your company are performing their tasks more efficiently and effectively.
Contract lifecycle management (CLM) software improves business revenues and profitability in a variety of ways. In this article, we’ll address five of the factors that contract management software has to offer for enhancing both your top line and bottom line.
CLM software = Faster contract review
In today’s economy, agility is a cardinal virtue. By accelerating contract reviews and approvals, your company will close deals quickly, leading to faster revenue generation for new clients and projects. On the buy-side, faster execution means first-mover access to opportunities and limited resources.
Contract management software offers a structured process for drafting, reviewing, negotiating, and approving legal agreements. Not only does this accelerate business processes, it also reduces the likelihood of errors, which can lead to further delays. The end result is a smoother, more efficient process for executing contracts, with improved customer satisfaction and potentially a significantly higher likelihood of repeat business.
CLM’s automation capabilities contribute significantly to cost reduction. Research from EY indicates that “the average basic contract costs nearly $7,000 to create.” The same study indicated that drafting, reviewing, negotiating, and executing complex contracts cost an average of $50,000. And one in three large organizations are targeting aggressive cost reductions of 30% or more for their contracting processes. CLM software provides the tools to achieve that, while also improving business outcomes.
Faster review processes help companies maintain a competitive edge. For sell-side contracts, this means a faster and easier sales process for everyone. Prospective customers experience smooth, efficient processes before they ever sign on the dotted line. That contributes to a positive first impression. Naturally, faster contract reviews mean your sales organization can close business more quickly and efficiently, for a clear edge over the competition.
On the buy-side, faster contract reviews mean early access to opportunities. Whether you’re acquiring real estate, licensing intellectual property, or securing access to critical supply chain resources, the ability to act quickly can often be the difference between getting the deal and losing out to the competition.
In today’s environment, agility is paramount. Contract management lifecycle software speeds processes, offering significant competitive advantages.
Reduced risk through improved compliance
CLM software also helps organizations minimize risk and meet compliance requirements more consistently and efficiently. A contract management solution improves consistency and accuracy, ensuring that contracts are executed in a standardized way. That eliminates many potential points of failure, including oversights that could lead to compliance issues.
Contract intelligence can proactively identify potential areas of risk in an organization’s contracts, alerting key personnel to issues that may merit their attention. In today’s rapidly changing regulatory environment, CLM software helps organizations to stay ahead of the curve by monitoring the impact of new or pending legal requirements, and by tracking performance to ensure that all parties to an agreement are adhering to its and conditions.
CLM software also provides a clear audit trail of all contract-related activities, making it easier to demonstrate compliance with relevant regulations and standards. Overall, CLM software can help organizations effectively manage risk and ensure compliance, providing peace of mind and protection against potential legal and financial consequences.
Contract management software provides a single source of truth
Today’s innovative organizations are looking to technology for a single source of truth. When users have a unified, trustworthy repository of information about all of the company’s contracts, the result is smoother, more efficient operations, with fewer opportunities for error.
A single source of truth also means better decisions. Contract analytics deliver insights that uncover new opportunities and help identify potential cost-savings. CLM enables data-driven decisions.
One way of using your CLM is in finding clauses that can be leveraged to increase revenues. The best recent example comes from clauses related to inflation. Inflation persisted at very low levels from the early 1990s until picking up dramatically in 2021. Many long-term contracts include price adjustment clauses that are related to inflation, but these can be hard to track manually. CLM systems can easily find these clauses, potentially unlocking massive price increases and increased revenues.
Many organizations struggle with a proliferation of systems. The best contract management solutions not only offer a single source of truth for all of a company’s legal agreements, they also offer seamless integration with ERP, CRM and other external systems. That leads to a consistent view of information across the entire enterprise.
Many organizations continue to struggle with manual contract management systems. When key users send draft agreements back and forth via email, for example, it often leads to a confusing array of documents, comments, phone calls, and email discussions. Multiple conflicting versions of the same contract are commonplace, and there’s no clear record of potential issues, concerns, and decisions.
Contract management software provides a structured environment in which to manage all of your information, sharing and collaborating with other key users in real peak-time. With contract management software, organizations can eliminate the use of multiple, disparate systems and manual processes, and instead rely on a single, unified platform to manage all aspects of their contracts. This provides a single source of truth for contract information, reducing the risk of errors and inconsistencies.
A key benefit of contract management software is its ability to store all contract-related documents and information in one central location. This includes contracts, amendments, renewal notices, and other relevant documents. Robust search capabilities enable users to easily find the information they need in a matter of seconds.
Faster, better contract renewals
Contracts invariably include key dates and deadlines that impact the company’s bottom line. CLM software monitors upcoming dates, including pending renewals, to ensure that your organization can take full advantage of opportunities as they approach.
Contract management software alerts a contract’s “owner” when a renewal date is on the horizon. It can also monitor contractual obligations, ensuring that whoever is managing a given contractual relationship will be fully informed as to the performance of each party to an existing agreement. As a result, key personnel will be in a stronger position to re-negotiate pricing and other terms, potentially lowering costs, reducing risk, or increasing the standards for a vendor’s performance.
For sell-side contracts, alerts ensure that your organization has met all of its obligations, and that each customer is fully satisfied. By taking a proactive approach toward customer renewals, your organization can ensure a higher volume of repeat business.
Increased contract privacy and security
Many organizations still rely on email, network folders, or online file-sharing services to store contracts. With these kinds of tools, it can be virtually impossible to manage and control user access to highly confidential information at a granular level. These technologies also expose sensitive legal agreements to hackers, which could have profound negative legal and financial implications to your organization.
The best CLM software offers robust security features such as multi-factor authentication, encryption, and data backup, significantly enhancing the privacy and security of contract data. CLM software also provides an audit trail that tracks all changes made to contracts, enabling organizations to monitor who accesses and modifies their data, and when. This helps to ensure that contracts are handled in full compliance with privacy and security regulations such as the GDPR, GLBA, CCPA, and HIPAA. By improving privacy and security, CLM software helps organizations protect their sensitive information and minimize the risk of legal and financial consequences.
The value-creating potential of contract management software extends far beyond merely organizing and managing information digitally. CLM software cuts costs by making contracting processes more efficient and effective. It reduces errors and accelerates the speed of the business. It enables your organization to act on new opportunities, focus on efficient business relationships, and close business faster than ever before.
This is especially true in the context of our current economic environment, where agility and efficiency rule the day. Contracts are fundamental to the smooth operation of any business. As you scale up, contract management software ensures that you have the tools you need to control costs and grow revenue rapidly.
Icertis Contract Intelligence (ICI) provides a unified, intelligent digital system of record for every contract across your entire enterprise. ICI enables improved visibility, robust analytics, workflow automation, and monitoring tools. To learn more about Icertis contract lifecycle management solutions, sign up for a free no-obligation demo, or contact a member of our sales team.