What is contract or lifecycle management and how can it help companies remain compliant and mitigate risks?

Presented by: CQN Advantage


Q:

What is contract or lifecycle management and how can it help companies remain compliant and mitigate risks?

A:

Contract Lifecycle Management (CLM) is a process that optimizes agreements related to client and vendor relationships at all stages of the contract lifecycle, including:

  • Contract requisitions
  • Contract preparation
  • Negotiation and revisions
  • Approvals
  • Organization and storage
  • Tracking of performance and milestones alerts
  • Reporting

Using CLM Technology

Today, it is common for companies to use information technology to manage the CLM process. The implementation of CLM technology provides just-in-time performance visibility, along with enhanced alerts and reporting mechanisms that enrich the contract management process. Besides process efficiencies, CLM systems offer a variety of features to improve security and limit access of documents as required, while ensuring that all necessary approvals are in place before taking the next step.

Using commercially available CLM software that captures and manages contract information, companies can proactively manage their business relationships. In doing so, they will:

  • Offer consistent and timely contract creation, renewal, and evaluation
  • Reduce the length of the contract cycle
  • Increase profits by eliminating bottlenecks and generating more contracts
  • Accurately track and provide alerts related to contract milestones and obligations
  • Streamline the provision of reports for any legal or regulatory review
  • Increase worker productivity by automating routine processes and workflows

Although it is possible to manage contracts without information technology, those companies using manual processes are often inconsistent in the way that contracts are processed. In these cases, it is not unusual to find costly errors, unfulfilled contract benchmarks, or lengthy contract cycles.

(Learn more in Managing Contractors From Start to Finish: The 4 Stages of Contractor Management.)

Mitigate Contract Risks

Risks are inherent in every type of business contract. Mitigating and managing potential risks to your organization is another benefit of implementing a CLM system.

Here are some of the risk mitigation tools your CLM system should offer:

  • Checklists to identify identity all areas where something could be at risk
  • Risk evaluation including quantitative and qualitative analysis through the use of graphics and by prioritization of risk demands
  • Establishing a risk management plan considering all steps in the contract lifecycle
  • Controlling and monitoring risks through analyzing trends and audit trails and providing alerts that notify administration of any contract inconsistencies

CLM Is an Advantage to Your Company and Stakeholders

CLM empowers the contract process by controlling costs, forecasting revenues, establishing service levels and keeping milestones associated with the business of contracts top of mind. In doing so, risks associated with contract liabilities, performance, regulations, and the loss of new opportunities facilitated through inconsistent contract renewal are minimized.

(Read about Contractor Management Best Practices: You Should Be Using Them...But Are You Really?)

Through best-practice Contract Lifecycle Management, your company will increase transparency, create consistent and better-informed relationships with stakeholders, and mitigate the risks of doing business.

Have a question? Ask Patrick here.


PRESENTED BY

View all questions from Patrick Robinson.

Share this:
Written by Patrick Robinson
Profile Picture of Patrick Robinson

Patrick Robinson is the founder and President of CQ Network, CQN Advantage, and RISC Management Inc., Alberta-based technology companies that specialize in contractor management and assessment applications.


  Full Bio