Business groups or companies that harness Contract Lifecycle Management (CLM) typically make fewer contract-related mistakes and can also make their customers happy.
Even statistics also support it. As per Concord data, by 2035, the projected CLM market size will be $11 billion. However, 72% of contract professionals still now have not implemented any AI solution.
However, managing a contract from start to finish that includes creation, review, signing, and renewal can be complicated as many departments are usually involved without creating any real communication between them.
In this blog, we will discuss 10 common challenges businesses face with Contract Lifecycle Management (CLM) and later explore how CLM software can address them.
The 10 Common CLM Concerns Businesses Usually Face
Despite each business having a distinct nature, there are a few digital contract management-related concerns that are common for each business.
Here we are going to discuss the 10 common problems businesses usually face.
1. Contract Searchability
For large companies, contract searchability is a major concern. As they have many contracts, you may find them in outboxes, local folders, and other folders in a scattered way. Even Gartner has also acknowledged this issue that most of the large contracts are unable to track their contracts as they are fragmented across various departments.
How The Cloud-Based Solution Can Solve This Problem?
The cloud-based contract lifecycle management solution has a solution to this challenge. With the help of the software, you can upload all your contracts in a single platform. It enhances the accessibility of all your contracts. You can search them easily and analyze them at any time for better business outcomes.
2. Contract Safeguarding
Most business organizations apply passwords or firewalls on emails for security purposes. However, businesses need to be more cautious regarding contract-related problems, especially for those contracts that do not follow any rules. These poorly managed or non-compliant contracts can lead to legal disputes and ultimately reputational damage.
How Can the Inbuilt Automated Workflows Solve This Problem?
The inbuilt automated workflows make sure that the contract is well-tracked and that all the people responsible know their role in managing the contract. Even the non-legal teams can regularly update themselves regarding what’s happening with the contract without requesting the legal team’s information repeatedly.
3. Unwanted Expiry of Contract
Unexpected expiry of contracts is a problem that every business organization keeps facing. You may face financial loss if the contract expires suddenly and you have no clue about it. Your client may deny paying you the rightful dues citing that the contract has expired.
How Can Notification and Alerts Solve This Problem?
The solution can send alerts and notifications to the person concerned at the right time before the expiration of the contract. The automated renewal tracking feature of the software can revoke any kind of human error that may deny the company any kind of revenue-generating opportunity. Whether you want to renew the contract or terminate it, you will get the notification with enough time in hand to decide.
4. Disharmony between CLM Processes and Other Teams
Usually, a contract is handled by multiple teams i.e. Finance, Procurement, Sales, HR, and others. Everyone needs a contract to execute their day-to-day activities. However, it is only the legal department that has the final say in a contract. This creates a rift between CLM processes and other non-legal teams.
How Can the Software Bridge The Gap?
The software can seamlessly integrate with external apps that can help the non-legal teams receive all the latest updates about the contract. You can review the contract and edit it. It has a two-way synchronization facility, which means if you make changes in the original document, it will be shown in the platform and vice versa.
5. Excessive Redlining of Contract
Standard Contracts like NDA (Non-Disclosure Agreements), Rental Agreements, and Employment Contracts are not usually meant to be changed. The other parties accept the contract or walk away without accepting the contract. But during the negotiation, if the contract is changed contiguously, it will be deemed that there are problems with the contract itself.
How Can the Software Address Redlining?
The solution can curbthe excessive contract redlining by implying a standard template and enforcing the prime clauses that you cannot edit. The analytics feature in the software can analyze the specific area where redlining is happening too much and can improve the area.
6. Manual Handling of Contracts
Manual handling of contracts can lead to errors, delays in the process, or lack of control. Managing the contract will become more difficult if multiple departments of an organization are associated with it. So, multiple handling of contracts even that too manual, is inevitable to human errors.
How to Automate Your Manual CLM Tasks?
Contract management includes a few repetitive administrative tasks. The tool can save time for an organization by automating these tasks. The software can streamline the process of drafting and reviewing contracts. The advanced search capabilities can help the contracts to be found easily, which usually takes too much time if you search them manually.
7. Supplier Contract Management
It is the contract that creates a bridge between suppliers and a business organization. When the number of suppliers increases it becomes difficult for companies to remember with whom they are doing the business and what the terms and conditions negotiated during the time of the contract.
How Can Software Help in Vendor Tracking and Management?
The tool can auto-track critical contracting obligations to make vendor tracking and management easy. The tool has features like auto-reminders and automated obligation tracking to make sure that none of the vendor-related obligations don’t get unattended.
8. Version Control Risks
If the contract has different versions and the business organization does not keep a clear track record of all the edits made to the contract, it is going to cause serious concern for the businesses in the future. If the businesses do not know how to control different versions at the time of negotiation the company may ask the other party to approve the contract where the clauses are still not updated. It may cause loss for the businesses.
How to Cope with Version Controlling?
The digital redlining feature in the software can help the business organization in controlling the version history. It can track all the versions and redlining done in the contract. The version control feature ensures that all the respective people and groups have access to the latest redlined and revised version of the agreement.
9. Deep Analysis of Contract
Only a deep analysis of the contract can help you to understand the data inside the contract. It will help you to make better business decisions. Companies can only get better deals if they have thoroughly gone through past contracts. It is only possible if the legal professionals of a company make a deeper analysis of the contract and it is not possible to execute manually, which will inevitably cause some mistakes.
How Can CLM Software Solve This Issue?
By leveraging AI, the software can extract and analyze the key data inserted in the contracts like clauses, terms, and obligations. It can create searchable insights from past contracts so that for better decision-making of the legal team.
10. Remote Working
The recent challenge business organizations are facing post-Covid is shifting to remote work. This has made contract management even more challenging. Most companies were not ready for it and seriously lacked the tools, processes, and security measures needed to manage contracts effectively in a remote environment.
How Can CLM Support You?
A good digital contract management software can ensure seamless remote working for a business organization. The advanced search functionality of the software can help you with searching the relevant data, version control, and cataloging the metadata while you are pursuing remote work.
All the above-described problems are usually faced by business organizations regarding contract management, and these are the 10 solutions to them.
Final Thoughts
As contract management is a complex issue, it cannot be solved manually. Even age-old processes cannot help much either. Business organizations need to leverage the modernized AI-empowered CLM solution that can give them positive business outcomes.
So, where to find such a CLM solution?
SutiCLM is an AI-powered contract management software that can help you manage your contract smartly. The user-friendly contract management solution with its key features like industry-standard contract templates, contract authoring, and customized contract approval workflows; you can streamline the contract lifecycle management seamlessly.
