Contracts are critical in business. They protect your interests and give you a sense of security.

They become even more critical in highly regulated businesses. Aside from ensuring security, these businesses need to deliver contracts on time, in large volumes, and with the approval of multiple stakeholders. In fact, the top healthcare management company in the United States holds 3,900 contracts.

Remember that in contracts, there is no to little tolerance for discrepancies. A poorly specified contract can blow into bad publicity on an international scale.

Goes to show that in industries governed by high-volume contracts, manual management won’t cut it—contract lifecycle management is a priority.

Is your business in a highly regulated industry too?

If so, keep reading this article and learn how to automate different phases of contract management easily with CLM software.

3 Different phases of contract management

The different stages of contract lifecycle management can be tedious and repetitive.

The question is: can you automate them?

First, it’s important to know the ins and outs of the end-to-end contract management process. Let’s look at them closer and see how we can apply better management.

Phase 1: Pre-Execution

Contract management begins even before you actually draft the contract. This starts when 2 parties agree to enter into an agreement.

To legalize every intent therein, you should articulate them in a document, a contract.

So what are the steps here?  We subdivided the contract preparation process into 4 activities:

• Request and intake
• Creation and drafting (authoring)
• Collaboration and redlining (negotiation)
• Final reviews and approvals

Request and intake

The first phase of contract management begins with requesting the contract. You need a good understanding of the purpose of entering the agreement.

It also helps to identify if your business is the seller or the buyer so you can better define the intent behind the contract. All these should be done before you author the contract.

In this stage, you collect all the crucial information needed for drafting the contract. To avoid the differences between parties from becoming a conflict, you must clearly define:

• Detailed information about the goods or services
• Goals and risk assessments of the agreement
• Term & conditions
• Dates of milestones
• Commitments to each milestone
• Documentation supporting the request

Can you automate this? 

CLMs (contract lifecycle management) offer different integrations. Software like Avokaado allows you to integrate with your existing technology stack.

If your business uses CRM software then you’re keeping a record of your client details. In this case, if the signing party is in your CRM you can easily pull their data and use it directly into your document.

And even if they’re not in your CRM, you can also use a public data registry where data is pulled to the contract draft automatically via API.

Creation and drafting (authoring)

Now that you have the important details compiled, let’s put them to use.

At this point, you can start authoring your first draft.

You may start from scratch or you can also consult your in-house legal department. When you do this though, take note that you’ll be taking time away from your legal department. This means not doing more important legal tasks (like ensuring your company’s global compliance) than always checking drafts.

Can you automate this?

Most CLMs provide a template library so you won’t have to build them from the ground up. Avokaado specifically houses pre-lawyered templates that allow employees of different departments to self-serve.

👉 Check out Avokaado’s open-source library with automated templates for contracts. Pick any template and draft it for free.

The legal department can draft the automated templates,  so you’re assured that the clauses you’ll include are legal and up to date.

It’s convenient for the entire organization.

The key takeaway for you? Fast and smart document drafting.

Collaboration and redlining (negotiation)

Is the initial drafting done? Then it’s now time for review. 

Do you need further input on the documentation from others? Let your collaborators review the contract first.

Afterward, the signing party should review and negotiate the terms of the agreement. Expect some redlining here.

The signing party will usually mark the contract for additions, changes, rejections, approvals, and deletions.

Can you automate this?

First things first. Do you need to add team members from your company? Avokaado lets you collaborate before you finalize the contract draft. So if you need to modify the content, you can do it internally first.

To facilitate negotiation with external collaborators, you can share the contract via a public link.

Grant them editing or viewing rights so you can start a discussion,  add comments,  and work together in real-time. Yep, it’s co-editing at its finest!

The best part is you can view audit logs to see who made the changes, when they happened, and what modifications were actually made.

Final Reviews and Approvals

You are now one step away from signing the contract.

After both parties have given their nods and accepted the modifications, you’re now in the final review phase.

This is when the stakeholders go through the document for the contract approval process (or last-minute revisions).

Can you automate this?

Yes.

One of the powerful features of a CLM like Avokaado is its ability to automate the approval process. 

Instead of manually soliciting the approver’s verdict, you can simply add them to your contract as an approver and/or a signer.

Prior to sending the document out, you can pre-define the order of the approver for faster decision-making. So, you can dictate the entire approval flow as you’d like.

Phase 2: Execution

This is the phase when all parties come to an agreement and seal it with their signatures. This means everyone has agreed and confirmed their decisions about how they want things done.

It’s time for action.

Execution and Signatures

To legalize everything, all parties involved just need to attach their signatures. The signing process is supposed to be simple now that tech tools are available. Location is no longer an issue.

👉 Need a tool for digital signing? Check out this rundown of different digital contract signing apps.

Can you automate this?

Lucky for us, we now have the technology of converting physical signatures to digital ones.

Avokaado is a CLM with a legally binding digital contract signing process. Its integration with signing software like Dokobit and SignNow provides eIDAS compliant signatures. These apps collect electronic signatures that are verified counterparts of your wet signatures.

With this technology, contracts can be signed anywhere without the need to meet the signers physically. Yes, the process is fully automated.

Phase 3: Post-Execution

If you’ve done this before, you know that once a contract has been signed, your work isn’t done yet. Here are your next actions:

Obligations and Commitments, Amendments, Addendums, Renewals, and Terminations

After the contract has been signed, there’s a time when you’ll need to perform regular audits.

Are there clauses that need fulfillment? Are there amendments? Perhaps it needs renewal, additional scope, or termination within the contract?

You have to keep the contract updated until it reaches expiration.

Can you automate this?

CLMs can help you keep up with these changes. Like in Avokaado, it’s easy to manage important deadlines as it’s simple to track and alerts you when due.

If you need a personal reminder or to delegate tasks to your collaborators, you can automate them, too. Everyone assigned to the project will be notified, according to the schedule that you established.

Reporting and Auditing

Now, it’s smart to harvest insights from your contract automation performance.

If you know how long and how fast you can get contracts signed, you can optimize your process and save resources in the long run. This will also help you maximize operational and financial performance, while minimizing risk.

Can you automate this?

Of course, you can in a CLM like Avokaado. Do you need a view of your workspace or the entire team? The workspace displays your deal statistics and reminds you of your critical deadlines. With Avokaado, you can view all your contracts in one dashboard. 

What else can you monitor?

You can see each document’s status to know if the negotiation is slow. At the same time, you can check the number of contracts lined up. Another thing you can keep an eye on is revenue leakage. Know when the contract gets stuck and reach a critical date.

So in your report, it’s clear to see which metric needs improvements.

Archival and Data Retention

Wrapping up the contract is the final phase of its management. Whether the contract yielded a good statistic or not, use software to store documents. They must be in a secured but easily accessible (by authorized persons) storage.

Can you automate this?

A contract management system stores all your contracts, documents, and data in a secure, digital contract repository.

In Avokaado, your database is not only cloud-based but is clause-based. In other words, contracts are stored digitally not as single files but as clauses that users can easily reuse for future contracts.

Wait, it only gets better. 

Now you can sort these contracts and store them in shared folders. You, your co-workers, and external users can see the contents of your folders with just a few clicks. Specify who can access the folder by selecting specific users or even user groups.

Manage contracts better with Automation from CLMs

The different phases of contract management require serious work.

The good news is that modern CLMs can help you manage your workload. From the time a contract is requested, signed until it expires, CLMs are there to help you manage your contracts. Those who use a contract management solution have been able to reduce material and services costs by 2% to 7%, cut process cycles in half, reduce contract administration costs, and improve contract compliance by 50% to 55%.

Automating a lot of these processes means freeing up more time for you to focus on high-level strategy. Not only that. The contract lifecycle automation they provide allows for quick, legally compliant, and error-free contract completion.

In short, contract lifecycle management software helps businesses operate better.

Avokaado is a modern CLM that uses automation to make your life easier. Try Out Avokaado for free for 7 days!