Contracts are the lifeblood of any business

Even though the contract lifecycle process is still fairly simple, it takes weeks and costs thousands of dollars. Business development, HR, sales, procurement teams are dependent on the legal team. Businesses are not able to run their operations efficiently to close deals and mitigate risks at the same time.

Even a low-risk contract costs an average of $6,900 to process. Costs for a mid-complexity contract averages $21,300, and high-complexity contracts run into hundreds of thousands of dollars.

Average cycle times to create, negotiate and approve contracts are 7-18 days to close standard agreements such as NDA or IP and 20-30 days for procurement or sales documentation.

What’s more, contract numbers increase at scale — additional parties and increased organisational complexity demand difficult-to-implement workflows but the same efficiency and cost optimisation.

In this guide, we’ll explain how any business can make contract lifecycle management efficient and reduce waiting time, costs and risks. With efficient contract lifecycle management tools businesses and legal teams can:

• Get better aligned on their document workflow
• Ensure compliance of each legal document
• Reduce contract time cycle and speed up deals closure
• Save costs by automating manual work

Without further ado let’s start.

What is contract lifecycle management?

Before we go into our study about document workflow solutions and cloud-based contract lifecycle management, let’s dive into the terminology – what we mean by ‘contract workflow’ and by ‘contract lifecycle management’.

Contract workflow is the process of streamlining document creation, negotiation, approval, and execution. If managed manually, the workflow usually includes these 10 stages:

Contract lifecycle management includes more steps and processes in addition to the contract workflow.

Contract lifecycle management covers more organisation needs such as contract data processing, oversight, analytics, and sharing with other systems and/or platforms. It also provides post-signing management – reminders, renewals, storage and search, audit/reporting/data rooms. Digital contract lifecycle management is cloud-based meaning all the processes are managed via cloud computing model, giving operations the scalability and access 24/7 everywhere in the globe. 

In sum, contract management and contract lifecycle management solutions are great for post-execution contract needs, and workflow solutions are great for pre-execution needs.

What are the risks of manual contract lifecycle process?

Any business, no matter the size and industry, needs contracts to support business operations and close deals. Whether you’ve got a new employee to onboard, a new contractor to outsource or new business premises to rent out — it’s all run on contracts. Still, each company goes through the same inefficiencies of the contract lifecycle process:

• Involving lawyers in low-value tasks

Business people need to put together all commercial terms for the contract, deliver accurate answers to customers and close deals as soon as customers are warmed up. For lawyers, document creation takes time as they are responsible for compliance and risk management.

Contract drafting from scratch and repetitive data insertion has always been a lawyer’s job which makes business people become dependent on lawyers and wait a lot.

• Human errors

We are all humans, and we all make mistakes. However, mistakes in legal documents are not tolerated. Gaps in standardised language, missing data, or regular typos can introduce risk or confusion, disarray and potential loss of critical information. Delegating documents to non-lawyers might mean untrackable changes and deletions that may totally break the contract.

That’s why legal documents are not collaborative business tasks and have to be always double-checked by lawyers that consume a lot of business-critical time.

• Distorted capture of the data input

The data is scattered over different professional departments or clients whose data input might be imprecise, incomplete or simply inadequate. Business people’s goal is to get to the deals’ closure as fast as possible and they won’t allocate their time to find out potential risk areas.

Working with an outdated template version or incorrect data results in penalties and profit losses.

• Miscommunication

Working under the time pressure causes communication gaps especially when contract negotiation, approval and signing happens all over the places – in an endless email thread and constant reminders. Messy communication leads to lost deadlines, overlooked changes, additional negotiation and review rounds, repetitive approval requests.

Money that is at the stake of the high-value contract could be easily lost due to time-consuming negotiations and closure./p>

• Lack of transparency

If contracts depended only on lawyers and their speed it would have been much faster to get them signed. However, document creation is just the initial stage of the contract lifecycle management. The next stages include other parties who are supposed to leave comments, suggest changes, negotiate, approve and execute a contract. At these stages, lawyers have no full control over activity logs, document statuses and emerged bottlenecks.

If you can’t see it, you can’t control it. That’s why contracts remain stuck until they get business-critical.

Why is digital contract lifecycle management important?

Implementing and digitising contract lifecycle management helps you streamline the contract workflow and improve your business and legal teams’ performance by:

• Reducing risks: automation of contract management can lead to improved compliance by 55%
• Saving time: document workflow automation can save, on average, 20-30 days that otherwise the company spends to create, negotiate and finalise a contract
• Saving costs: administrative costs associated with contracts are reduced by 25%-30% through contract lifecycle automation

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Digital Contract Lifecycle Management follows the same logic as the manual one, however, it replaces half of the process with automated contract lifecycle management solutions:

Digital Contract Lifecycle Management solution eliminates:

• Manual processes and data silos
• Chances of mistakes and typos
• Mess with versioning and their exchange
• Decentralised negotiations
• Inconsistency and slow approvals
• The lack of visibility around contracts’ progress

As a result, legal and business people can manage risks better, proactively meet deadlines and maximise the value of your contract. Digital Contract Lifecycle Management helps with:

What are contract lifecycle management best practices?

Contract lifecycle management pays off if businesses know their use case and the goal of digitising contract lifecycle process. To help you navigate better among different opportunities that automated solution can give you, here are the key contract lifecycle management best practices to start with:

• A central contract repository in the cloud
• Contract workflows delegated to business departments
• Automated document generation
• Task management and collaboration
• Document approval workflow and document tracking
• Integrated digital contract signing
• Secure document storage systems
• Contracts performance measurement and reassessment

In the infographic below you can see how each stage of the contract lifecycle is turned into a specific use case. With a clear understanding of your use case it’s much easier to formulate and, therefore, solve the pains you experience in your current manual document workflows.

Let’s now dive deeper into each best practice:

1. Maintaining a Centralised Document Database

A centralised document database helps you keep document templates available and up-to-date to the internal team, external legal service providers and business customers. It ensures everyone in the organisation uses the latest versions which are compliant and proof-read by lawyers.

Another benefit of a centralised contract repository system is access to the shared clause library. Lawyers or contract makers no longer need to search for “that very” clause all around files and put together a document from scratch especially when documents for a similar case have already been prepared.

Maintaining a centralised document database makes your internal knowledge and best practices captured and consolidated in one place.

2. Standardising the Document Creation Process

Standardised document creation process helps you reduce time to get your first contract draft ready. Standardising document generation is usually done by creating automated templates based on your own word templates.

Automated templates for contracts are made in a way to eliminate all possible routine and repetitive drafting parts by enabling:

• One-time data insertion
• Automated formatting and styles
• Default answers
• Tooltips and guidelines

Standardising the document creation process helps you kick off with the first draft in a few minutes and reduce the number of mistakes.

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3. Online Document Sharing: Delegation and Co-Drafting

Sharing your documents in a controlled environment allows you to delegate drafting to other business units or clients. Document drafting delegation helps you save time on manual data entry or collecting data input from all the stakeholders and let them do it for you. Creating self-help tools and guides for internal or external counterparties for regular and low-risk work eliminates legal department involvement.

Lawyers can share document templates for co-editing or completed documents for review and approval – all in one place. Automated questionnaire-based templates ensure no business-critical data is lost or incomplete and no unnecessary changes are made. Lawyers can decide to which extent they will enable other parties’ contribution by extending drafting rights.

Delegating automated document templates makes document drafting fast and error-free and lets the legal team focus on high-volume tasks.

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4. Automating Document Workflow

Document workflow is effective when it happens in a transparent and organised way. Having all the document stakeholders working from a shared window eliminates constant email exchange with the new document versions, downloading and uploading amended files, and gives you control over progress.

Contract lifecycle management software with document workflow automation helps you streamline your own contract workflow and bring all parties to one place. You can automate your document workflow and:

• Assign user roles with specific rights
• Open up a discussion for negotiation
• Add attachments to the document
• Set up a queue-based approval order
• Enable reminders and notifications
• Set up a digital signing flow

Having all these tasks performed in a centralised place saves tons of time on communication, checking overloaded inbox, and exchanging emails.

5. Online Document Signing

Execution of a contact can easily happen right after the terms are negotiated and agreed with the help of digital signing solutions.

To execute a contract even faster you can use a legal electronic signature straight from the contract lifecycle management platform. Make sure your contract lifecycle management has a suitable digital contract signing functionality integrated so that you would not need to pay for the external digital singing providers.

With online document sharing, you don’t need to download the document and send it for signing over email, nor create an account with the digital or electronic signature provider, nor pay for signatures additional fees. Depending on your jurisdiction you can choose between signatures and finish documents without ever leaving the platform. Digital signing is instant and seamless and helps execute contracts much faster and in a matter of a few clicks.

6. Contract Management and Overview

Contract lifecycle doesn’t stop as soon as contracts are signed. A proper document management system helps you not only organise all of your files and data in one place but also serves as a baseline for better document collaboration. You can keep track of all of your critical documents, accelerate your workflow, increase accuracy and provide 24/7 access to documents from any part of the world.

Contract management solutions provide you with a dynamic dashboard with hot deadlines, documents’ statuses and unfinished tasks. Centralised data about the entire document workflow gives you visibility and therefore control over deals’ progress. The oversight over progress allows lawyers to meet deadlines proactively and address the upcoming issues instantly.

Contract management can be a time-consuming stage of the contract lifecycle process, but if properly managed, can be one of the most impactful areas for building business relationships and generating revenue.

7. Integrated Contracts

Contracts are full of data, which could be managed and shared through the organisation effectively. Advanced contract management solutions are tailored for integration with a business’ existing CRM system or any other internal tool, accelerating the entire contract lifecycle process and eliminating lack of communication between legal teams and other business units.

While filling in the contract data it could be already marked as shareable data points for posting or received from other databases like CRM. Integrated electronic signatures makes the signing process for all involved stakeholders really easy. The same goes for post-signing contract lifecycle management – for metadata search, analytics, data rooms, audits. This ensures that none of the contracts are lost, data is not missing or wrong and all flows are working smoothly without human interaction.

The benefits of integrated contracts are clear to see. Business units and legal teams close deals faster when CRM information and contract information are managed within a centralised system.

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What are the best contract lifecycle management software?

Depending on your needs you might consider optimising either all your current business and legal process or starting with the most urgent ones. Choosing contract lifecycle management software depends directly on your needs and resources.

Many business and legal teams get stuck once the question of choosing a legal tech provider comes up:

• Build or buy contract lifecycle management tools?
• What is available on the contract lifecycle management software market?
• What is the best contract management software?
• What is contract lifecycle management software pricing?
• What contract lifecycle management software features are must-have?

Some contract lifecycle management solutions are strong in drafting standard agreements, others are suitable for creating complex document packages. Ones are good for internal collaboration and document storage and others – for external document sharing and external collaboration. Choosing your contract lifecycle management solution depends on:

• The number of document workflow stages they cover
• The complexity of documents you need to automate
• The easiness of collaboration environment
• The number of users you plan to assign to the platform
• The possibility to execute a contract by singing straight from the platform
• The possibility of integrations with your CRM or task management tool
• The friendliness of UX-design
• The difficulty of the learning curve 
• The flexibility of the legal tech vendor to adjust to your needs

Let’s take a few CLM software examples:

Avokaado

Avokaado is a contract lifecycle management platform that lets you create contracts easily and collaborate on one central platform at every stage of the contract lifecycle — from smart drafting through to final approval and e-signature.

What makes Avokaado a really unique solution is its flexibility to adapt to other business systems as well as its dynamic infrastructure to deal with the complexity and particularities of your legal documents. That’s what makes Avokaado’s contract lifecycle management adaptable:

• High complexity documentation generation: formatting and styles, add in-document attachments, clause library, and structured data
• Integration with the existing technology stack: a data register, CRM, or your own software
• Built-in digital contract signing functionality for quick sign-off: Dokobit and SignNow
• Advanced user collaboration: different right levels and user groups for your team and unlimited external collaborators
• A full contract lifecycle management from one place: smart drafting, co-editing with parties, negotiating, approving, e-signing, document management, and a tracking dashboard

Avokaado contract lifecycle management is made in a way to support each business no matter the size and limited resources to digitize contract lifecycle processes.

Agiloft

Agiloft offers pre-built and custom modules for contract lifecycle management stages: approval processes with integrated workflows, email alerts and one-click contract generation, a comprehensive dashboard, analytics and reporting features.

Agiloft is very user friendly and has the flexibility to customize your knowledge base and develop workflows to automate mundane tasks, eliminate human error, integrate with other software tools, and increase end-user satisfaction.

Such a deep and rapid customization that adapts to serve a wide range of vertical industries is especially relevant for the mid-to-large companies that need robust automation of their business flows. This is not a con, but having a champion for the project internally who understands the business processes you’re wanting to implement in Agiloft would be crucial for implementing this software.

ContractWorks

ContractWorks is an easy-to-use, affordable contract management software for businesses who need a quick way to understand and manage contract obligations. ContractWorks is suitable for executing, storing, and tracking corporate agreements.

While ContractWorks makes contract management software accessible to businesses of all sizes it might not be a good solution for those who need to collaborate on documents: gather information from contractors, collect approvals and signatures. It might also consume more time to move documents out of the ContractWorks and download them each time.

👉 Learn more about 16 different contract lifecycle management software options and their core functionality.

The Bottom Line

Businesses’ operations have always been run on contracts. Contract lifecycle management that includes document creation, workflow and document management directly affects businesses’ performance and revenue. That’s why having an efficient contract lifecycle management is the key to businesses’ efficiency and growth.

End-to-end contract lifecycle management software give you control over the entire contract lifecycle process from document creation to execution of a contract:

• Maintaining a Centralised Document Database
• Standardising the Document Creation Process
• Document Delegation and Co-Drafting
• Automating Document Workflow
• Online Document Signing
• Contract Management and Overview
• Integrating contracts with existing databases

With a digital contract lifecycle management solutions in place, your company can get the most value out of your contracts during each phase of the process and enable business operations to run fast, smooth and riskless.