What is Contract Management Software?

Managing contracts is a critical aspect of any business operation, proper handling of all agreements. However, managing contracts manually can be a time-consuming and error-prone process. That's where contract management software comes in.

Contract management software makes contract processes easier by handling everything from creating to renewing contracts automatically. It centralizes and digitizes contract information, making it easily accessible and searchable. With contract management software, businesses can collaborate more effectively, ensuring efficient contract creation and approval processes.

In addition to simplifying contract management, this software also provides compliance management features, helping businesses stay on top of contractual obligations and regulatory requirements. It automates workflows, reduces manual errors, and integrates with other systems, improving efficiency and data accuracy.

Advanced contract management software incorporates artificial intelligence (AI) capabilities, offering features such as contract intelligence and automation. These AI-powered solutions can analyze contracts, identify risks, and automate routine tasks, further enhancing productivity and risk management.

Whether you are a small or large business, using contract management software streamlines the entire contract lifecycle.

Related Article: Best Contract Management Software In 2024

What is Contract Management Software?

Contract management software refers to a digital solution that helps businesses streamline and automate their contract-related processes. It offers a range of core functionalities that facilitate the management of contracts throughout their lifecycle.

The contract lifecycle refers to the stages of a contract, from creation and contract negotiation to execution and renewal. Contract management software simplifies each stage of this process, making it easier to handle multiple contracts simultaneously.

The core functions of contract management software include contract drafting, negotiation, approval workflows, compliance management, and contract storage. These features allow businesses to efficiently create contracts, collaborate & ensure compliance. A central repository stores all contracts in a single place.

By automating these core functions, contract management software improves the efficiency and accuracy of contracting processes. It reduces manual errors, enhances collaboration among teams, and provides businesses with a comprehensive view of their contractual obligations.

You also might like to read: Contract Management Software Free Trial

Who should use a CLM platform?

Companies that want to handle more contracts without hiring more people like using contract management software. This is especially useful for fast-growing businesses dealing with a lot of contracts.

This handy tool isn't just for one department — it helps different teams in a company. It makes handling contracts easier and helps the company grow better. Here is how a CLM can help each department:

Legal Team

The legal teams play a crucial role in dealing with contracts and overseeing the contracting process. With the help of contract management software, these in-house legal departments find it easier to handle contract templates.

Research from Forrester and Aberdeen indicates that it typically takes about 3.4 weeks to get contracts approved. However, studies suggest that using a CLM tool can cut down the overall time spent on contracting by a whopping 82%. This software isn't just helpful in drafting contracts; it also gives a central place to keep track of all documents. The tool makes the business rely less on legal department, so they can spend more time on important strategic decisions.

Sales Team

Sales teams like it when deals close smoothly and don't like anything that slows things down. A contract management software when implemented, so they can handle business contracts themselves instead of waiting on legal teams.

Many CLM Software works seamlessly with popular customer relationship management (CRM) systems like Salesforce, HubSpot, and others. With salesforce integration, document management becomes sales teams because they can use the tools they already know and like.

Finance Team

Finance teams like things to be straightforward when dealing with contracts. Finance teams ensure contracts align with billing, gaining clarity on expected revenue. Contract management software assists these teams in asking questions, generating detailed reporting stats, and analyzing contracts throughout.

A helpful CLM tool identifies any breaches, provides insights into finances, and highlights any risks associated with the agreement. It reduces risks and allows the finance department to stay proactive, ensuring ongoing compliance with the agreement.

Procurement Team

Procurement teams play a crucial role in managing a company's spending. Making this important function work better doesn't just save money but also makes the overall buying plans better. But, lots of purchasing teams still use manual processes, spreadsheets, and different systems, which causes problems and delays.

Using contract management software is a big help for supply chain & procurement teams. It makes it easy to track spending, makes approving contracts smoother, and helps teams work better with suppliers. This new way of doing things makes purchasing operations work better and gets things done more efficiently.

Contract Lifecycle Management Stages

The contract lifecycle management encompasses 6 key stages: contract request, contract authoring, contract approval, contract execution, contract monitoring & repository, and contract renewal or termination. At every step, contract management software helps with different tasks, making the contracting process smooth and efficient for organizations.

Contract management software provides real-time visibility into the status of agreements, enabling businesses to track compliance, identify issues, and take advantage of opportunities to improve performance. CLM software creates a centralized repository for all buy-side as well as sell-side agreements, allowing legal departments to centrally manage all their agreements and store documents on a unified platform. A CLM software can break down your contracting process into different steps and allow you to seamlessly manage each stage.

1. Contract request

In contract management, the first step is the contract request stage. This is where someone asks for a new contract or changes to an existing one.

Contract management software helps by automating this request process. It provides a standard form that the requester can fill out. This form gathers all the important information needed to start the contract process smoothly.

2. Contract authoring

After receiving a contract request, the next step is contract authoring. In this stage, the parties involved create, review, and negotiate the contract. Contract management software provides a platform where stakeholders can work together on the contract document and make necessary changes.

Additionally, the software includes features like redlining, version history & audit trail for highlighting any edits made to the document. This makes it easier for reviewers to keep track of these changes.

3. Contract approval

After drafting & reviewing the contract, the next crucial step involves securing approval from all concerned parties. Contract management software helps a lot with this. It automatically sends the contract to the right people for them to carefully review contracts and approve it.The software also has a dashboard where these people can easily keep track of how the approval process is going.

You also might like to read: How To Automate Approval Workflow?

4. Contract execution

After progressing through the contract lifecycle, the next step is contract execution. This is when everyone involved signs the contract. Here, the CLM software comes into play with its electronic signature features.

This allows stakeholders to digitally sign the contract without the need for physical signatures. So, getting the contract signed becomes faster and much easier for everyone.

5. Contract monitoring & repository

After signing the contract, it is necessary to regularly check for compliance & obligations. Contract management software helps with this by sending automatic reminders. These reminders tell people quickly about important times in the contract or if someone breaches the contract.

This proactive approach helps organizations carefully fulfill their obligations and avoid breaches. Plus, the CLM software sets up a secure contract repository where you can drop files and keep track of all documents.

6. Contract renewal or termination

In the concluding phase of the contract lifecycle, the focus shifts to contract renewal or termination. During this stage, the contract undergoes one of three outcomes: renewal or termination. The contract management software plays a pivotal role by furnishing a dashboard that presents all contracts. This feature simplifies the process, allowing stakeholders to effortlessly oversee and navigate the renewal or termination procedures.

What are the benefits of contract management software?

An AI CLM software can help organizations manage contracts efficiently and effectively. By standardizing the contracting processes, automating repetitive tasks, improving collaboration, improving visibility, reducing costs, and improving compliance, contract management software can provide significant benefits to organizations of all sizes. As the complexity of contracts increases, the use of a contract management tool becomes more critical to ensure that organizations can effectively manage their contracts and mitigate risks. Here are some of the benefits of implementing a CLM tool:

1. Contract Standardization

Contracts are the backbone of business relationships, and ensuring consistency is crucial. Using the same tone and language helps legal and other departments streamline the negotiations.

With Contract Management Software, you can:

• • Create Standardized Templates: Create standard contract templates that match your company's rules, reducing mistakes and confusion. By making a consistent format, you lower the chance of confusion and errors.

  • Accelerate Drafting: Quickly create contracts using ready-made templates, making sure they're accurate and saving time. This speeds up the whole process of contract drafting, so you can collaborate with external parties faster.

  • Legally Sound Agreements: It is crucial to ensure that contracts are compliant with the law and up-to-date. By following legal standards and regulations, your organization can reduce legal risks and avoid potential disputes.

2. Manual Task Automation

Automating manual tasks saves time and prevents mistakes. Automating tasks enables your legal team to focus on important strategic work, thus boosting overall efficiency.

Here's how contract management software can help:

• • Efficient Workflows: Automate approval processes to reduce manual work and speed up contract cycles. Workflow automation ensures contracts move smoothly through all required steps, from creation to approval.

  • Renewal Alerts: Generate contracts swiftly using predefined templates, ensuring speed and accuracy in contract creation. This expedites the entire contract lifecycle, enabling quicker agreements with partners and clients.

  • Reduced Errors: Standardization helps in maintaining legally compliant and up-to-date contracts. By adhering to legal standards and regulations, your organization mitigates legal risks and potential disputes.

You also might like to read: Effectively Use AI In Contract Drafting

3. Manual Task Automation

Collaboration fuels innovation and contract management software fosters seamless teamwork. By enhancing collaboration, your organization becomes more agile and responsive.

With an efficient CLM, you can:

• • Real-time Collaboration: Cloud-based access allows stakeholders to work together on contracts regardless of their location. With real-time collaboration, remote teams can effectively contribute to contract drafting and editing.

  • Simultaneous Updates: Multiple team members can make real-time updates to contracts, improving communication and decision-making. Collaborators can work simultaneously on different sections of a contract, enhancing productivity.

  • Version Control: Maintain a clear history of contract changes, ensuring everyone is on the same page. Version control prevents conflicting edits and ensures the accuracy of contract content.

4. Improved Contract Visibility

Visibility into your contract landscape is vital for informed decision-making. Enhanced visibility empowers your organization to make well-informed choices and strategic moves.

Contract management software offers:

• • Centralized Repository: Store contracts in a single, accessible location for easy tracking and reference. A centralized repository simplifies contract retrieval and minimizes the risk of misplaced or lost agreements.

  • Performance Metrics: Monitor contract statuses, important dates, and key performance indicators. Access to performance metrics allows you to assess the effectiveness of your contracting strategies.

  • Risk Mitigation: Identify potential risks and opportunities using real-time insights from your contract data. Improved visibility helps in making proactive decisions to address risks and capitalize on opportunities.

5. Reduced Administrative Costs

Managing contracts manually leads to high contract administrative costs. By reducing these costs, your organization can function more efficiently and make better use of resources.

Contract management software offers:

• • Minimize Paper Usage: Cut costs by digitizing contracts instead of printing and storing saving on paper, ink, and storage.

  • Efficient Time Use: Automation saves time on paperwork, so people can work on more important things. They can concentrate on tasks that help the business grow.

  • Optimized processes: Making workflows smoother makes contracting faster, saving both time and money. When things run efficiently, people spend less time on contract-related tasks.

You also might like to read: How To Measure Legal ROI: A Simple Guide

6. Improved Business Efficiency

Efficiency is crucial for business success. When your organization runs more efficiently, it can serve customers better and adapt quickly to changes in the market.

Contract management software enhances efficiency through:

• • Automated Workflows: Automation speeds up the process. Automated workflows make sure that contracts move smoothly through different stages without any delays.

  • Standardized Procedures: Having the same steps for every contract reduces errors and delays. Standardization helps each contract follow the same process, so there's less confusion and better efficiency.

  • Swift Approvals: Getting contract approvals faster means quicker business transactions and decision-making. A streamlined approval process guarantees quicker closure of business deals.

7. Improved Compliance

It's important to ensure you follow all the obligations in your contracts. When you automate keeping track of all compliances, you protect your company's reputation and money.

Contract management software ensures:

• • Automated Workflows: Contracts are in line with legal and regulatory rules. The CLM tool assists in creating contracts that comply with specific industry regulations and guidelines.

  • Standardized Procedures: The tool sends you notifications for upcoming deadlines, so you can act on time. These alerts help avoid contract lapses and make sure you keep your promises.

  • Swift Approvals: Reduced risk of non-compliance and associated penalties. By automating compliance tracking, you reduce the chances of missing important contractual obligations.

8. Timely Alerts & notifications

Make sure you never forget an important deadline again. With timely reminders, your organization stays on schedule and can plan to avoid any issues.

With Contract management software you can:

• • Automated Notifications: Get reminders for important contract terms like deadlines, renewals, and payments. These reminders keep you informed about all deadlines.

  • Client Relationship: Sending reminders on right time helps build strong relationships. When you keep your meet your committed deadlines, it shows that you are reliable.

  • Enhanced Accountability: People involved in contracts remain responsible for their tasks. Reminders help them stay on track and make sure contracts move forward smoothly and on time.

You also might like to read: How to choose the right CLM software

How to evaluate a CLM Software?

Choosing the right contract management softwareis important for legal professionals who want to improve their contract processes. With many options available, it's important to pick one that fits your business's specific criteria well.

Volody's CLM solution has an OCR engine that makes it easy to turn static documents into digital files. You can upload a bunch of contracts at once and the software will pick out the important information from them. It also sends automated reminders for renewals and obligations.

Volody's AI analysis risks and notifies you of any risky terms in your contracts with third parties. It also offers clause suggestions by providing terms based on your past agreements. A good contract management software should integrate with ERPs, CRMs, and popular e-sign tools.

Here are a few things to look out for when implementing CLM software into your business:

1. Identify Your Needs:

Before you start picking contract management software, it's crucial to look closely at what your organization needs. This means carefully thinking about questions like:

• 1. How many contracts your organization deals with?

  2. How big is your organization?

  3. Who participates in the contract management process?

  4. What are the major issues in the current contracting process?

  5. Which features are a must-have?

  6. What is the budget?

After identifying the answer to these questions, you will have a better insight into what you are looking for.

2. Assess User-Friendliness:

After identifying the needs of the business, the key to any good software is how easy it is to use. That's why it's important to pick a contract management platform that's easy for people to use.

The software should have a simple and easy-to-understand interface, so business users can figure out how to use it quickly. It's even better if there's a mobile app available. This is helpful for people who work remotely or need to manage contracts while they're away from their desks.

3. Customization Flexibility:

Each organization has unique needs for managing contracts. It is crucial to choose a contract management tool that allows room for customization. This flexibility ensures that your organization can seamlessly tailor the software to fit its specific working methods. This involves things like custom workflows, custom fields for contract creation, and generating MIS reports.

4. Integration Capability:

In today's interconnected digital environment, it's crucial that contract management software seamlessly works with your current systems. When choosing software, make sure it integrates easily with your existing systems like CRM or ERP platforms. This integration not only makes your processes smoother but removes manual data entry, reducing mistakes and boosting efficiency.

5. Prioritize Security:

Contracts hold important and private information. That's why, when thinking about contract management software, it's crucial to focus on security features. Look for software that has strong security measures like encrypting data and controlling user access at different levels.

By making sure your contracts and data are secure, you're protecting your business. Volody's CLM hosts on AWS and holds ISO 27001 and SOC-2 certifications, securing your data.

6. Support and Training:

Moving to new software can be tricky, and it's crucial to have good customer support. Make sure the CLM software you choose has all the help you need, like online guides, manuals, and a support team that's quick to respond. Having these resources means your team can learn how to use the software well and fix any problems that come up.

7. Evaluate Pricing and Scalability:

Considering your budget is important when choosing contract management software for your organization. Make sure to check how much it costs and if it fits your budget. Look for software that has different pricing options based on the size of your organization and the number of contracts.

A free plan would be better to test the software and its use cases. Also, make sure the software can grow with your organization as it expands, so you won't have to switch to a new system.

AI-powered contract management software

Volody is one of the best contract management software out there in the market. Volody's contract management platform leverages advanced AI and ML technologies to provide end-to-end contract management.

With Volody, you can extract key contract details from contracts, analyze contract terms, and identify risks and opportunities. Volody automates the contract creation process, approval workflows, and risk management, reducing manual errors and boosting the contracting process.

Volody's user-friendly interface and intuitive workflows ensure a seamless user experience. Organizations can easily customize Volody to suit their needs and integrate with all systems used in the legal industry.

Volody's CLM software uses AI to make contract management easier. It helps modern businesses work better by improving efficiency, managing risks, and provides a strategic advantage in managing contracts.

Volody's AI contract management software can also integrate with ERPs, Payroll systems, CRMs, and all leading e-signature platforms like DocuSign, Adobe Sign, etc.

Features of Volody's AI CLM Software

1. Contract intelligence: It extracts important data from contracts, analyzes contract terms, and identifies risks and opportunities. This contract intelligence helps businesses make smart decisions and deal with risks effectively.

2. Contract automation: Volody's AI automates everyday tasks like creating contracts, approving workflows, and managing risks. This automation cuts down on mistakes, gives contract managers more time, and speeds up managing contracts.

3. Risk mitigation: Volody's AI examines contracts to spot possible problems, risky terms, or missing clauses. When businesses know about risks early, they can do things to stop them from causing trouble later on.

4. Clause Suggestion: Volody's AI runs through your past agreements and suggests clauses to help you shorten the review time. You can also send clauses for approval individually rather than having to send the entire clause.

5. Contract Summary: Volody's software offers an easy-to-understand summary without legal jargon. It doesn't have any legal jargon, so people from other departments can understand the contract easily.

6. Efficiency and productivity: Volody's makes processes easier, reduces the amount of paperwork, and makes everything work better and faster. AI helps with tasks that repeat a lot, so contract managers can spend more time on important things.

FAQs regarding Contract Management Software:

1. What is contract management software?

A contract management system is a digital solution that helps businesses streamline, organize, and automate the entire contract lifecycle. It facilitates tasks such as contract creation, approval workflows, storage, tracking, and compliance management.

2. How to Choose Contract Lifecycle Management Software?

When picking contract lifecycle management (CLM) software, consider factors like size, industry, and needed features. Look at integration, user-friendliness, scalability, and pricing. Read research options, read reviews, and request demos from trusted mediums to ensure alignment with your needs.

3. Who uses contract management software?

Different professionals and business verticals like legal, procurement, sales, marketing, and finance actively use CLM software. It's super helpful for business verticals dealing with lots of contracts and complicated rules.

4. Is contract management software suitable for small businesses?

Contract management software can grow with your business and helps companies of any size save time and money. Even small businesses can use it to work more efficiently and keep up with the competition by automating tasks.

5. Can contract management software integrate with other business tools?

A lot of contract management software solutions can connect with CRM and ERP systems such as HubSpot and Salesforce. This makes things more efficient and keeps the data consistent. When these systems work together, they can easily share information without any problems.

6. Can contract management software help with regulatory compliance?

Yes, contract lifecycle management software can automatically track compliance, making sure contracts follow the law. By using automated compliance checks, companies lower the chance of breaking rules and facing fines.

To conclude,

Contract management software is really important for businesses today. It helps make things run smoother and reduces risks. This software has great features like automation, tools for following rules, and can easily work with other systems. It's useful for all kinds of industries and departments.

Using Volody's contract management software improves the contracting process by speeding things up and aiding in decision-making.

When you're picking the right software, think about things like how much it costs, if it can grow with your business, and if you can get help when you need it. It's important to plan carefully when you're putting in contract management solutions to avoid common problems. Keep up with how technology is changing so you can help your organization succeed with good contract management.