Procuring items for a place of business has often been a lengthy process in the past. Finding the item that the company needs, agreeing to terms in exchange for an item. Then, finally, acquiring the goods or services needed from the external source who had that good or service. Thankfully, contract lifecycle management software makes it easier to procure goods and services.
What Is Contract Lifecycle Management?
Contract Lifecycle Management (CLM) is when the streamlining of the management of a contract, making it easier to deal with hundreds of thousands of contracts a company may have. This method reduces the risk to the company and misplacing a contract would affect a business in a negative manner.
What Are The Benefits of Contract Lifecycle Management Software?
There are always benefits when properly using the software. The software can either keep track of something, create forecasts, help manage many things. It can even create a budget for a person to follow in budgeting software. CLM software provides four main benefits. Expediting approval processes, transparency, better management of terms, and compliance.
Expediting Approval Processes
In today’s world, things happen quickly and people want things to get done as soon as possible. One of the benefits of CLM software is that it accelerates the process in which contracts are approved. Instead of weeks, or even months, of phone tag or even waiting for approval, the person in charge of approving the contracts could simply have an app for that. All they would have to do is bring up the name of the company, see if they meet the criteria for approval and then approve that company if they do meet the criteria for approval. The company would then receive the notice of approval almost instantly.
Transparency in this instance would be that both companies are operating in a way which facilitates openness, communication, and accountability. This makes easy for others to see what actions are performed. For example, a cashier provides a receipt for the customer, which is a record of what the customer has purchased. In CLM, both sides can see which actions have yet to be taken in the process of the company acquiring the goods or services they need.
Better Management Of Terms
Contracts are put in place to define a business interaction. They are put in place to mitigate risk, establish service levels, manage the number of supplies and suppliers, as well as several other things which can be put into the contract. A contract can also be up to hundreds and hundreds of pages long and can contain countless terms, amendments, and numerous clauses both parties have to abide by. With CLM software, either party can do a quick search to see if their specific inquiry is included in the contract before deciding on a course of action.
Acting per a procedure or rule of what both parties would have to do. There are either regulatory, operational, and even supplier compliance rules both parties must follow in order not to break those laws or operating procedures. CLM software can help both parties navigate the compliance procedures the other, as well as the compliance procedures of third parties. When compliance is not followed, there is a higher risk of data breaches and theft, there will be decreased trust from other business and the credibility of the offender will be put into doubt, and the ensuing fines can hurt the business for years to come.
What Do CLM Software Users Want?
There are a few things those in charge of procurement want and need when it comes to using a specific CLM software. They want:
- More visibility into their contractual risk and obligations.
- To know the state of the contract at any moment
- To Identify and remove inefficiencies related to the contract process.
- Greater compliance in all areas of the contract
In summary, procurement teams are relying on Contract Management Software at increasing rates. If you are a procurement professional, it may be worth investigation.