Best Contract Management Software for Streamlining your Sourcing & Procurement

Contract Lifecycle Management (CLM) involves all processes for the end-to-end management of activities related to contract creation and modification, execution, and management. The contract lifecycle is a seven-stage process:

1. Contract initiation: The process begins with a request for a new contract or a review of an existing one. 
2. Contract creation & authoring: It refers to the process of creating a contract from pre-existing and authorized templates and provisions, as well as a set of business regulations.
3. Negotiations & review: The contract is shared with the opposite party at this stage, and the process of reviewing and negotiation begins.
4. Approvals & Execution: A contract is required to be approved by various stakeholders. The contract’s execution by e-signature ensures compliance and efficiency.
5. Analytics & Performance: It is critical to understand how the contract works. Understanding and executing the different milestones and monitoring payments are crucial to realizing the value inside a contract. Also, as regulations change, certain contracts may need to be changed to reflect the new environment.
6. Contract amendments: After the contract is signed, adjustments must be handled quickly and without jeopardizing the process or established criteria.
7. Contract expiry or renewal: Contracts should be renewed on the expiry of the contracts. Both parties get an opportunity to renegotiate terms and take advantage of future opportunities during renewal.

Contract Management is a critical step in procurement as it’s the contract that defines your relationship with your suppliers, vendors or service providers. Effective Contract Management in procurement helps to ensure suppliers and buyers adhere to their agreed contractual obligations and it allows for negotiating any future changes that need to take place. Contract Management in procurement helps to ensure products/services are bought at the negotiated and agreed-upon price, they are delivered on time, regularly assess if the purchases made conform to quality standards, and so on.  Managing contracts in procurement involve the following processes:

• Managing contracts’ legal documentation for establishing professional connections with vendors.
• Management of contractual terms and conditions as discussed and negotiated.
• Monitoring and executing agreed contractual schedule, deliverables and payment milestones. 
• Assuring that the terms and conditions are being followed.
• Documenting and reaching an agreement on any modifications to activities performed by the parties involved.

Contract Management is an important part of any organization’s sourcing and procurement process. Here are some Contract
Management best practices that can help increase the efficiency of sourcing and procurement functions, minimize expenses and improve the company’s performance:

• Prioritizing supplier management and service-level-agreements:

Procurement Contract Management software can provide end-to-end visibility by allowing contract data to be standardized at the organizational level, as well as monitoring and managing contract terms, and providing vital supplier information.

• Getting rid of manual processes required for negotiations and generating purchasing orders:

Comparing and manually assembling supplier offers can be time-consuming. By automating the process of negotiation and supplier identification, best practices for achieving the desired results may be realized.

• Improving the productivity of the procurement process:

Adopting a centralized contract repository can help procurement teams conveniently manage contract data. Contract digitization helps reduce operational expenses and increase productivity.

• Keeping track of terms and expenditures:

Increasing the possibilities for further savings and operational effectiveness in the sourcing and procurement departments can be done by establishing expenditure transparency.

• Maintaining supplier relationships:

Developing a positive connection with a supplier can help organizations in obtaining supplies during difficult times, resolve and negotiate contract disputes easily.

• Recognizing KPIs:

To increase the value of your Contract Management system during the procurement process, keeping track of the three most important KPIs – contract effectiveness, contract risk and contract efficiency is essential.

• Performing regular audits:

It is critical to audit contracts regularly to monitor contractual performance and detect any risks across company agreements.

Procurement software when integrated with a Contract Management solution can centralize bidding processes, Contract Management processes, and contract records as well as help in tracking the vendor contract expenditure for the procurement budgets.

Contract Management software allows you to easily handle all components of a contract in one location. There are several advantages of using digital contracting:

• Minimize contract creation time: Digital collaboration tools, documented modifications and automated review management tools help to expedite the reviews and negotiations.
• Improve contract visibility: Users can search & view the complete history of contracts including all the versions, amendments, approvers, hierarchy, and updates.
• Simplify compliance management: With automated Contract Management tools, it is easier to monitor and track compliance with contract terms and conditions.
• Enhance risk mitigation: Digital contracting helps in minimizing risks by tracking and monitoring important contract milestones, events, etc. and helps in the identification of contracts that require revisions due to regulatory changes.

Contract Management software provides several features and advantages that can assist in tracking and managing the complete contract lifecycle, starting from contract initiation to post-execution compliance tracking. Some of the essential features that must be present in Contract Management software are:

• A centralized repository of contract documents and important information with advanced search functionality.
• Ability to create/author new contracts or revise existing ones.
• It should assist in delivering timely reminders, alerts, and notifications about critical contractual milestones, impending renewals as well as warnings about non-compliance incidents.
• Feature to standardize contract types and governance norms.
• Should consist of contract templates and pre-approved clause libraries.
• Ability to provide customized security based on roles or features.
• Capability to sign contract agreements electronically.
• Provides user-friendly dashboard features.
• Functionality to manage workflow and approvals for internal as well as external stakeholders.

Contract repository software is a centralized location for the storage of contracts. The following are the major features that should be present in contract repository software:

• A hierarchical access control feature that ensures only the people with the appropriate set of permissions can access critical contract data from the repository.
• Integration adaptors that link cloud contract repositories to your corporate data.
• Powerful search capabilities that allow users to search terms through the contract portfolio.
• Advanced analytics capable of transforming gathered contract data into meaningful insights.
• Document reader feature that allows users to view any form of document without switching systems.