Whether you are a big or small organization, you will be juggling several contracts simultaneously. Each contract will be at a different stage in its lifecycle and this can result in errors, oversights, and mistakes if you do not properly manage the lifecycle. The right management processes will not only reduce risks but also improve productivity and maximize the value of the contract.
In very simple terms, the contract lifecycle can be explained as the different stages that a contract goes through. These stages include the draft, review, signing, and execution. The lifecycle of a contract begins with a request and ends when the request has been completely fulfilled. This can then lead to contract renewal.
Here are the different steps involved in contract lifecycle management:
Request:
This is the first step in the lifecycle management of a contract. This is an important stage as it will determine when you process the contract on time or battle delays. It involves getting the necessary details related to a new contract, making amendments to an existing contract, or renewing a contract that is about to expire.
Writing:
This stage involves writing down the terms and conditions of the contract by using standard clauses, contract-specific dates, details of the other party, and any other important contract-related data. Basically, you create a draft of the contract.
Negotiation:
In this stage, the stakeholders negotiate the terms and conditions and other parameters that were drafted. Here, all stakeholders discuss the terms and conditions as well as their expectations until they are on the same page.
Approval:
Once the negotiation is complete, the necessary changes are done in the contract. It is here that contract management software can be useful as it enables you to create an audit trail. The approval process allows the stakeholders to review the contract and ensure that the compliance standards, terms, milestones, and obligations listed are as agreed.
Signature:
The authorized signatory signs the contract, thereby clearing it for execution. If your organization opts for contract lifecycle management Excel, it could delay the signing and execution of the contract. Using the right software will enable you to use an electronic signature to hasten the execution of the contract and make the process more efficient.
The Bottom Line
After signing, the parties need to acknowledge their responsibilities and ensure they meet the deliverables. Using software to manage the lifecycle of a contract boosts compliance and also makes it easier to renew it.
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