From Procurement to Sales, from Operations to Human Resources, all areas of business deal, directly or indirectly, with formalizing and managing contracts. As this document’s lifecycle develops throughout many of those areas, it becomes a coordinator between them.
Each department has its own particularities, yet they need to work together to reach the institution’s common goal. While Suppliers are focussed in negotiating the contract so that it meets the company's needs, the legal department tries to mitigate risks, as the Financial team assesses the transaction’s viability and so on. When these directives are not aligned, it is hard to ensure the operation’s success.
If contracts cross and connect all those areas, the management of these documents is indissociable from the management of the company itself.
Optimizing contract management through CLM
CLM, or Contract Lifecycle Management, is a set of practices aimed at the promotion of an efficient administration of contracts, taking into consideration all stages of an agreement, from the initial negotiations through signature, without forgetting the execution of obligations and data extraction.
In this text we will present some examples of contracts that run through the company’s operations, and can be managed in a more efficient way by implementing a good CLM software.
Sales and service contracts
Areas that deal constantly with suppliers tend to handle a large volume of legal agreements. Amongst them are sales and service contracts.
These documents engage in a more substantial way suppliers and consumers, who interact with areas such as Procurement, Sales and Finance. Other departments frequently called upon to enter contracts and to manage suppliers are Legal, I.T. and Marketing, for instance.
A sales or service contract can be fully managed via CLM softwares, such as netLex, to
- Structure models pre-approved by the Legal department, to be completed through a simplified questionnaire, with alteration control and automatic recording of all modifications to the text;
- Automatic engagement of the Financial and Legal teams in specific and predetermined hypotheses, with SLA control and visibility as to those responsible for the review.
- Include external agents in the negotiation process, via unified platform, to interact directly with the supplier, while keeping a full record of communication.
Corporate Minutes
The process of managing corporate minutes, from drafting to approval and registration is a major challenge for companies of different sizes, especially if they do not use technology to optimize the workflow.
As a rule, managers and lawyers are more involved in these document’s dynamics.
A consistent CLM strategy, allied with technology solutions such as netLex, allows:
- Gather in a centralized repository the various versions of constitutional documents, minutes and contractual alterations;
- Set different permission levels, depending on each company’s particularities, reducing the frequency of access requests;
- Fill documents via simple questionnaires, reducing the risks of mistakes and ensuring that all relevant information is included.
Employment Contracts and Non Disclosure Agreements
Contracts involving companies and collaborators also engage several business support functions. An employment contract must, for example, be well adjusted by the Legal Department to reduce the risk of litigation, be in accordance with what has been negotiated with the Human
Resources department, as well as to be within what was authorized by Finance.
Tha same can be applied to Non Disclosure Agreements, whose terms must be planned in detail by lawyers, and may vary in light of the different levels of access conferred to an employee for the exercise of their activities.
Of course, the larger the company, the greater the volume of these documents, and the management of all of them can become a nightmare. A well implemented CLM strategy eliminates this scenery, allowing for:
- Draft elaboration by the legal team, with limits to alteration, since these are documents that carry high legal risk and so must be well adjusted internally;
- Engage external users, as the prospect candidate, and integrate with e-signing apps, to accelerate the process of revision and conclusion.
- Set different access levels to the documents, to ensure visibility to the legal team, at the same time as strategic information is protected.
Connected through contracts
The great value generated by the connection between different teams of a same company is the increase in agility, and the reduction of failures and friction in internal procedures. Considering that most of these interactions take place during a contract’s lifecycle, it is possible to affirm that the management of these documents is fundamental to the success of a company’s operations.
Hence, contract management must be conducted with the utmost efficiency. A good CLM software, as netLex, is an excellent tool to achieve this goal.
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