Your guide to error-free contract lifecycle management

Whether you're just wrapping your head around the intricacies of contract lifecycle management or you're an IT leader aiming to lift your team out of the quagmire of manual contract handling, you’ll know that CLM is a strategic approach to contract management across all stages of the contract cycle: draft, generate, negotiate, implement, archive, monitor, renew and terminate contracts. In CLM, contract management starts not only when a contract is signed but already during its initial draft. The contract lifecycle ends either with its renewal or termination and archiving.

To achieve this, CLM standardizes processes so that they are systematic and efficient at the same time. In concrete terms, this means that understandable contract processes can reduce costs and risks end-to-end.

Building on the strategic framework of CLM, digital solutions enhance these efforts with significant benefits that align with your broader business objectives. Here’s how digital contract lifecycle management advances your operations:

• It puts contract processes in context with business processes.
• It minimizes compliance risks through increased transparency in processes.
• It saves time through automation and thus relieves employees.
• It minimizes the susceptibility to errors in processes and increases legal security.

Businesses that digitalize contract processes are ultimately more agile. There is a simple reason for this: CLM software continuously optimizes contract processes. For example, when you manage contracts in a document management system (DMS), you're kept in the loop of the following at all times:

• Where contract documents are located,
• What information they contain,
• Who created and last updated it, and
• When the next contract deadlines are due.

Managing contracts on an ongoing basis means managing them throughout their lifecycle. This consists of five stages:

Step 1: Draft and create a contract

The contract lifecycle begins with template management. All the commercial activities in a business are based on contracts. It would be too time-consuming to draw up individual contracts for each employment contract, supplier contract, or service contract. Instead, companies can use templates to draw up contracts based on the same pattern and then standardize the content.

Contract templates therefore define the structure of a contract but also relevant information. For example, a standardized business contract contains legal information, such as deadlines, clauses, and contractual penalties. Text modules, i.e. fields that are automatically filled with organiztion-specific data, simplify the creation of individual contracts.

Here’s how the first stage of the contract lifecycle looks, based on the example of an employment contract:

• You select a contract template depending on the type of contract; in our example this is an employment contract for a full-time position.
• A query screen requests all the relevant information, such as the new employee's master data, salary information, fixed-term contract, probationary period, location and more.  
• The system then automatically fills the placeholders in the contract template with the information specified.

Using templates not only speeds up the creation of contracts but also cuts down on errors compared to traditional methods. This modern approach isn't just efficient—it's also becoming the standard. Chances are that your competitors are already using it.

Step 2: Review and approve the contract

The review stage is a critical part of contract lifecycle management. This step involves the legal team assessing the generated contract based on potential business risks. The review process typically includes performing a risk assessment or managing risks directly. For simpler contracts, such as standard purchase agreements or employment contracts, a full legal review might not be necessary. However, these should still adhere to the four-eyes principle to ensure accuracy and thoroughness.

The four-eyes principle entails:

• Dual approval: Requires that at least two individuals approve any action, increasing accountability and reducing the likelihood of errors.
• Increased scrutiny: Each document or decision is reviewed by more than one person, decreasing the chance of oversight.
• Shared responsibility: Responsibilities are distributed among multiple individuals, which is crucial for critical or sensitive decisions.
• Enhanced security: Acts as a safeguard against fraud and data breaches, especially in financial and sensitive transactions.

After review, the contract is ready for signature.

Step 3: Sign the contract

In stage three, you sign the contract and present it to your contract partner. Using electronic signature systems such as DocuSign, you can sign digitally and legally. Once the contract is signed, all terms and conditions are legally binding.

Step 4: Monitor the contract

Contracts are not merely signed and shelved; they demand continuous oversight to remain effective. At the heart of contract lifecycle management is the nuanced task of risk management coupled with the precise monitoring of deadlines. This ensures that each contract is not only a formal agreement but a dynamic, evolving framework capable of adapting over time.

Activities such as assessing extension possibilities, scrutinizing notice periods, and gearing up for renegotiations with business partners are essential to this process. The necessity for renewal often arises when new laws reshape the landscape or when the practical details of business diverge from previously agreed terms.

Step 5: Archive contract

Contract management concludes with archiving once a contract has run its course. Legally, businesses are obligated to retain contract documents for at least six years, and with versioning in place, every contract is archived in a traceable, complete manner—forming the backbone of audit-proof storage.

Digital systems take this a step further. Not only do they securely store contracts, but they make them searchable and accessible at a moment’s notice. Beyond being simply convenient, it ensures that key information is always on hand, especially when audits or review processes require a closer look.

Top enterprises are quickly leaving behind the inefficiencies of manual contract management, turning to platforms like Doxis to stay ahead. With Doxis, you can manage every aspect of a contract’s lifecycle—from planning and creation to digital signatures, administration, deadline tracking, and even adjusting contractual terms.

As an enterprise content management (ECM) system, Doxis does more than just handle contracts; it streamlines the entire process, allowing businesses to work smarter, reduce risks, and keep their contracts aligned with ever-changing needs.

Template management in Doxis in the CLM planning stage

In Doxis, the contract lifecycle kicks off with the drafting phase. You work with either document templates or text modules, both designed to streamline the process. Document templates are particularly useful for contracts as they follow a standard structure that varies by contract type. For instance, an employment contract will look different from a purchase agreement. By creating templates in Doxis, you can quickly fill in standardized contracts with the specific details you need.

Here’s how it works:  
For each contract type—such as a rental agreement—you generate a query screen that includes placeholders for essential information. In a rental agreement, this might include details like the rental unit, contract period, and property location. The query screen also covers standard fields like notice periods and liability. The result? A faster, more efficient way to draft contracts that are customized yet consistent.

Hey Doxi, what does the contract management process look like in Doxis?

As we've demonstrated throughout the article, contract lifecycle management, to a layperson, might conjure the picture an office worker buried in paperwork, but it’s far more than that. It's about establishing a seamless process that guides contracts from their first draft to their final archive. With enterprise content management systems like Doxis, structure and visibility take center stage, reducing risks and ensuring legal compliance is always upheld. These systems also offer the agility to adapt swiftly when laws or contract terms shift, keeping processes relevant and efficient. ECM turns contract management into a streamlined, controlled and precise operation, moving far beyond the inefficiencies of traditional methods. And now is the perfect time to get on board and harness this technology for yourself.  

Get in touch today! Our experts will be happy to guide you through the capabilities of Doxis and the impact it will have on your contract lifecycle management.

FAQs about contract lifecycle management