Contract Lifecycle Management (CLM)

How to manage your contracts?

Philipp Rosenauer
Partner Legal, PwC Switzerland

We’re living and working in a quickly developing legal environment. There are more international connections and opportunities than ever. We build new business relationships with worldwide clients, partners, providers, suppliers and employees. Contracts form the groundwork for all business deals and relationships. So, to build, maintain and renew business relationships, coherent and structured contract management is necessary.

Every business is focused on achieving growth in revenue and the overall size of their company. Contracts stand behind every first step towards that growth. Some statistics suggest that companies can lose up to 9% of their annual revenue to inconsistent and insufficient organisation, maintenance and updating of contracts. Therefore, a holistic overview on the whole lifetime of a contract is indispensable.

Contract Lifecycle Management (CLM) is a proactive way to accelerate your business performance and improve cost savings and efficiency. A CLM enables automated and integrated contract processing during the key stages of the so-called Contract Lifecycle Management System (CLMS). A CLMS tackles the typical challenges in contract management and provides a clear overview.

Typical challenges

Predominantly, the difficulty with contract management is the lack of oversight. The required information and documents are missing, non-retrievable or the current status of the contract is unclear. This leads to repetitive searching for the right version of contracts or gathering signatures and approvals. Extensive human resource efforts and manual work are required to finally get the contract ready. Often, clear responsibilities throughout the contract development stage are not assigned. The missing oversight and the high level of manual work go hand in hand with a lack of sufficient technology to organise, search, audit and automate the contract management process.

There are potential liabilities and sanctions risks arising from the lack of a document overview and contractual penalties. The lack of overview and technology can lead to missing deadlines and the non-renewal of client contracts.
In conclusion, insufficient contract management always reacts to problems instead of creating proactive work. The CLMS follows a stage-by-stage process to ensure the creation, saving, reporting and renewal of the contract.

Insufficient contract management always reacts to problems instead of creating proactive work.

Philipp RosenauerPartner, Legal, PwC Switzerland

Why is a CLMS necessary?

Contracts go through multiple stages during their lifecycle and require different kinds of attention. From the request through to execution, different people must attend to the contract’s creation and review. Post-execution contracts need careful and structured storage. Reliable storage enables the supervision of the contractual obligations, quick retrieval of contracts for future reference, and notifications of deadlines and renewal dates.

A CLMS ensures successful and efficient attendance throughout the entire lifecycle. Additionally, it tracks and analyses the contract lifecycle to conduct audits and statistics to identify inefficiencies.
The CLMS gives technical support at every stage. However, a CLMS needs to be adapted and adjusted to the subjective and demanding lifecycle and type of contracts within the business.

Benefits and opportunities

By implementing a CLMS and best practice recommendations on contract management, companies maintain an overview of the contract lifecycle and are able to allocate workload, resources and responsibilities more efficiently, reduce manual work, increase cost savings and the quality of the delivery, and ensure compliance and best performance on contracts.

New technological opportunities like AI will play a major role in future contract management. To make use of these new opportunities quickly and efficiently there must be sufficient contract management in place.

We always look out for and develop new ways to enhance contract management and IT.

Our team provides help to understand, assess and enhance your contract management and proposes the best recommendations for you in line with industry leading practices. We’re looking forward to helping you achieve a value-adding contract management transformation.