From procurement and finance to legal and operations, organizations depend on meticulously structured contracts to mitigate risks, control costs, and enhance operational efficiency. This makes effective contract lifecycle management (CLM) an indispensable tool for success.
Yet, if you lack a streamlined approach, you may face contract bottlenecks and compliance challenges, not to mention financial losses. Research indicates that organizations can lose up to 9.2% of their annual revenue due to contract mismanagement. It’s an easy fix, but you need a structured approach – and the right technologies to support it.
This blog explores the growing importance of CLM tools and how modern Contract Management Solutions can help businesses cut costs, reduce risk, and improve collaboration. You’ll learn about the ways in which CLM solutions enhance efficiency across departments and the benefits of adopting an automated, digital-first approach to contract management.
What is Contract Lifecycle Management (CLM)?
First, let’s begin with Ivalua’s definition. CLM is a comprehensive solution designed to streamline and digitize the entire contract process, encompassing creation, authoring, negotiation, approval, and ongoing management throughout the contract’s lifecycle.
Seven key stages of the contract lifecycle:
- Contract Request / Intake: Encompasses the collection of needs, information, documents and details from the end user.
- Contract Creation & Authoring: Standardized templates and clause libraries ensure consistency and legal compliance while accelerating contract drafting.
- Negotiation & Approval: Collaboration tools and version control enable seamless back-and-forth negotiations, ensuring transparency and efficient approvals.
- Execution & Storage: Electronic signature integration speeds up execution, while a centralized repository secures contracts for easy access and audit readiness.
- Obligation & Compliance Tracking: Automated alerts for renewals, payments, and service level agreements (SLAs) help maintain compliance and mitigate risks.
- Renewals, Termination, Amendments: Management, tracking, and execution extending, amending or terminating an agreement.
- Analytics & Optimization: AI-powered insights improve contract performance, cost savings, and risk management, helping businesses make data-driven decisions.
Effective CLM reduces administrative burdens while improving contract visibility and enforcement, so your business can keep pace with the evolving and increasingly complex regulatory and commercial landscape. However, like with any business process, there are challenges to implementing effective CLM processes.
In the next section, we’ll explore the most pressing challenges that can get in the way of your CLM efforts.
Common Challenges in Contract Lifecycle Management
When it comes to CLM, many organizations struggle with human error, fragmented processes, and lack of visibility, all of which can lead to financial and legal risks.
Without a structured approach, contracts are difficult to track and it’s easy to miss obligations. Organizations may lose opportunities to optimize supplier relationships and revenue, as well.
Below, we explore the biggest contract management challenges across procurement, finance, and legal teams.
Procurement Challenges
Procurement teams depend on contracts to set clear expectations with vendors and ensure smooth tracking of service delivery. However, poorly organized contract lifecycle management processes can lead to significant disruptions and negatively affect overall operations.
Ensuring suppliers consistently meet contractual obligations and adhere to industry regulations can be challenging. Disconnected systems complicate the process, making it difficult to streamline approvals, negotiations, and contract execution. Additionally, limited visibility into contract terms and performance metrics hinders the effective enforcement of service level agreements (SLAs).
Finance Challenges
Contracts play a critical role in shaping payment terms, revenue recognition, and overall financial planning. Ineffective tracking can result in unexpected expenses, operational inefficiencies, and misalignment with key financial objectives. Without proper monitoring, businesses risk late payments, penalties, and even revenue leakage, all of which can significantly impact financial performance.
Finally, a lack of clarity on contractual terms can lead to miscalculations in revenue recognition and expense forecasting, with devastating financial consequences.
Legal Challenges
For legal teams, managing contract risk and ensuring compliance with evolving regulations is a constant challenge. Manual processes slow down contract creation and approval, leading to:
- Increased legal risk: Poorly managed contracts can expose the organization to liability, disputes, and contract breaches.
- Regulatory non-compliance: Laws and industry regulations change frequently, requiring constant contract updates and oversight.
- Time-consuming approval cycles: Lengthy contract review and approval processes delay business transactions and revenue recognition.
High Costs of Manual Processes
Organizations still relying on manual contract management face inefficiencies and human errors that can directly impact profitability and compliance. From missed renewal deadlines to inaccurate financial reporting, the inability to effectively manage contracts can cost businesses millions in lost revenue, fines, and operational bottlenecks.
To mitigate these challenges, companies need an automated, centralized CLM solution that enhances visibility and ensures compliance across procurement, finance, and legal functions.
How CLM is Transforming Procurement, Legal, and Finance Professionals
Contract Lifecycle Management (CLM) solutions are transforming how procurement, legal, and finance teams handle contracts. By streamlining processes, they enhance compliance, boost operational efficiency, and drive significant cost savings. Here’s a closer look at the key benefits these solutions bring to the table.
CLM for Procurement: Enhancing Vendor Management
With a centralized CLM system, procurement professionals can align vendor agreements with company goals, ensuring service level agreements (SLAs) are met and contract terms are enforced. The ability to automate contract execution accelerates vendor onboarding and reduces delays in approvals and signatures, as well.
Additionally, CLM provides better visibility into contract renewals, allowing procurement teams to renegotiate more favorable terms.
CLM for Legal: Mitigating Risks and Simplifying Compliance
CLM platforms centralize contract storage, making it easier to track, retrieve, and audit agreements while maintaining a complete record of contract changes. What’s more, CLM strengthens risk management by structuring agreements with enforceable terms and clearly defined termination clauses, helping to prevent disputes and penalties.
CLM for Finance: Managing Costs and Financial Obligations
With real-time visibility into contract terms, finance professionals can leverage CLM to accurately track financial obligations, so that payments, renewals, and revenue forecasts align with budgetary expectations.
CLM assists with cost analysis by enabling financial professionals to evaluate contract value against financial performance and help to pinpoint waste and identify cost-saving opportunities.
If you’re looking to get started on planning a successful contract management transformation, check out our CLM transformation checklist to get started planning
Generative AI (IVA) Use-Cases for Contract Lifecycle Management
Now that we understand the benefits of CLM, let’s dive a little deeper into one of the key technologies driving improvements in contract management – specifically, Generative AI. Leading organizations are leveraging AI-powered assistants, such as Ivalua’s Virtual Assistant (IVA), to significantly reduce manual effort, enhance accuracy, and improve efficiency.
This section explores how AI-driven contract management automation is transforming and streamlining contract workflows, bringing smarter, more efficient solutions to the table.
AI-Powered Contract Request Intake
Collecting request information and documents can be difficult, disorganized, and span multiple modes of communication (such as email, chat, etc.). Solutions like Ivalua’s Intake Management solution enable contract request processes with Ivalua’s GenAI powered chatbot IVA to conversationally collect information and fill out the request form automatically through question and answers, as well as extracting data from contracts dragged and dropped into the chatbot. IVA will then “triage” the request, suggesting the right contract process, and engage the right stakeholders at the right time.
AI-Powered Contract Drafting and Summarization
Drafting contracts and summarizing legal documents can be time-consuming and labor-intensive, requiring legal teams to meticulously review every clause for accuracy and compliance. With an AI-powered assistant like Ivalua’s IVA, contract summaries can be generated in seconds, providing a clear, concise breakdown of key terms, obligations, and risks.
Need to ensure a contract includes specific legal provisions? AI can be used to instantly draft new or modify existing contract clauses based on predefined requirements, helping you to craft enforceable and compliant agreements.
Rapid Information Extraction from Lengthy Contracts
Instead of manually scanning a 40-page supplier agreement or a detailed ESG report, you can use IVA to extract relevant data, clauses, and insights in minutes.
For example, instead of searching through a 10-K filing for financial risks or vendor obligations, users can simply ask a virtual assistant to find the information for you. With instant access to the information you need, your team can make decisions faster and shift their focus to other high-value work. Read the IVA Generative AI Datasheet to learn more.
Data Capture, Clause Analysis and Risk Assessments
Managing contracts efficiently is critical for organizations to mitigate risk, ensure compliance, and drive operational efficiency. Ivalua’s Contract Lifecycle Management software provides a centralized, AI-powered platform to streamline contract creation, approval, execution, and renewal processes.
Ivalua’s end-to-end AI contract management software enables:
- Faster contract creation with clause libraries and templates
- Seamless collaboration between internal teams and external stakeholders
- Automated alerts to track renewals, obligations, and compliance risks
- AI-driven insights to optimize contract performance and supplier relationships
By integrating automation, collaboration, and real-time insights, Ivalua’s contract lifecycle management software helps procurement, legal, and finance teams be more efficient and stay compliant, while gaining complete visibility into their contractual obligations across suppliers.
Unlocking Contract Intelligence with AI
Ivalua’s Contract Data Capture solution leverages AI-powered document extraction to automatically recognize, categorize, and extract key contract information – eliminating the need for time-consuming manual review.
Ivalua’s intelligent virtual assistant (IVA) enables you to:
- Instantly extract key terms such as payment schedules, SLAs, and renewal clauses
- Extract, monitor, and manage contract obligations throughout their lifecycle
- Gain immediate insights from long, complex agreements without manual searching
- Ensure data accuracy and compliance by validating extracted information against predefined rules
Using AI-driven contract intelligence, you can minimize risk, enhance decision-making, and maximize contract value.
Learn more about Ivalua’s Contract Data Capture capabilities.
From Fragmented to Integrated: How Ivalua Transformed Transmountain’s Procurement
Many organizations are leveraging Ivalua’s CLM solutions to transform and streamline their CLM processes – and Trans Mountain Corporation, Canada’s only pipeline system transporting oil to the West Coast, is a great example.
Trans Mountain was struggling with managing complex services due to a fragmented IT landscape and a lack of system integration. With 1,150 kilometers of pipeline across Alberta, British Columbia, and Washington state, inefficiencies from 300 disconnected applications and no DocuSign integration led to higher costs and operational bottlenecks.
By adopting Ivalua’s Source-to-Contract solution, Trans Mountain improved procurement workflows and enhanced supplier collaboration. The platform helped Trans Mountain to improve contract management with seamless ERP integration and support for indigenous supplier engagement, reducing administrative overhead and driving efficiency across its operations.
Read the full Trans Mountain case study.
What’s Next? It’s Time to Drive Compliance and Cost Savings with CLM Tools
As compliance requirements evolve and become more stringent – and as supply chains become increasingly complex – business continuity and efficient operations will hinge on effective contract lifecycle management. Estimates show that contracts govern around 70%-80% of businesses – yet 55-70% of organizations say they lack effective contract management systems.
Transform the way your teams handle contracts with Ivalua’s advanced contract lifecycle management (CLM) solution. Experience enhanced visibility, simplified processes, and unmatched control at every stage of the contract lifecycle.
Adopting an innovative CLM solution like Ivalua empowers teams to manage contracts with greater visibility and control. Watch our Contract Lifecycle Management Demo to explore how CLM software can transform your contract management strategy and drive your business forward.
