NOTE: This is the fourth article in this series. Start here if you missed the previous articles in the series: CLM Health Check Pillar 1.
Marshfield’s CLM Health Check service, a systemized, holistic evaluation to identify inefficiencies, gaps, and improvement opportunities, is designed to turn your CLM software into a maximized tool to deliver the most business value it possibly can. This blog series takes the 10 pillars of the Marshfield Method, briefly defines and describes each pillar, and then walks you through evaluating the health of your CLM system as it relates to each individual pillar.
The sixth pillar is Contract Finalization, and the seventh pillar is Contract Renewal. What are these, and how can you tell if these pillars in your process are in good shape?
The Contract Finalization pillar entails meticulous final reviews to ensure all contract details are correct post-negotiation, solidifying the agreement’s terms and reducing risk. Negotiations could have taken
days, weeks or even months, during which time the contract may have gone through countless iterations and rounds of negotiation. Having a well designed Finalization process ensures that executed documents are always archived with the proper tagging to drive downstream processes accurately.
Indicators of Good Health:
- Contract is executed properly and fully
- All signatures are captured
- All data is aligned to the contract and stored coorectly
- All data attributes are aligned to the system and process
- Redundancies and unnecessary steps are eliminated
- All data points for governing law are captured
- All process allows for user confirmation and human validation
- Process allows for user confirmation and human validation
- Process allows the user to go backwards to previous steps
Indicators of Poor Health:
- Finalization review is skipped entirely or done only in part
- Necessary signatures are missing
- Data is misaligned, lost, or stored in the wrong location, making it difficult to retrieve
- Process is flawed, inadequate, blocked, or contains redundancies and unnecessary steps
The seventh pillar is Contract Renewal, which, without a true Contract Lifecycle Management system, is a static, manual process, devoid of any real business value. CLM gives businesses the ability to proactively manage contract renewals, and to leverage automated reminders and renewal terms to maintain continuity. Tracking expiration dates, notice periods, and renewals is key to ensuring your CLM process extends through these processes vs. ending with a signed contract.
Indicators of Good Health:
- Capturing the data points, end dates and any other relevant data to adequately monitor contracts
- Contract expiration reminders are sent to more than just a single named user
- There is an automated process for renewal workflows that initiates as the renewal date approaches
- Users can generate a renewal from the existing system
- Ability to easily understand client and vendor agreements across departments, contracts and terms; no regression on terms
Indicators of Poor Health:
- Having either nothing in place, or something very basic
- Reminders are sent to a single individual
- High percentage of bounce backs from renewal emails
- Loss of business, business disruption, and loss of revenue due to lapsed contracts
- Contracts auto renew without any communication with clients
Contract Finalization and Contract Renewal are important pillars in achieving a streamlined and effective Contract Lifecycle Management process. A well-structured Finalization process ensures every agreement is error-free, fully executed, and correctly stored, eliminating redundancies and aligning all contract data for seamless downstream processes. Similarly, an optimized Renewal process shifts from being a reactive, manual task to a proactive, automated system that preserves business continuity, prevents lapses, and maximizes revenue potential.
By strengthening these pillars, you not only reduce risk but also create a foundation for smarter, more efficient contract management. Are your processes for Finalization and Renewal as robust as they could be? Now is the time to assess and optimize for success.
We would welcome the opportunity to help you optimize your CLM system. Contact us here to get started.
