What Is Contract Management? FAQ

Key takeaways:

• Contract management is a strategic business function that helps save time, reduce risk, and unlock revenue through automation and insight
• CLM platforms streamline every stage of the contract lifecycle, enabling faster turnaround, better collaboration, and consistent compliance
• Contract management software is used by legal, HR, finance, sales, procurement, and marketing teams to streamline workflows and reduce bottlenecks
• The future of contract management is all about smart, AI-enabled digital tools that help teams move faster, stay on top of deadlines, and actually get value out of their contracts

Introduction

Managing contracts isn’t just about getting a signature. It involves a full process—from creation and negotiation to execution and renewal. As contract volume grows and more teams get involved, having the right tools in place helps you stay organized, reduce risk, and work more efficiently.

Whether you’re just starting your search for contract management software or looking to improve your current setup, this FAQ breaks down each stage of contract management and highlights the features that help legal and business teams work smarter.

Contract management is a framework for digitally maintaining business agreements made with customers, vendors, partners, or employees. This encompasses creating, managing, organizing, sharing and archiving contracts, which allows in-house legal and other users to automate management processes while extracting business intelligence from those contracts. In other words, it’s an opportunity to save time, increase revenue, and gain insight.

Today’s chronically understaffed in-house legal teams, charged with managing contracts and mitigating related business risks, are often unable to keep pace. Rather than looking out for the best interests of the business—negotiating better deals, keeping ahead of agreement renewals or spotlighting risky contract clauses—they spend inordinate time on contract organization and paper chasing, signature tracking and redline review. Not to mention the money your contracts could be costing you in contract revenue leakage. According to WCC, organizations lose an average of 8.6% of total spending a year to cost leakage in contracts.

In short, contract management presents a big business opportunity.

Contract lifecycle management (CLM) takes the concept of contract management a step further. The addition of the word “lifecycle” denotes end-to-end management of contracts throughout all stages of the process. “Contract management” and “CLM” are often used interchangeably, and most often as shorthand for contract management software.

The contract management lifecycle involves many stakeholders and steps, so it’s important to choose a CLM that simplifies the process so users don’t have to worry about it.

This will make things easier on your entire cross-functional team—legal will be happy because they’ll get fully formed, enforceable contracts without the complexity of having to explain the legal process to business users with each contract. In turn, business users get to go through a simple series of prompts and come out the over end with a legitimate contract.

Let’s explore the eight steps of the contract management process: Create, negotiate, approve, accept, fulfill, analyze, optimize, and renew.

Step 1: Contract creation (or generation)

During the contract creation or generation step:

• You set the tone for the rest of the contract management process
• Contract requests are sent to the legal department
• Determine stakeholders and confirm internal alignment
• The legal team creates the contract.

Step 2: Contract negotiation

Negotiation is often the longest part of the lifecycle since it requires a lot of back and forth.

During the contract negotiation process:

• You communicate with your counterparty to come to an agreement
• Redline and edit contracts

Step 3: Contract Approval

During the contract approval stage, you’ll:

• Run the contract by every business stakeholder for review
• Come to an internal agreement to proceed with the contract

Step 4: Contract review and acceptance

During the contract acceptance stage, your business will:

• Decide how to sign the contract (wet signature, electronic signature, clickwrap)
• Sign the contract

Step 5: Contract fulfillment

During the fulfillment stage:

• Both parties are held accountable to their contractual obligations

Step 6: Contract analysis

During the contract analysis stage, you:

• Collect and review meta data from your contracts
• Store your contracts in a repository

Step 7: Contract optimization

During the optimization step, you’ll:

• Put your data to work, using your findings to improve processes, increase efficiency, or drive business
• See how your contracting KPIs measure up with insights from our 2025 Contracting Benchmark Report

Step 8: Contract Renewal

During contract renewal, the last step of the contract management lifecycle, you’ll:

• Decide whether or not to renew your contract

After surveying 1700 customers across 12 industries, we found that the average time it takes to execute a contract can range from 34 to 54 days. That’s a month or two of valuable business time spent on just one agreement, tying up valuable resources and slowing down critical business operations. Contract management software shortens this cycle by streamlining reviews, automating approvals, and providing visibility into every stage of the process, helping teams move faster and close deals sooner.

To transform legal teams from cost center to business center, forward-thinking businesses are adopting contract management workflows—standardized processes for shepherding contracts through various approvals and systems efficiently. Unfortunately, without modern tools, workflows involve many manual steps.

For example, a typical workflow for a legal team may involve word processing software for drafting contracts and redlines, email for collaboration and negotiation, and a CLM for tracking.

Hallmarks of modern digital contract management, workflow technologies stem from the need to shepherd digital contracts across functions, organizations and systems. These tools deliver key efficiency and business-driving features, from a single platform, including:

• Document creation
• Automated approvals triggered by predefined conditions
• E-signature
• Repository that enables contract organization and storage
• Integrations with contract-adjacent systems like Salesforce

Giving users visibility into every step of the contract management process, digital contract management platforms are also:

• Cloud-native and data-driven through every step of the contract management process
• Designed to enable real-time collaboration and negotiation
• Capable of syncing with all other systems and business users who need to consume contract information
• Built around core concepts of usability to help ensure businesses can onboard quickly and give teams powerful tools they want to use

The result is contract management that coordinates and connects every person, every step and every system relevant to contracts—establishing a digital contracts hub for businesses. In effect, this is helping a new breed of senior counsel and legal operations professionals escape their siloed, informational black boxes to become data-driven doers who can illuminate contract metadata (e.g., renewals or force majeure clauses) and process data (e.g., time and cost to process contracts) to advance business priorities.

What will distinguish in-house leaders from laggards in this new world? How they use contract data.

Successful legal teams will be those who harness contract data to protect their businesses, save money, and provide business-critical insights. In the process, they will uplevel their own value to the organization by becoming trusted business advisers.

Innovative companies with ambitious long-term goals are turning to CLM platforms because it is the only true way to make sure their contract management process keeps up with the pace of modern business. Here are some of the benefits these organizations experience.

Time saved

With a CLM that enables contract organization, you’ll eliminate the headache and hurry-up-and-wait culture surrounding contracts by implementing one robust platform that anyone can use.

Reduce turnaround time: Dropbox used a CLM to fast track 2000 Inbound Services Agreements and Statements of Work per year, reducing turnaround times from 2 weeks to minutes and eliminating hundreds of contract tickets.

See how Demostack’s one-woman legal team reduced contracting time to close by 80%+ in four months.

Reduced contract volume

Contract management software allows you to scale and automate much of the contract administration process, which means you’ll reduce the number of individual contracts to be created and reviewed.

Easier collaboration

CLM software makes it easy to collaborate within one unified platform, making edits everyone can see and accepting redlines once and for all. It also allows you to work more quickly and get answers to your leadership’s pressing questions.

“The notion that procurement is a blocker or legal is a blocker, that’s no longer a conversation. There’s a process, and they trust our procurement team to get us through that process easily and efficiently and help us navigate,” said Sid Ramesh, Head of Procurement at Gusto.

How procurement at Gusto went from blockers to business enablers.

Reduced risk

Many businesses believe that saving time on their contract management process is equivalent to cutting corners, which would put them at larger risk than manually creating and reviewing each contract. But with the right CLM solution, this isn’t a concern at all—in fact, digital contracting keeps your team accountable, provides transparency, and creates alerts to maintain and increase your security and compliance.

“We have a very compliance heavy industry and there’s a lot of audit and oversight to make sure that we’re doing things the way we’re supposed to. [Ironclad] just makes those things a whole lot easier, said Elliot Mandel, VP of Legal Operations at Alnylam Pharmaceuticals.

See how Alnylam Pharmaceuticals automated processes while maintaining compliance.

Increased revenue and savings

When it comes to using CLM platforms to save money during the contract management process, the State of Oklahoma’s OMES is a prime example. Since November 2023, collaboration between procurement and legal teams using a CLM has significantly reduced contract execution time—by over 50% for RFPs—and generated more than $66,000 in financial savings to date. It’s important to understand the total cost of CLM ownership before buying one, but the long-term savings on time and energy are invaluable.

Reduced external counsel spend

Bitmovin’s GC used CLM to expedite high-volume sales agreements, achieve substantial savings on outside counsel, and ensure all of their contracts were organized in a central repository. This resulted in an estimated $400K reduction in outside counsel spend.

Stage 1: Create the contract

At the start of the contract lifecycle, tools like a Workflow Designer empower business users across departments to initiate contracts on their own with easy-to-use workflows. Instead of creating each contract from scratch, you can create templates, automatically assign approvers based on contract type, and create other customizations specific to your contract process. These steps help you save time on contract creation and help you get to the next steps of the contract management lifecycle faster.

Step 2: Negotiate the contract

During negotiation, document editors streamline collaboration by enabling internal teams to make edits, resolve redlines, and track changes in a familiar, DocX-native environment. This contract organization approach ensures everyone has visibility into a contract’s progress. Some CLMs also have AI-enabled collaboration features like Jurist, which help you focus on what really matters.

Step 3: Approve the contract

Automated workflows, often built through a Workflow Designer, help route contracts to the right reviewers at the right time. This keeps contract reviews and approvals within the same platform, ensuring nothing slips through the cracks.

Step 4: Review and accept the contract

When it’s time to sign, integrated eSignature capabilities allow for flexible, secure acceptance methods, making it easy to finalize contracts regardless of complexity or stakeholder involvement.

Step 5: Fulfill the contract

After execution, a central repository acts as a source of truth, helping teams track obligations, monitor key dates, and ensure deliverables are fulfilled on schedule.

Step 6: Analyze the contract

With metadata captured and stored in a repository, contract data becomes searchable and reportable. Tools like Insights allow legal and business teams to analyze trends, measure performance, and answer contract-related questions quickly.

Step 7: Optimize your content management process

By combining intelligent alerts, automated processes, and integrations with other systems, teams can continuously improve contract operations. Tools like the Data Repository help improve business operations and compare your KPIs to industry benchmarks.

Step 8: Renew the contract (or not)

For renewals, teams can set automated reminders to avoid missed deadlines and take timely action on extensions, renegotiations, or terminations.

Innovative companies with ambitious long-term goals are turning to CLM platforms because it is the only true way to make sure their contract process keeps up with the pace of business. Here are some of the benefits these organizations’ experience.

Legal

General counsel and the in-house legal team, which may include legal operations, usually own the contract process within an organization. They use legal contract management software on a daily basis to oversee the entire contract lifecycle, from creation to renewal. Legal teams will most likely be found creating workflow templates, writing clauses, negotiating terms, or reviewing revisions within the contract management software.

HR

HR processes a lot of contracts in the employment process, which is why it’s necessary for them to have access to contract management software. You can find them sending standardized contracts that have been pre-approved by legal, like offer letters, Non-Disclosure Agreements, and Statements of Work.

Sarepta Therapeutics used Workflow Designer to create HR-specific workflows, routing each contract to the appropriate approver, streamlining the process overall and driving adoption throughout the organization.

Procurement

Since procurement teams are responsible for obtaining goods and services for the company from third parties, procurement contract management is an important aspect to consider when evaluating CLMs. Procurement teams can frequently be found making contract requests to legal, so choosing a CLM platform where they can self-service their own contracts is key.

Finance

Finance teams rely on contract management software to help them inform the budget, forecast revenue, and find billing information. When COVID-19 hit, our own finance team was able to use our CLM platform to quickly identify the company’s current and upcoming payment obligations. They created a workflow that identified payment obligations for contracts that were in-flight before they were even signed, allowing them to plan more strategically for the financial unpredictability of the pandemic. 

Sales

Sales teams need to move quickly to close deals, and contract management software helps them do just that. By using a workflow and template created by legal, they’re able to self-service their contracts and integrate with other systems they use, like Salesforce.

Before they started using a CLM, Asana’s sales team encountered friction and delays in their sales contracting process. But with a CLM that encourages collaboration, the relationship between sales and legal is stronger and more efficient than ever.

Marketing

Marketing teams make many contract requests, some for services, like vendor agreements for a new software or tool, and others for working relationships, like contractors that require influencer agreements or photography releases.

They have campaigns to launch and goals to reach, so it’s imperative they have a CLM that can keep up.

L’Oréal USA used a CLM to scale their strategic influencer agreements, and in turn, created a “laboratory of innovation” in 15 countries. 

If you’re not sure whether contract management software is something your team actually needs, you’re not alone. A lot of people aren’t actively looking for it until something starts to feel broken—like a contract goes missing or a renewal sneaks up on you. Below are a few common scenarios that usually point to deeper issues CLM software is built to solve.

You’re always trying to track down a contract

If you’ve ever spent half an hour digging through emails, Slack threads, or random folders for a signed agreement—or worse, you’re not even sure which version was final—you’re dealing with a visibility problem.

This probably means there’s no centralized place to store or search for contracts, so you can’t quickly access what you need, when you need it. A contract management platform would serve as a single source of truth for your entire company.

Your contract process takes way too long

If getting a contract from draft to signature feels like a never-ending back-and-forth, you’re not imagining it. Maybe your legal team is swamped, approvals are unclear, or edits happen in a messy game of email tag. It’s not uncommon—In fact, only 13% of legal and compliance leaders feel confident in managing cross-functional risks without creating drag on the business.

It’s likely your workflows are manual, approvals aren’t standardized, and nobody has a clear picture of what’s holding things up. A CLM would give you clear visibility into where your contracts are at all times, cutting down your contract administration time.

Legal is overwhelmed with basic requests

If your legal team is stuck fielding the same “Can I get the NDA template?” request over and over, that’s a red flag. Chances are, business teams want to move faster but don’t have a safe way to do it without legal hand-holding. It’s a common occurrence, with 83% of legal departments saying they expect requests to increase, with 63% identifying workload and resource bandwidth as their top challenge.

It’s likely there’s no structured way for non-legal folks to access or use contracts without risk. A CLM would free up your legal team to focus their expertise on the highest impact work instead of contract management.

Important dates or obligations are slipping through the cracks

Maybe you missed a renewal deadline and got stuck paying for another year. Or maybe someone asked for a contract during an audit and no one could find it. These things happen—but they don’t have to.

In this case, you probably don’t have a system to track what’s coming up or what needs to be done after signing, which is exactly where a CLM comes in.

You’re worried about compliance

If you’re not 100% sure whether every contract meets your latest compliance standards—or if tracking down specific clauses during an audit gives you anxiety—you’re not alone. Staying on top of legal risk is tough when contracts are scattered and policies are constantly evolving.

If there isn’t a consistent way to ensure contracts follow the right rules, you’re definitely in need of a CLM.

If any of this sounds familiar, you’re probably past the point where spreadsheets and shared drives can keep up. CLM software isn’t just about contract organization. It’s about giving you more control, better visibility, and a lot less stress.

If you’re thinking about implementing contract management for the first time, here are a few things to consider:

• Experience the software: Find a CLM solution that will let you experience their platform first-hand before you make your decision. Sandboxes are a critical part of the CLM evaluation process because you can clearly understand what you’ll be using day-to-day. 
• Choose a long-term partner: 50% of CLM implementations fail (Gartner), and that’s because companies pick the easiest, cheapest route with little-to-no support. Make sure you’re partnering with a CLM platform that has the experience (Legal engineers and customer support) and expertise to help you implement successfully and drive adoption throughout your organization. 
• Focus on your most pressing contract type first: When you implement a new CLM solution, it’s tempting to use it for all of your contracts right away, but the best way is to start with one contract type and go from there. This speeds up your time-to-value, meaning you’ll start getting value out of the product as soon as you stand up your first workflow. 
• Look for resources: An indication of a strong CLM choice is the amount of resources they provide for continued learning and inspiration, like implementation guides and articles on contract management. Make sure your CLM will continue to help you reach your goals. 

Learn about partnering with us for a successful CLM implementation.

If you’ve already implemented contract management but want to level-up your strategy and maximize your investment, consider these:

• Reporting: Is your CLM set up to gather the most helpful data for your business? When creating workflows, think about what questions you’d like your contracts to help answer. 
• Data analysis: How long does it take to turn around a contract? Where do they get stuck? Instead of testing theories, analysis of your contract data helps you make informed decisions that will increase the ROI of your platform. 
• Automation: The best way to scale the workflows that are already working and save time every step of the way.

The future of contract management is digital contracting that allows you to accelerate, control, and understand all of the information in your contracts. Until recently, contract management platforms and practices were narrowly focused on isolated stages of the contract lifecycle, such as signing or storage, rather than supporting the process end to end. Today’s businesses need tools that support the entire contract lifecycle—empowering not just in-house legal and legal operations teams, but also departments like procurement and finance that regularly create or manage contracts.

Contact management can no longer be viewed as a lateral, static, one-way process. Instead, contracting must operate as the hub connecting and driving other business units.

It’s impossible to talk about the future of CLMs without mentioning the way AI is transforming contracts. Tools that use machine learning and natural language processing can take over legal teams’ manual work by extracting key clauses, suggesting redlines, flagging potential risks, and even generating contracts using templates and playbooks.

AI-based CLM software puts this power into practice by helping teams:

• Suggest fallback language during negotiations
• Automatically tag metadata across large volumes of contracts
• Identify risky clauses or deviations from standard terms
• Empower non-legal teams to create compliant contracts using templates and built-in guidance

In fact, a recent study by Gartner predicts that 50% of procurement contract negotiations will utilize AI-enabled tools for risk analysis and editing by 2027. As a result, they also expect a rise in productivity.

However, it’s important to be realistic and intentional about implementing AI into your workflows, and a CLM can do that hard work for you.

“We are in the wild west of artificial intelligence right now. There’s a ton of excitement, tons of people rushing into this amazing opportunity for productivity. But it’s a lawless place. There are no common standards. There are tons of risks – from data security to content proliferation to who knows, maybe the end of civilization! But just because our governments and experts haven’t established regulations around AI doesn’t mean we don’t need them.

On the contrary, we need them more now than ever, because the latest generation of AI is so powerful that if we wait for the law to catch up, we’re going to miss out on a massive opportunity to get faster, smarter, and more effective at everything we do.”
-John Fiedler, Chief Information Security Officer, Ironclad

It’s understandable to have a lot of questions about the contract management process. From generation to renewal, each stage brings its own challenge and opportunities. The good news is that with the right tools and workflows, managing contracts doesn’t have to be complicated. Whether you’re focused on efficiency, visibility, or reducing risk, modern CLM features can help you get there.

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