What is a CLM System?

All businesses, both small and large, work with contracts. It’s important for companies to manage document workflows as it allows them to meet obligations and key dates, as well as analyze performance. 

Managing documents manually involves using spreadsheets and emails to share and redline contracts. You also end up having to draft contracts from scratch each time you need one, triggering a long approval process. This approach often leads to unintentional errors and scattering documents in all possible places. 

Not only is this insecure and inconvenient, but it’s difficult to track documents and it’s impossible to keep everything in mind. A contract lifecycle management system can prove to be great help in these situations.

What is Contract Lifecycle Management Software?

Before we explore CLM software, we should define what a contract lifecycle is. The contract lifecycle describes the sequence of steps that a contract goes through, from its creation to tracking obligations after it’s been signed. There are several distinct stages a contract must go through, such as the initial request, drafting, negotiation, execution, and termination or renewal. 

Contract lifecycle management software is a tool designed to help legal and business teams manage contract lifecycles. The simplest CLM provides a single digital repository where organizations can store all their legal documents. More sophisticated systems use artificial intelligence to increase efficiency and mitigate risks by automating document workflows, gathering and analyzing data, and managing obligations. It streamlines the contract lifecycle, enabling users to self-serve, sign, and manage routine contracts on a large scale from one centralized workspace.

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Features of Contract Lifecycle Management Software

Contract lifecycle management ensures all steps of the contract lifecycle are followed while allowing you to track each agreement through its pre- and post-execution phases. Here are some key features of CLM and how they work.

Document drafting

Document drafting is one of the most time-consuming activities for lawyers. It often steals their time from higher value work while making them stay overtime. However, in many cases, drafting doesn’t even need a lawyer’s involvement. A CLM system can free your legal department from this burden by using a dynamic template editor.

Users draft documents by answering simple questions. At the same time, all data is saved and automatically transferred to related documents. For example, you can instantly transfer a deal’s details from an NDA to a sales agreement without copy-pasting the data. 

CLM software allows you to set up a fully automated document drafting process that requires zero input from your lawyers. In addition to saving a lot of time, automation significantly reduces the risk of making mistakes.

Collaboration and approvals

Negotiations and review occur after the drafting process. Automated communication, tracking and sharing capabilities, and collaboration features streamline this process. This includes comments, chatting, and the ability to share documents inside and outside the system. 

In the event you lack certain information, you can send a data request to any team member or counterparty. On the flip side, highly-functional contract lifecycle management tools allow you to grant third parties access to redline your documents.

Another important thing about collaboration via a CLM system is that all changes in documents are automatically saved, allowing you to view their history and roll back to previous versions whenever necessary. As a result, you enjoy complete control over all contract versions.


What can be worse than running around looking for the right person to get a contract signed? Inviting a person to esign a document using contract management software is a much simpler way. Once the document is ready to be signed, all signatories will receive an email or in-app notification. 

Also, CLM software often supports integrations with online signature services. This automates the signature process and ensures seamless document updates without human intervention. Furthermore, esignatures help avoid delays in your document workflows.

Centralized storage

Without a centralized storage, your documents will be scattered across different folders, emails, desk drawers, and filing cabinets. This dramatically reduces visibility and increases the risk of creating multiple versions of the same document or mixing up contract lifecycle stages. 

That’s why cloud storage is a basic feature of many contract management solutions. It provides greater visibility for contracts, both new and legacy ones, and gives the ability to easily find and analyze information, or retrieve data for future contracts. You won’t have to dig through tons of paper looking for and manually entering the information you need. Thanks to simplified search and tracking, you can control the workflow.


Notifications instantly inform you about updates to processes. You’ll be able to stay on top of what’s going on with your contracts. Once you need to sign a contract, you’ll get a notification.

Another important thing to mention is scheduled reminders about key dates.  According to a survey, 26% of lawyers who stored contracts across different locations accidentally missed at least one deadline. Contract lifecycle management tools allow you to not check deadlines all the time so that you can focus on more valuable work. When key dates are approaching, you’ll receive notifications that help you deal with renewals and obligations on time.

Analytics and reporting

When everything’s structured, you don’t have to waste time searching and collecting information for analysis. CLM software tracks and displays productivity stats for each user. This can include the number of documents prepared, number of contracts by type, days in negotiation, average drafting time, and time saved. But that’s far from all. CLM systems track other types of data, such as sales, operational, and financial information.

Automation can quickly supply you valuable data that can help make crucial business decisions. A CLM’s analytics and reporting features may prove highly useful when it’s time to decide whether to extend or terminate a specific agreement. For example, courtesy of metadata and conditional-based logic, you can evaluate contract performance by generating reports in moments.

How CLM can help you

In general, the main goal of contract management software is to streamline contract processes, cut expenses, and mitigate risks. CLM systems that cover the whole contract lifecycle bring all contract-related processes under one roof. Here’s how this significantly simplifies legal workflows:

  • All data is kept in one place so that it’s easy to manage, retrieve, analyze, and report
  • Time spent on drafting, negotiating, and approving is reduced
  • Manual processes are eliminated
  • Error-proof and compliant templates are prepared
  • Risks of broken deadlines, obligations, and legal consequences because of mistakes are mitigated

Even if it may seem that CLM software is a tool just for lawyers, your sales, procurement, and other departments can benefit from it as well. Contract lifecycle management solutions enable these teams to retain valuable clients, close deals faster, and allow lawyers to focus on their work instead of being sidetracked by routine contract drafting.

How to choose a CLM system?

The first and most important thing you should do before choosing a contract lifecycle management system is to examine your goals and expectations. A clear understanding of your company’s goals will help you choose the right vendor. Otherwise, you risk wasting a lot of time and money.

Analyze your existing legal workflow, identify your pain points, and consider the specific needs of your business. These will give you insights on what processes can be preserved, improved, or eliminated. The answers to these questions will help you clarify your particular needs and manage expectations:

  • Which contracts do you want to manage? 
  • Who’s involved in your contract management lifecycle?
  • How does the approval process work?
  • How many contracts do you need to manage a month (on average)? 
  • How do you sign your contracts? 
  • Do you need to migrate legacy contracts to the platform?
  • How can the business benefit from using CLM?

Once you have the answers, you can start looking for a CLM tool. There are some essential components of CLM and document automation software, such as centralized storage, a dynamic template editor, security, analytics, and notifications. It won’t be difficult to create a list of solutions that cover your needs. But to narrow down your search and find the best possible option, you should pay attention to some less obvious things.

  • Complex documentation capabilities. Processing a 3-page document in a minute is okay, but what about a 100-page contract? If it takes half an hour to process, you might not want to work with such software. That’s why we recommend testing both simple and complex contracts during the demo.
  • Customer care. Without quality support and regular updates, there’s a chance you may get trapped at some stage of document processing.
  • Scalability. Software that allows you to do more than you currently require will help your organization scale in the future. But too many features may not be a good thing either. Look for solid performance and stability as this means the software is designed and well-tested.
  • User experience. CLM software should make your life easier. A user-friendly interface and helpful features are what you need.
  • Simple onboarding. If the tool is made well, it shouldn’t take months for your staff to learn the ins and outs.
  • Economic efficiency. Compare prices, assess your needs, and calculate the possible ROI. A CLM system should save money, not create additional expenses.
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We can say that CLM systems are a useful tool that automates processes, thoroughly gathers and analyzes data, decreases risks, and increases productivity.

But to really benefit from implementing contract lifecycle management software, it’s important to identify specific issues that can be solved with automation. Otherwise, you may not be able to maximize the potential benefits of such an investment.

If you want to learn more about the possibilities of CLM software, discuss your legal workflows, find out possible improvements, and estimate potential ROI, book a demo with AXDRAFT. We’d be more than happy to talk.  

How does CLM work?

Contract lifecycle management (CLM) systems automate and streamline contract processes during key stages, sometimes with the help of artificial intelligence. It provides a centralized storage where all contracts are readily accessible, easy to find, analyze, report, and retrieve information for future use. This reduces time spent on drafting contracts and manual errors.

Who uses CLM software?

There’s no particular industry or department that must use CLM. Rather, it’s a useful tool for lawyers, procurement and sales managers, and other departments that deal with documents.

Why is CLM important?

CLMs simplify contract management processes. They keep all information close at hand, improve compliance, and automate creation, execution, and document management. By automating routine, CLMs save time and money, eliminate errors, and mitigate risks.

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