Contracts are everywhere in business, whether you're hiring vendors or renewing services. Sadly, keeping track of them all can get overwhelming very quickly.
Maybe you've spent too long digging through emails for the latest version or realized too late that something expired. Or you’ve had two people working off different drafts and didn’t catch the mix-ups until it slowed everything down.
Contract lifecycle management (CLM) helps you avoid those situations by giving you a clear process from start to finish. Essentially, it makes it easier to stay organized, cut down on delays, and keep everyone on the same page.
And it’s becoming more important across the board. According to Gartner, around 60 to 80% of all business-to-business deals involve contracts. As companies grow, the number of agreements grows with them, and managing those contracts well becomes harder to ignore.
In this guide, you’ll get a full look at what CLM is, how it works, and how it can help your team stay in control of the entire contract process.
Contract lifecycle management is the process of managing contracts from beginning to end.
It includes drafting, reviewing, approving, signing, tracking key dates, and eventually renewing or closing the contract. Every step matters, and having a clear process keeps things running smoothly.
Effective contract lifecycle management is helpful across different teams; not only legal, but also sales, HR, procurement, and operations. When contracts are organized and easy to track, everyone can move faster and focus on the tasks that actually need their attention.
A contract goes through several steps before it’s complete. From the first request to the final decision to renew or close it out, every step cuts down on risk and keeps things clear.
A solid process keeps work moving and makes it easier for everyone to stay on track. Here’s a simple breakdown of the key stages.
Every contract starts with a request. Maybe you need to bring on a new vendor, close a deal with a client, or hire someone. Whatever the reason, this step kicks off the contract management process.
It’s your chance to lay out the basics:
The clearer you are at this point, the smoother the rest of the contract process will go. You don’t need to write the whole contract request yourself, but you should know the key details.
Skipping this step or rushing through it usually leads to back-and-forth later. This is where structure starts, and where things can easily go off track if not handled carefully.
Once the request is submitted, the next step is to draft the contract. Contract creation is where all the important details get written down, like timelines, pricing, responsibilities, and terms.
Depending on the situation, you might use a standard template or write something new from the ground up.
If you’re using contract management software, this step becomes quicker and more organized. You can access approved templates, insert key details, and avoid starting from scratch each time. It also helps keep formatting consistent and reduces the chance of errors.
Legal teams usually get involved here to make sure everything is accurate and legally sound. A clear draft avoids confusion later and helps everyone move forward faster.
Things to keep in mind during drafting:
After the contract is drafted, it moves into the contract review stage. This is where people like legal, finance, or department heads take a closer look. They’re checking that the terms are correct, the language is clear, and the contract lines up with company policies.
If something’s off, like a missing clause or a pricing issue, it gets flagged and sent back for updates.
Let’s say your sales team creates a contract with a new client. Before it’s approved, the legal team might notice that the liability clause is outdated.
At the same time, finance might spot that the payment schedule doesn’t match the billing system. Without this review step, those details could slip through and cause bigger issues later.
Using contract lifecycle management software helps make contract review smoother. It routes the contract to the right people, keeps track of changes, and makes sure feedback doesn’t get lost in someone’s inbox.
This step gives the green light for the contract to move forward. Depending on your company’s contract lifecycle management process, approvals might come from senior leadership, legal, finance, or all three.
The goal is to make sure everything looks right, and the contract is truly ready to move forward.
In some cases, contract approval workflows are straightforward: a department head signs off, and it’s good to go. However, for larger deals or complex agreements, multiple layers of approval may be required. Without a clear process, this can cause delays or confusion.
With a contract lifecycle management system, you can streamline this step by routing the contract automatically to the right people and sending reminders if anything’s holding things up. A proper approval keeps the contract on track and clears the way for contract execution.
Once the contract is approved internally, it’s shared with the other party for contract negotiation. This is where both sides take a closer look at the terms and suggest edits.
The negotiation process can involve minor wording changes or more detailed discussions about pricing, timelines, or responsibilities.
It’s common to go through several rounds before reaching a final version that works for everyone. Clear communication is key here as both sides need to stay aligned and respond promptly to keep things moving.
Contract management software can make this process smoother by:
Once both parties agree, the contract is ready to move forward to signing.
The contract is signed after both parties agree to the final terms. This is the moment the agreement becomes official and legally binding.
Many teams now rely on contract lifecycle management software to handle digital signatures. E-signature software helps avoid delays, reduce manual errors, and provide a clear audit trail.
Once the contract is signed, both sides get a copy, and the agreement moves into its next stage.
After signing, the contract needs to be stored somewhere safe and easy to find. Leaving it buried in email threads or scattered across folders only leads to confusion later.
Using contract management tools with contract repositories, you can store signed agreements in a central, searchable location. This makes it simple to pull up a contract whenever you need to check a clause or share a copy with your team.
Signed contracts still need attention long after the ink dries. They come with deadlines, terms, and commitments that must be followed. This stage focuses on tracking contract data, such as renewal dates, payment schedules, and delivery milestones.
Staying on top of this information helps your team meet obligations and avoid issues that could have been prevented. It also gives you a clearer picture of how each contract is performing.
This way, you can spot what’s working and what may need another look.
Every contract has an endpoint, and as that date gets closer, you’ll need to decide what comes next. This could mean:
Whatever the choice, this step plays a key role in contract administration.
If the contractual agreement still makes sense for your business, renewing it might be the best move. If not, it’s time to close it out properly and update your records.
This step wraps up the entire contract process, but it also connects directly to ongoing management.
A solid CLM system gives you better control over every agreement. Here are some of the main benefits of doing CLM the right way:
If contracts are constantly stuck in manual processes, it inevitably slows everything down. That’s why having a solid process and the right tools makes a big difference.
Legal contract automation plays a huge role here. Automated contract workflows can route documents to the right reviewers, send reminders, and even trigger next steps once approvals are completed.
Using contract templates speeds up drafting, and automated approval paths cut out the back-and-forth. Everyone knows what to do, and nothing gets lost in inbox clutter.
This is what makes contract lifecycle management important. It keeps things moving by guiding each contract through the right steps with less manual effort. When the process is faster, deals close sooner, and teams can move on to the next task.
Want to learn more about contract automation? Check out this guide on contract lifecycle automation.
Mistakes in contracts can lead to delays, disputes, or even a considerable loss in overall contract value. A repeatable process helps keep things clean and consistent.
When everyone follows the same steps, there's less room for error and less time spent fixing problems later. This is especially helpful for legal departments, which often end up handling the fallout from small mistakes.
A good system improves accuracy in areas like:
A more structured process means less guesswork and fewer surprises when it’s time to review or enforce a contract.
You shouldn’t have to guess where a contract is or rely on someone else to keep you in the loop.
With the right software solutions, you can quickly see what stage a contract is in, who’s approved it, and what’s left to do. That kind of visibility speeds up the approval process and helps reduce your contract cycle time.
For example, if you’re waiting on a vendor agreement and want to know what’s holding things up, you can check the dashboard and see that it’s still in the legal review process.
Tracking contract terms and status in real time helps you plan ahead and stay focused. It also boosts operational efficiency because you’re not wasting time trying to figure things out. Everyone’s on the same page, and that makes it easier to keep work moving.
Staying compliant protects your business and keeps things running smoothly. When contracts follow clear rules and checkpoints, it’s much easier to meet internal policies and external requirements.
Digital contract systems help here in a big way. According to B2B Reviews, companies that digitize their contracts see a 55% improvement in compliance. That means fewer legal risks, more consistent terms, and better handling of audits or regulatory compliance checks.
With the right tools in place, legal departments don’t have to double-check every contract manually. Built-in alerts, templates, and approval paths help keep contracts aligned with the rules, especially when there are multiple contracts at play.
When everything lives in one place, and your CLM tools include built-in reporting, it’s easy to check status, deadlines, obligations, values, and other key details in seconds.
Using pre-approved contract templates and a consistent contract writing process also makes reports cleaner and more accurate. Everything follows the same structure, so it's easier to spot issues or share updates.
Clear and timely contract processes don’t just help your internal team; they make a difference to the people you work with.
Vendors, clients, and partners notice when your contract handling is smooth, professional, and on schedule. It shows you’re organized, reliable, and easy to work with.
For example, if a vendor submits a contract and gets clear feedback, fast approval, and a signed agreement without delays, they’re far more likely to want to work with you again. The same goes for clients: clean contracting processes set the tone for the entire relationship.
When expectations are clear from the start, and no one’s left wondering what’s going on, trust grows naturally. And that’s the kind of trust that leads to long-term success.
We’ve talked about CLM as a whole and how it covers every step of handling contracts from beginning to end. But software built for CLM takes that process and makes it easier to manage day to day.
You can draft contracts, send them for review, manage approvals, get signatures, and follow up on key dates without needing five different tools.
When you're picking CLM software, it's important to think about how it’ll fit into your team’s daily work.
The right tool should help you manage your contracts without slowing anyone down. It should support clear communication, reduce back-and-forth, and give you a better view of your entire contract portfolio.
Here are some key features to look for:
In general, a strong CLM system brings order to the process, helps avoid delays, and gives you more control over how contracts are created, reviewed, and managed.
If your team is still managing contracts through email threads, shared drives, and multiple tools, it’s time for a better way.
Aline makes the entire contract lifecycle process easier to manage, from drafting and negotiation to signing and tracking. You don’t need to bounce between platforms or wait days for approvals.
Aline is built for modern teams that want speed and accuracy without the extra hassle. With AI-assisted drafting, dynamic templates, built-in e-signatures, and clear workflows, your legal, sales, and finance teams can collaborate in one place.
You can generate, review, and sign contracts 5–10x faster, without giving up control. No more digging through folders, reworking the same clause ten times, or missing important deadlines. Everything lives in one system, and everyone involved stays on the same page.
Start using Aline today and make contract management feel less like work.
Contract lifecycle management is the process of managing a contract from the initial request through contract drafting, approval, signature, tracking, and renewal or closeout. It helps keep everything organized and makes sure each step is handled properly.
The CLM process flow outlines the steps involved in handling a contract, such as request, contract drafting, review, approval, signing, storage, and monitoring. CLM software can help automate routine tasks along the way and make the process more efficient for everyone involved.
A CMS focuses on storing documents, while a CLM solution manages every step of the contract process, from contract generation to approval and signature. CMS tools help keep files organized, but CLM systems guide contract managers through tasks like compliance tracking, contract performance monitoring, and handling contract obligations. This matters in the legal industry because law firms and business users often need more than storage; they need a structured way to manage contract status, licensing agreements, and the full contract value over time.
The five key stages usually include creation, negotiation, execution, performance, and renewal. During creation, teams gather relevant data and build a draft. Negotiation helps both sides refine terms and confirm legal requirements. Execution finalizes the agreement, and performance covers the ongoing work tied to the contract. Renewal reviews results, checks business relationships, and determines next steps using custom reporting tools.
Brent is an attorney, a full-stack JavaScript engineer and the CEO of Aline.
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