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There’s no single way to manage contracts, but there are proven basics that make the process more straightforward.
Every agreement comes with deadlines, obligations, and details that need to be tracked. If those things aren’t managed well, small issues can grow into disputes, missed payments, or compliance problems.
That’s why it helps to have a strong foundation of knowledge and clear processes in place. Understanding how contracts are created, reviewed, signed, and renewed gives you a framework you can rely on, no matter the size of your organization.
In the sections ahead, we’ll cover the essentials of contract management and introduce strategies (including legal tech) that can help you manage contracts with more confidence.
Contract management is the process of handling agreements from the moment they’re drafted to the time they expire or renew.
Put simply, it’s how businesses keep track of their contracts, make sure terms are followed, and keep important contract data from being overlooked.
Some of the main contract management processes include:
It’s also worth pointing out the difference between contract management and contract lifecycle management (CLM).
Contract management is the broader practice of keeping contracts organized and compliant. CLM, on the other hand, is a structured approach that breaks the work into stages (creation, review, approval, signing, and renewal), often supported by software.
Think of it this way: contract management is the overall responsibility, while CLM is the step-by-step method many companies use to bring more structure and automation to the process. Nevertheless, both aim to keep contracts accurate, accessible, and under control.
The way you handle contracts has a direct impact on revenue, compliance, and the relationships you maintain with involved parties. Hence, weak contract management processes often cause missed renewals, payment delays, or disputes that could have been avoided.
But with the right contract management solutions in place, you can keep existing contracts organized, shorten the time it takes for signing contracts, and give everyone involved more confidence in the agreement.
Here’s why it matters to you:
Want a simpler way to manage all of this? Try Aline, an AI-powered contract management platform that helps you draft, review, sign, and track contracts in one place.
Now that you know why strong contract management processes matter, let’s look at how they actually work in practice.
Every agreement begins with drafting, and this step sets the foundation for the entire contract.
A new contract usually starts with a standard template or previous agreement, then gets adjusted to fit the current deal. During this stage, terms like payment schedules, responsibilities, and timelines are written out clearly so there’s no confusion later.
For example, a vendor contract might include delivery dates and service levels that both sides agree on before moving forward. Since this is one of the main phases of contract management, it’s important to get the language right from the start.
Remember: A well-drafted contract makes later reviews and negotiations much smoother because everyone already has a clear reference point.
After a draft is created, the focus shifts to the negotiation process. This stage is where terms are refined and adjusted until all involved parties are on the same page.
Contract negotiation can cover many points, such as pricing, delivery timelines, service levels, or risk-sharing. Essentially, the goal is to build a fair business arrangement that protects both sides.
Different groups often take part in this step. Legal teams and in-house counsel make sure the language meets legal requirements, while sales, procurement, or finance may push for terms that align with company goals.
Because multiple people are reviewing the same document, keeping versions organized is key to avoiding confusion. Take advantage of a centralized repository and an audit trail during this process.
When handled well, this stage also makes contract approvals smoother. Clear communication and tracked edits help everyone move from negotiation to signing without delays.
Once the negotiation process is complete, the contract moves into approvals and execution. This stage is where the agreement gets final confirmation and becomes legally binding.
A clear contract approval workflow is important because multiple agreements may require sign-off from different stakeholders, such as finance, legal teams, or department heads. Missing a step here can delay contract execution or even cause compliance issues later.
Plus, using e-signatures has become a best practice for signing contracts. They speed up approvals, reduce paperwork, and make it easier to track who signed and when.
Best practices for this stage include:
Signing a contract isn’t the end of the work. After execution, the focus shifts to making sure agreements are followed and that all contractual obligations are carried out.
This usually includes tracking payments, monitoring deadlines, and confirming that both sides deliver what they promised. However, your checklist may look different, depending on the contract you are handling.
Keeping the original contract and all contract files in a digital contract repository makes this stage much easier. Instead of managing emails or paper folders, you can quickly pull up terms, check who signed through electronic signatures, and resolve questions before they turn into disputes.
For example, imagine a vendor contract with scheduled deliveries. If those dates aren’t tracked, delays could go unnoticed until they affect operations. Storing contracts properly in a contract repository and setting reminders reduces those risks and helps mitigate compliance risks over time.
In other words, this stage is about turning signed documents into active agreements that continue to protect and guide your business arrangements.
Every contract eventually reaches the point where it must either continue or come to an end. Generally, the decision to renew contracts or terminate them depends on:
Reviewing approved contracts before they expire allows you to decide whether the agreement still benefits both sides or if changes are needed.
This stage also involves checking contractual obligations. If one party hasn’t met its commitments, renewal might not be the best option.
On the other hand, if the arrangement has worked smoothly, extending the agreement can save time compared to starting over with a new contract.
For example, consider a service contract with an IT provider. If the provider has consistently delivered on time and supported your systems well, renewal may make sense with updated terms for the next period. If not, it may be better to close the contract and look for a new partner.
When you handle this stage with attention, renewals and terminations keep agreements relevant and prevent you from being locked into deals that no longer serve your goals.
Even with the best intentions, managing contracts can go wrong when small errors build up over time. Many of these issues come from manual work and processes that don’t scale across the entire organization (but it can also come from errors you may not notice right away).
Recognizing common pitfalls can help you mitigate risk and keep agreements under control. Here are common mistakes to watch out for:
A quick tip: Schedule regular reviews of incoming contracts and contract versions so issues are caught early instead of after they cause delays or costs.
Studies show that contract review alone takes an average of 92 minutes for professionals in experienced legal departments. And that’s just one part of contract management. Once you add drafting, approvals, and renewals, the hours add up fast.
Let’s talk about how legal tech can change that:
Old-school contract administration means chasing signatures and rifling through folders whenever someone needs the original document. It’s slow, time-consuming, and leaves a lot of room for human error.
A modern system changes that by centralizing all your contract data, automating reminders, creating audit trails that ensure compliance, and so much more.
Not every tool is built the same. A contract management system gives you the basics, like storage, search, and a place to keep contracts stored correctly. That might be enough if you’re managing a smaller set of files.
A CLM tool, on the other hand, takes it further. It covers the entire lifecycle: drafting, negotiation, approval, signing, and renewal. You get integrations with e-signatures, approval workflows, and reporting tools that help you see how agreements are performing.
If you’re managing many contracts across the entire organization, CLM is the smarter choice. It not only helps you increase efficiency but also makes sure you don’t miss key obligations.
In short, it’s the difference between just storing contracts and actually managing them with confidence.
Contracts sit at the center of almost every deal, hire, and partnership. Yet too often, they’re treated as paperwork to file away instead of a tool that can drive results.
If your current process leaves you buried in emails, chasing signatures, or second-guessing deadlines, it’s worth asking: How much time and money is that costing you?
Now flip the question: What would change if your team could see every obligation at a glance, draft with confidence, and close deals without bottlenecks? That’s the real value of using smarter tools.
Aline was built for exactly this. From AI-powered drafting to e-signatures and a searchable contract repository, it’s a single platform designed to cut the noise and keep you in control.
Give your team the clarity they need. Start your trial today and start managing contracts smarter with Aline.
The key is to follow contract management best practices such as using contract templates, keeping all related documents in a central repository, and tracking obligations with reminders. The right contract management software helps you stay on top of deadlines and approvals while cutting down on manual effort. This makes it easier to minimize risk and improve accuracy across agreements.
The 5 C’s are clarity, completeness, consistency, compliance, and communication. Together, they show what contract-related tasks represent: keeping agreements readable, aligned, and legally sound.
The four components are parties, promises, performance, and price. These elements outline who is involved, what each side agrees to, how obligations are carried out, and what the cost will be.
Typical steps include drafting with contract templates, review, negotiation, approvals, signing, storage, and renewals. With contract automation, many of these steps can be completed in just a few clicks, reducing delays and creating measurable cost savings.
Not always. Many companies handle at least half of their agreements internally and bring in outside counsel for complex cases. A structured process backed by CLM software makes it easier to know when you need extra support.
Brent is an attorney, a full-stack JavaScript engineer and the CEO of Aline.
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