CLM Solution Explained: Why It Matters, Features & Benefits

October 18, 2025

6 min read

Successful businesses don’t just focus on sealing deals they handle every contract with accuracy and intent. Despite this, many organizations continue to depend on old-fashioned, manual processes for contract management.

Strong vendor relationships drive business success. Using a CLM solution speeds up approvals, minimizes compliance errors, and cuts legal and admin costs.

EY reports that while 70% of organizations have a formal contracting strategy, 99% still lack the data and technology needed to streamline their contract processes.

Adopting modern CLM solution empowers teams to make faster, data-driven decisions.

A study by Thomson Reuters revealed that 42% of legal professionals surveyed in the Future of Professionals Report want to spend more of their valuable time on expertise-driven legal work in the next five years. The good news? These challenges are now easier than ever to overcome with the right contract management system software in place. In this blog, we will explore the 5 best contract management system tools that are helping legal teams work smarter.

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Quick Read

Summary generated by AI, reviewed for accuracy.

If your current contract workflows are causing delays or errors, now is the perfect time to explore a best CLM solution. This blog highlights the key features and essentials that any effective platform should offer. By understanding these aspects, users can choose a solution that truly streamlines your contract management and boosts efficiency.

Why CLM Solution is Important for Business

In every organization, contracts form the foundation of business relationships from vendors and clients to employees and service providers. Managing these contracts manually can become increasingly difficult as a company grows.

The Growing Volume of Contracts
According to a PwC study, the average Fortune 1000 company manages anywhere from 20,000 to 40,000 active contracts.
This sheer volume makes manual handling difficult and time-consuming. As a company expands, keeping track of all agreements, terms, and obligations becomes a serious operational challenge.

The Impact of Delays on Business Operations
Contract-related delays often slow down key business processes such as payments, project launches, and vendor onboarding.
These delays can affect timelines and create challenges across departments.
When contracts move through defined stages in an organized manner, it helps businesses operate more efficiently and maintain consistent progress in their operations.

Need for Centralized Access to Contract Information
In many organizations, contracts are scattered across multiple storage systems shared drives, emails, or physical files. This makes it difficult for teams to find the right document when needed.
A centralized CLM solution helps overcome this challenge by storing all contracts in a single contract repository.
This improves accessibility, reduces confusion, and helps teams make informed decisions quickly.

Importance of Tracking Key Dates and Milestones
Every contract carries important dates such as renewals, expirations, and delivery milestones.
Missing these dates can lead to financial loss, service interruptions, or even legal complications.
Having a CLM solution that tracks and alerts teams about upcoming events helps businesses stay proactive and manage their commitments responsibly.

Managing Risk Through Better Contracts
Contracts define the legal and financial responsibilities of all parties involved. When these are not properly maintained, businesses risk disputes, non-compliance, or unexpected liabilities.
A structured CLM solution helps manage such contracts risks by keeping every document organized, updated, and accessible for review when needed.
It creates a foundation of accountability and control, which is essential for long-term business stability.

Difference Between Traditional and CLM Solution

Contract management has evolved significantly over the years, moving from manual, paper-based processes to modern digital solutions. Comparing traditional contract management with a CLM solution highlights how technology improves efficiency, accuracy, and visibility across the entire contract process.

Aspect	Traditional Contract Management	CLM Solution
Contract Creation	Manual drafting in Word or Excel; often inconsistent templates	AI-powered contract drafting with pre-approved templates and clause libraries
Approval Process	Emails or physical signatures; can take days	Multilevel digital approvals with routing to relevant stakeholders
Collaboration	Multiple versions shared via email, high chance of confusion	Real-time collaboration with version control and editing history
Tracking & Monitoring	Limited visibility; tracking is manual and prone to delays	Automatic notifications, tracking, and reminders for key dates
Compliance & Risk	Hard to enforce company-wide compliance; risk of errors	Built-in compliance checks, standardized templates, and audit trails

How Does a CLM Solution Work?

A CLM solution works by organizing the entire contract process into clear, actionable steps. Here is a step-by-step explanation.

Step 1: Contract Request
Any team member can raise a request for a new contract through the CLM software solutions. The request is routed to the legal team with relevant details such as type of agreement, parties involved, and key contract clauses.

Step 2: Contract Drafting
Using pre-approved templates and a clause library, the legal team creates the initial contract draft process and can share it directly via Outlook for review. AI tools can suggest standard clauses based on the contract type, helping reduce the time spent on drafting and communication.

Step 3: Internal Review
The contract is shared with internal stakeholders, such as finance, operations, or sales, for feedback. The CLM solution tracks comments and changes, ensuring all inputs are recorded.

Step 4: Negotiation with Counterparties
The contract is sent to external parties for review as part of a contract negotiation strategy. All changes and suggestions are tracked digitally, allowing users to compare versions, review redlines, and finalize agreements efficiently.

Step 5: Approvals
The contract goes through a multilevel approval process. Each approver is notified automatically, and their approvals are stored in the system for audit purposes.

Step 6: Execution
Electronic signatures are applied once all parties approve the document. The executed contract is securely stored in the system for easy access. This ensures compliance, transparency, and a clear audit trail for future reference.

Step 7: Post-Execution Management
The CLM software solutions monitors key dates, renewal timelines, and obligations. Alerts and reminders ensure that deadlines are met, and reporting tools provide insight into contract performance.

Step 8: Amendments and Updates
Any amendments are handled within the system, maintaining a complete version history. Users can compare changes and ensure updated terms are communicated clearly.

Key Features of a CLM Solution

A modern CLM solution comes with a wide range of features designed to make contract management more organized and effective. Key features include. Here are some reliable feature to consider.

1. AI-Powered System

AI-powered CLM solution assist during contract workflow. The AI can suggest clauses that match the type of contract being prepared. It can also detect unusual terms, missing information, or potential risks, helping prevent problems before they occur.

The AI can summarize long contracts into simple points, making it easier to understand the main details. It can also offer alternative clauses, allow better choices when draft agreements.

2. Easy Contract Creation

Contracts can be created easily using ready-made templates and a clause library. This means there is no need to start from a blank document every time.

Templates are designed for different types of agreements, so selecting the right template helps in creating contracts that are correct from the beginning.

The process requires fewer steps, making contract creation simpler and faster for the legal and business teams.

3. Clause Library

A clause library is a collection of standard contract terms that can be used in many contracts. It ensures that all contracts follow the company’s rules and policies.

The library allows users to pick the right clauses quickly without thinking about the wording every time.

It also reduces mistakes and ensures that every contract includes important clauses.

4. Integrations

CLM 365 integrates with tools like SharePoint, MS Teams, Outlook, Power BI, and MS Copilot. Contracts can be shared via Outlook, stored in SharePoint, discussed in Teams, or analysed in Power BI.

MS Copilot can suggest clauses, summarize contracts, and track obligations. These integrations make contract management faster and more organized.

They also help teams collaborate better and keep all contract information in one place.

Recommended Read: Best SharePoint Contract Management Software

5. Multilevel Contract Approvals

An enterprise-level CLM solution allows contracts to be sent to multiple approvers based on company rules. Each approval is recorded, making it easy to track who has approved and when.

This easy contract approval process reduces delays, keeps the process organized, and ensures every contract follows the correct approval path.

It also provides a clear audit trail for accountability and compliance. Additionally, it helps teams make faster decisions by showing pending approvals immediately.

6. Contract Routing

A CLM solution can automatically send contracts to the right people at the right time. This feature makes sure that contracts do not get stuck with the wrong person.

The automated routing saves time and avoids mistakes caused by manual sending.

It ensures that contracts move quickly from creation to approval and then to signing.

7. Draft Comparison

CLM 365 allows different versions of a contract to be compared side by side. Teams can see what has been added, removed, or changed, making negotiations easier to follow.

This helps avoid mistakes, keeps the review process clear, and ensures all changes are tracked accurately.

It provides a reliable record of all edits for future reference and can be combined with analysis to identify contracts risks, obligations, or unusual terms.

8. Contract Redlining

Contracts can be edited while keeping a clear record of all changes. Redlining highlights the edits made in each version, so everyone can see what was added or removed.

This feature helps teams work together without losing track of changes. It also makes negotiations easier because all suggestions and edits are visible in one place.

Redlining the contract ensures that every modification is tracked and nothing is overlooked.

9. Contract Amendment

Contracts can be updated or amended after they are signed without losing the original version. Each change is recorded, and the history of the contract is saved.

This makes it easy to review past versions and understand how the contract has changed over time. The contract amendment feature ensures that all updates are documented clearly.

It also helps maintain contract accuracy by linking every amendment to its original agreement.

10. Electronic Signature

Electronic signatures remove the need to print, sign, and scan contracts. Contracts can be signed online, which saves time and makes the process faster. Electronic signatures are legally valid and accepted in most countries.

This feature helps complete the contract process quickly, even when people are in different locations.

It also provides a secure and trackable way to verify who signed the contract and when.

11. Version Control

A CLM solution keeps every version of a contract neatly organized in one place. Teams can view earlier drafts, track updates, and review the complete contract history anytime.

This version control feature makes managing multiple revisions simple and reliable. It keeps the workflow clear, prevents data loss, and enhances visibility by showing who made each update and when.

With version control, teams can always work on the latest version with full confidence and accuracy.

12. Advanced Reporting & Analytics

A CLM solution provides reports and insights about contracts. It can show how long approvals are taking, which contracts are pending, and whether obligations are being met.

The contract analytics also highlight the performance of contracts, helping teams make better decisions.

These insights provide a clear view of all contracts in the system and help improve the contract management process.

Benefits of Using a CLM Solution

A CLM solution offers measurable advantages that go beyond just managing contracts. Below are some of the key benefits that businesses experience when adopting a CLM platform.

1) Accelerate Contract Approvals

With a centralized digital platform, contract creation, negotiation, and approvals happen in one seamless flow.

Teams no longer wait for manual reviews or scattered email exchanges. A good CLM solution provider streamlines the process and ensures contracts move from draft to execution faster, helping your business close deals and onboard partners more quickly.

2) Boost Productivity

Modern contract lifecycle management leverage AI to simplify and optimize every stage of the contract lifecycle.

AI can quickly analyse large volumes of contracts, identify key clauses, and flag potential risks saving teams valuable time and effort.

Instead of spending hours on manual reviews, your team can focus on strategic decision-making and higher-value work, leading to smarter, faster outcomes.

3) Enhance Efficiency Through Intelligent Automation

According to a survey by ALM and Bloomberg Law, over 40% of corporate counsel spend at least 50% of their daily workload on tasks related to contracts.

This shows the need for automated contract workflows ensure that every contract follows a consistent process, reducing human error and improving overall efficiency.

As a result, your organization enjoys accelerated turnaround times, flawless accuracy, and smarter resource utilization driving higher efficiency, productivity, and overall business growth.

4) Ensure Strong Compliance

An enterprise-level CLM solution helps you manage contract compliance effortlessly by aligning every contract with predefined templates, approval workflows, and policy standards.

It ensures full adherence to regulations, keeps teams audit-ready, and minimizes compliance risks building lasting trust with stakeholders and partners.

With centralized visibility, your organization can track, monitor, and enforce compliance at every stage of the contract lifecycle.

5) Protect Data with Enterprise-Grade Security

CLM 365’s CLM solution is built with ISO and SOC 2 certifications and is Microsoft-certified, ensuring top-tier data protection and privacy.

Every contract and document is stored in a secure cloud environment with role-based access control, encryption, and continuous monitoring.

With robust contract management security, businesses can confidently manage sensitive agreements, knowing their data is protected and compliant with global security standards.

6) Gain Greater Visibility

A centralized dashboard gives stakeholders real-time visibility into contract status, obligations, and performance metrics.

With advanced search and reporting features, decision-makers can instantly locate any document, track renewals, and ensure milestones are met.

The Corporate Legal Operations Consortium found that 68% of contract professionals search for a finalized contract at least once a week, a practice that enhances transparency, strengthens control over the contract portfolio, and improves accountability across the organization.

7) Strengthen Vendor Relationships

A CLM solutions ensures clear terms, timely renewals, and transparent performance tracking.

By centralizing all vendor contracts in one platform, businesses enhance collaboration, improve communication, and resolve issues quickly fostering stronger, long-term partnerships built on trust and reliability.

With greater visibility into vendor performance, organizations can make data-driven decisions that optimize value and strengthen supply chain efficiency.

Best Practices to Implement a CLM Solution

Implementing a CLM solution can significantly enhance the efficiency, accuracy, and visibility of your contract processes. The following best practices provide a comprehensive guide to help you get the most out of your CLM implementation.

1. Assess Current Processes

Before introducing a CLM solution, it’s essential to understand how your existing workflows operate. A clear picture of current contract lifecycle management processes helps identify opportunities for improvement and ensures the new system aligns with organizational needs.

Map your end-to-end contract process across departments.
Identify repetitive tasks and areas with manual effort.
Gather input from stakeholders to understand current challenges and priorities.

2. Define Objectives

Setting clear objectives ensures your CLM solution is purpose driven. Knowing what you want to achieve helps prioritize features, measure success, and align the system with broader business goals.

Determine key outcomes like faster approvals or enhanced compliance.
Establish measurable goals to track CLM effectiveness.
Align objectives with overall organizational strategy and team expectations.

3. Select the Right CLM Tool

Choosing a CLM solution that fits your organization is crucial for seamless adoption. The right tool should cater to your workflow requirements and integrate smoothly with existing systems.

Evaluate software features to match your contract needs.
Check for compatibility with current tools.
Consider scalability to support future growth and evolving requirements.

4. Train Teams

Successful CLM adoption depends on how well your teams understand and use the system. Utilizing training materials ensures everyone can leverage the platform efficiently and confidently.

Conduct role-based training for legal, sales, finance, and operations teams.
Provide hands-on sessions to familiarize users with system functionalities.
Offer ongoing support and resources for continuous learning.

5. Standardize Templates

Consistent templates create a streamlined and professional contract process. By 2025, 84% of organizations anticipate implementing globally consistent contract templates. This standardization not only saves time but also ensures uniformity in terms, language, and branding across all agreements.

Develop standardized templates for common contract types.
Include pre-approved clauses to maintain compliance and consistency.
Update templates periodically to reflect current policies and regulations.

6. Monitor and Adjust

Ongoing observation helps ensure your CLM solution continues to deliver value. Regular contract monitoring allows you to refine processes and adapt the system to evolving organizational needs.

Review system usage patterns and identify high-activity areas.
Gather feedback from teams to optimize workflow efficiency.
Make iterative adjustments to improve contract lifecycle management.

7. Track Key Metrics

Tracking performance metrics provides insights into the effectiveness of your CLM software solutions. Metrics help measure success, highlight areas for improvement, and guide strategic decision-making.

Measure contract completion times and approval durations.
Track compliance rates and adherence to organizational standards.
Analyse workflow performance to identify trends and opportunities.

The Future of Contract Management with AI

Contract management is rapidly evolving from a manual, document-centric process to a strategic, data-driven function. Here’s how AI is shaping the future of contract management.

Predictive Risk Analysis: AI analyses historical contract data to identify patterns and potential risks, allowing organizations to proactively mitigate issues.
Automated Contract Summaries: AI in CLM 365 can quickly analyse contracts and generate concise summaries, highlighting key terms, deadlines, and obligations. This saves time and ensures critical information is always visible immediately.
Alternative Clause Suggestions: AI-powered recommendations in CLM software solution help users identify and insert important contracts clauses based on previous contracts, compliance requirements, and organizational standards, improving contract quality and consistency.
Obligation Management: CLM solution uses AI to track contractual obligations automatically, sending alerts and reminders for milestones, renewals, and compliance deadlines. This ensures nothing is overlooked and enhances operational efficiency.
AI Contract Agent: CLM solution AI agent acts as a smart assistant, answering contract-related queries, guiding teams through workflows, and supporting faster decision-making throughout the contract lifecycle.
Risk and Compliance Insights: AI analyses contracts to detect potential risks, deviations, or non-compliant clauses, helping organizations maintain regulatory adherence and reduce exposure.

Conclusion

Implementing a robust contract solution is no longer optional it’s essential for organizations seeking efficiency, compliance, and strategic control over their contracts. CLM 365 empowers your teams with AI-driven contract summaries, intelligent clause suggestions, obligation tracking, and a smart AI agent, transforming the way you manage agreements from start to finish.

Take the next step in modernizing your contract management process. Get a 14-day free trial of CLM 365 no credit card required and experience every feature designed to streamline your contract workflows.