Best CLM Software: Manage Contracts Efficiently

December 6, 2025

6 min read

Every contract your team handles carries money time and responsibility. But many delays in a business start with slow movement of contracts.

The contract process is further slowed down when using manual steps, spread out files and extensive review periods, which are used by teams.

This is where CLM software becomes an important tool. It helps teams handle every step of the contract journey with clarity and speed.

This guide takes you through the what is CLM software, the reasons why it is important today, and how the modern business uses it to be ahead.

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Quick Read

Summary generated by AI, reviewed for accuracy.

If you’re looking for a reliable CLM software, CLM 365 is here to help. With AI and automation, it streamlines contract creation, approvals, and tracking making contract management simple and effortless.

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What Is CLM Software? A Simple Explanation

CLM software is a platform that helps teams manage contracts from the first draft to the final renewal in one place. Instead of creating, reviewing, signing, and storing contracts across different tools, CLM software brings every step together.

Key Stages of the Contract Lifecycle

A contract passes through various stages. Every step is associated with its details and work. The key steps that CLM software manages are listed below.

Request
The process of the contract journey starts with the fact that a person requires to create a new contract. It can be a sales contract, a vendor contract or a service contract. CLM 365 allows requesting contracts in Outlook and Microsoft Teams, which simplifies and streamlines the process. Users of CLM software submit a request on a clear form.

Authoring
This stage focuses on creating the first draft of the agreement. Most teams use templates so they can work faster and keep the language consistent. With CLM software with an intuitive interface, contract authoring becomes easier because users get access to ready-made templates and approved clauses. They can build a draft in minutes, giving legal teams clean and structured text that follows company rules.

Negotiation
This stage follows the contract negotiation workflow, where both parties review the draft and request changes. In many companies, this takes time because files move through inboxes. The CLM software will have all the review in a single location where everyone will be working on the same document and leaving clear notes.

Approval
According to a study conducted by Bloomberg Law, 62% of professionals spend more than half their time drafting, reviewing, and negotiating contracts a clear indication of excessive manual work. Multi-level approvals, in which quotes are pending sales and vendor contracts pending finance, are also used by most companies. CLM software provides a easy contract approval process.

Signing
Contracts are only signed and become valid. Signing manually is time consuming because individuals must print and scan documents. CLM software facilitates digital signature tools. Internal teams as well as external parties sign in any device. This reduces wait time and assists in closing deals.

Execution
After signing a contract, it passes to the contract execution stage. This is where duties, schedules and deliverables are involved. CLM software is useful because it alerts the appropriate teams at the appropriate time such that no step is overlooked or postponed. Each of the departments is aware of what should occur next, who should do it, and when it should be done, which makes the whole process easier and more systematized.

Renewal
Contracts have expiry dates and failure to meet them may result in unnecessary expenses or loss of opportunities. The system also records all the renewal dates and reminds the user in time; hence, nothing falls through. This gives teams enough time to review terms, plan ahead, and complete renewals in a calm and organized manner.

Reporting
Every contract carries key information. Values dates risks and tasks. CLM software gives simple reports for leadership. Businesses see revenue impact vendor performance or pending tasks in one screen. This helps analyse contract and make better decisions.

Why CLM Software Matters for Today’s Businesses?

Companies that operate at scale can no longer afford to operate manually when it comes to contract handling. The increasing amount of agreements requires a system of contracts that is organized to remain organized and prevent risks in its operations.

A enterprise CLM software makes it easier to handle a number of contracts between vendors, clients, and partners.
Order is introduced to the processes that include multiple teams and frequent communication among departments.
It is easier to keep track of deadlines, responsibilities, and significant dates to make timely decisions by companies.
The sequential flow of one stage of contract to another eliminates guesswork in day-to-day work.
The responsibility is made easier since everybody is aware of what they are supposed to do at any given stage.
History of the past contract activities remains in the books and it is easy to verify what has been done in the past.
All contracts are seen by the leaders and they are able to know what is active, pending and delayed.
With a fast-paced market, the companies will be able to work more in time and be more organized.

Key Features of CLM Software

An enterprise CLM software comes with many features, and each supports a different part of the contract process. Below are a few important features to look for when choosing a system.

1. AI Feature

CLM software now use AI to summarize contracts draft text and highlight issues. This feature helps teams complete work faster and with greater accuracy.

A study by McKinsey reports that 88% of teams use AI in at least one business function this year compared with 78% last year.

AI in CLM software helps with:

Suggesting industry relevant clauses
Identifying missing details
Flagging risks during review
Highlighting obligations

This reduces manual effort and helps teams focus on key decisions.

2. Compliance Management

All contracts must be in line with company regulations and legal requirements. Even one of the rules can be missed.

Zoho Contracts 43% of professionals stated compliance and regulatory issues as a big concern.

The CLM software is used to manage the compliance of the contract easily. It offers sanctioned clauses and templates to ensure that all contracts are done according to the correct rules. In case of a change in regulations, the teams update the templates once, and all new contracts automatically remain in compliance.

3. Clause Library

A contract clause library is a central repository of approved clauses to various contract requirements.

Teams do not need to start afresh when choosing clauses to use in pricing, payment terms, confidentiality, warranties and other areas.

This aids in ensuring uniformity of all the documents and saves time that could be used to repeat the same contents.

There is also no need of errors that are caused by copying clauses manually in old files or emails.

4. Multi-Level Workflow

Many contracts require approval from multiple departments such as sales, finance, legal, and operations.

A CLM software with an intuitive interface workflow maps this route, thus every contract follows the correct order without manual follow-ups.

The teams do not have to go after individuals to get them to sign-offs or fear taking the wrong steps.

All approvals are made in the right sequence making the process more structured and predictable.

5. Draft Comparison

During revisions, teams often work with several versions of the same document.

A draft comparison feature is used to highlight all the contract modification that have been added, removed, or modified in a single clean view.

Counterparty is able to identify the edits within seconds and concentrate on areas that need to be addressed. This minimizes the risk of not receiving critical updates and facilitates cooperation.

6. Redlining Process

The phase of redlining is when both parties present their modifications until an agreement is reached.

A good contract redline process view displays all the modifications in a simple layout, and therefore, users do not have to alternate between various files or emails.

The same set of edits can be seen by both sides, eliminating confusion and allowing discussions to proceed more rapidly. It also makes the process of review transparent and followable.

7. Negotiation

Negotiation can be characterized by a set of remarks, corrections, and follow-up.

When all the messages, tasks and revisions are kept in a single location both parties remain in sync on what is required to be changed.

CLM software with an intuitive interface minimizes confusion and facilitates a more organized and cleaner negotiation process. Teams are able to advance to final terms in a more clear and less back and forth manner.

8. Digital Signature

Digital signatures simplify the signing process. Users can sign contract on any device and do approvals without printing, scanning or physically meeting.

This accelerates the last process of the contract and eliminates the time wastage because of physical paperwork.

It also offers a secure and verifiable method of closing agreements.

9. Audit Trail

An audit trail also assists teams in monitoring all the activities carried out on a contract. This option is captured in CLM software as every update is documented since the creation of the contract to its completion.

Users are able to know who made a change, when it was made and what was changed. This will leave a clean record that will facilitate internal checks, approvals, and accountability.

An audit trail will ensure that teams do not have to guess or use old emails to know the history of the contract.

10. Version Control

Contracting usually has multiple editing and updating cycles. Contract version control stores all drafts in the proper sequence and it is easy to access any past version at any time.

The teams will always know which file is the latest and this eliminates confusion and duplication of work.

This also assists in keeping a good record of the development of the document throughout the review and negotiation process.

Benefits of Using Enterprise CLM Software

Now that we have explored the core features, here are the key benefits that show how enterprise CLM software helps a business work faster and more effectively.

1. Efficiency

CLM software saves a lot of manual work by automation. Monotonous activities such as data entry, the choice of clauses, alerts, follow-ups, and reminders are automated background tasks.

Teams do not take time to perform routine activities. They instead concentrate on those activities that add greater value to the business.

The contract journey is accelerated by eliminating the complicated process and minimizing the human resources to sign the final contract.

Recommended Reading: How Contract Automation Helps Business

2. Integration With Existing Systems

Microsoft 365 tools are already used by many companies in their day-to-day operations. CLM 365 will fit this arrangement without compelling teams to change platforms.

Users are able to connect their contract management system within SharePoint, Outlook, MS Teams, Copilot, MS Word and access the CLM features they require.

This environment that is familiar reduces the time of training, creates a feeling of comfort to the new users and enables the team to remain productive without the need to adapt to a new system.

3. Greater Visibility

CLM software provides a clear dashboard that shows the full contract picture. Contract managers can see contract status, values, pending tasks, and possible risks in one view.

World Commerce and Contracting reported that companies lose up to 9% of yearly revenue because they miss obligations or lack clear visibility.

A proper dashboard helps reduce these losses by showing what needs attention before problems appear.

4. Cross-Team Collaboration

Contract work is associated with numerous groups: sales, legal, finance, procurement, and external parties.

The CLM software facilitates collaborative contract management common and brings everybody into the same system. The secure access links allow counterparties to participate in contract negotiation.

Internal teams are also effective as everything is clear as all the comments, tasks, and drafts remain in a single location.

This will result in better relationship with vendors and easy communication between departments.

5. Data Security

With CLM 365, all contract data remains securely within your organization’s Microsoft environment.

Every access permission is fully controlled, allowing your organization to define exactly who can view, edit, or download each contract. This ensures that sensitive information is only accessible to the right individuals.

Because all data stays inside your company’s ecosystem, it is protected by your established internal security policies and compliance measures.

6. Safe Storage

Research conducted by EY revealed that 90% of contracting professionals have difficulties in locating contracts within a short time.

Contracts are mostly stored in various email chains, desktops, and shared folders. This complicates the process of locating the appropriate document when required.

This can be solved by CLM software which stores all contracts in a central repository. Users are able to search by the name of the vendor, the type of contract, the value or the date and find what they need within a few seconds.

7. Managing Risks

The AI within the current CLM software assists groups in identifying risks at an early stage.

It scans the text of the contract, marks out the risky terms, outlines the obligations, and indicates the sections that might require further attention.

Recent research revealed that 94% of legal professionals anticipate AI to be a powerful tool in risk analysis, obligations, and compliance work.

Through these insights, teams can make decisions earlier, minimize future issues and safeguard the business against unnecessary problems.

Common Challenges in the Contract Management Process

Here are five common difficulties companies often experience before using CLM software.

Slow Drafting Process
A lot of teams continue to copy previous documents when developing contract drafts. This is not only time consuming but also more likely to make minor mistakes. The content can vary in one contract to another when there are no accepted templates or standard clauses.
Lost Versions
In case multiple individuals edit the same document via email or shared folders, versions may become easily mixed up. Teams can even have a problem determining the most recent file or the appropriate modifications. This delays the development and can result in rework due to missing of important updates.
Delayed Approvals
Approvals may take longer than anticipated when approvers are not informed at the appropriate time. Team members have to make follow-ups manually or reminders. This will introduce more work and, in most cases, postpone the flow of the contract to the subsequent step.
Missed Deadlines
Pivotal events like contract renewal, delivery dates or payment dates may be overlooked when manually tracking. The absence of such timelines may have an impact on the relations with vendors, the value of the contract, and the performance of the business in general.
Lack of Visibility
Leaders might lack a clear vision of the progress of the contract, tasks to be completed and possible risks. It is hard to make quick and informed decisions without appropriate visibility. This may slow down business processes and limit the ability to manage commitments effectively.

Best Practices for an Efficient Contracting Workflow

Below are seven practical methods that help teams build a smoother and more organised contracting process.

1. Use Standard Templates

Standard templates help teams create drafts faster and keep the language consistent across all documents. This reduces unnecessary rewrites and makes the legal review easier.

Create templates for major contract types
Add approved clauses to each template
Update templates whenever rules change

2. Build a Clear Approval Path

When everyone knows who needs to approve contract and in what order, contracts move forward more quickly. A clear path also prevents delays caused by missing notifications or unclear responsibilities.

Identify all roles that must approve
Set the order of approval based on contract type
Add automated alerts for each approver

3. Use a Central Clause Library

A clause library gives teams quick access to company-approved wording. This helps avoid writing the same text repeatedly and keeps the legal tone steady across all contracts.

Group clauses by category
Mark mandatory clauses
Add alternative clauses for special cases

4. Track Every Contract Stage

A contract management dashboard provides a clear view of every contract stage, helping teams understand what is pending and where their attention is needed. This reduces delays that happen when tasks are forgotten or misplaced.

Leverage dashboards to see pending tasks
Add due dates to each stage
Send reminders before deadlines

5. Support Fast Negotiation

Negotiation becomes easier when all discussions happen in one shared space. This keeps both parties aligned and reduces delays caused by scattered documents.

Use a shared digital workspace
Track all comments in one place
Allow counterparties to suggest edits directly

6. Store Contracts in One Place

A central location makes it simple to find any contract when needed. It also helps maintain better control over document access and long-term storage.

Keep all contracts inside the CLM software
Tag files for easy search
Add access rules to protect private contracts

7. Leverage AI Option Effectively

AI tools help teams provide alternative clause, spot risks and manage obligation. This gives legal teams more time to review important items instead of spending hours on manual checks.

Run AI review on each new draft
Check for missing clauses or risky text
Share AI findings with legal teams for final review

How to Implement CLM 365 Into Your System?

Implementing CLM 365 takes planning, but the process is simple when broken into steps.

Map Your Current Workflow
List each stage of your contract process. Identify delays and repetitive tasks.
Define Roles and Permissions
Decide who can create approve sign and manage contracts. Set access rights before adding data.
Prepare Templates and Clauses
Add existing templates into CLM 365. Create clause groups so teams can draft quickly.
Integrate With Microsoft 365
Connect CLM 365 with Word Outlook Teams and SharePoint. This gives a smooth experience for users.
Train Your Team
Train each department based on their tasks. Provide simple guides for daily use.
Move Active Contracts Into the System
Import ongoing contracts. Tag them so teams can filter by type date or value.
Go Live in Phases
Start with one department. Fix any process issues. Then add the rest of the company.

Following these steps helps your team adopt CLM 365 with ease.

Conclusion

Contracts shape the journey of every business relationship. When the process is slow or unclear the entire business feels the impact. CLM software gives a clean path for every contract step from request to reporting.

If you want to manage all your contracts effectively in one place, try CLM 365. Start your 14-day free trial today.

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Frequently Asked Questions

How do I know if my organization needs an CLM software?

If your organization manages multiple contracts, struggles with approvals, misses renewal deadlines, or finds tracking obligations difficult, CLM software can help. It centralizes contracts, automates routine tasks, and provides clear visibility and stay compliant.

What types of contracts can be managed with CLM software?

CLM software can manage a wide range of contracts, including sales agreements, vendor and supplier contracts, NDAs, employment contracts, service agreements, and more. Essentially, any contract that requires tracking, approval, or renewal can be handled efficiently.