Contract Management Software

Software Tips

What is contract management?

Contract management encompasses the entire process of handling contracts. This ranges from planning and drafting to processing and monitoring to renewal or audit-proof archiving. The aim of contract management is to systematically control deadlines, obligations and risks and to ensure compliance with legal requirements. In its digital form, often referred to as digital contract management or contract lifecycle management (CLM), these processes are automated and centrally mapped in software solutions. These solutions support companies in the transparent management and approval of contracts, remind them of important deadlines, optimise approval processes and increase efficiency and legal certainty through central databases and digital signatures.

What are the advantages of digital contract management?

Digital contract management creates clear structures throughout the entire contract lifecycle, from request to negotiation and approval to term management and archiving. The advantages of digital contract management lie in increased transparency, risk reduction, accelerated processes and the resulting measurable economic success.

Transparency

One of the major advantages of digital contract management is the centralised, searchable storage system with up-to-date contract status, deadlines and responsibilities.

• Centralised contract file: Uniform storage for all contract types (purchase, service, licence, partner and framework agreements) including attachments, addenda and correspondence.
• Full-text search & metadata: Quickly find contracts using keywords, contract numbers, supplier/customer, amounts, terms, KPIs and tags.
• Clear status displays: Life cycle statuses such as draft, review, approved, active, terminated, archived – including timestamps.
• Roles & responsibilities: Clear assignment of owner, department, approvers and contractual partners – including substitution rules.
• Dashboards & reports: Live overviews of upcoming deadlines, renewals, obligations and exceptions (deviations).
• Rights concept: Access based on role/location/contract type; targeted protection of sensitive attachments (e.g. price lists).

Practical benefits: The information is available to all authorised persons within seconds. All processes use the same, up-to-date database.

Risk minimisation & compliance

Another advantage lies in the use of standard clauses, audit trails and the application of timely measures.

• Clause library & playbooks: Specifications for liability, warranty, data protection (e.g. DPA), information security, confidentiality and SLA. Automatic notifications of deviations.
• Approval workflows: Thresholds for amounts, terms or risk profiles control when the legal department, data protection, information security or purchasing are involved.
• Audit trail & versioning: Complete traceability of changes, comments and approvals – audit-proof.
• Regulatory requirements: Support for retention periods, GDPR requirements, SoD principles (segregation of duties) and supplier risk assessments.
• Deadline & obligation tracking: Contractual obligations (e.g. reporting obligations, certificate verification, SLA reviews) are monitored and escalated in a timely manner.

Practical benefits: Reduced contract and compliance risks, fewer disputes, better auditability and verifiability for auditors.

Efficiency

Another advantage of using digital contract management is the faster turnaround time from request to signature (time-to-contract).

• Guided self-service requests: Departments initiate contract processes using structured forms; mandatory fields ensure complete information.
• Templates & automation: Creation of standard contracts with placeholders; automatic filling from ERP/CRM (master data, prices, terms).
• Collaboration & redlining: Parallel technical and legal review, commenting, comparison views (diff), central negotiation environment.
• Digital signature: Seamless eSigning integration for legally compliant, fast closing processes – even on the go.
• Integrations: Interfaces to ERP, CRM, ITSM, DMS and e-procurement prevent media breaks and double entry.
• SLAs & escalations: Measurable processing times per step, automatic reminders and escalations in the event of delays.

Practical benefits: Shorter negotiation cycles, fewer queries, fewer manual steps – noticeably faster contract conclusions.

Economic benefits

Structured contract management ensures that automatic contract renewals are reviewed and actively managed in a timely manner, so that unwanted renewals can be avoided and better contract terms negotiated. This supports the consistent enforcement of claims against contractual partners and leads to a significant reduction in overall costs. The optimised process, from contract creation to final signing, speeds up contract conclusions, which helps to generate revenue streams and income earlier.

• Deadline monitoring & renewals: Timely notifications of termination and renewal deadlines; structured decision templates (renew, renegotiate, consolidate).
• Terms and conditions management: Transparency regarding prices, discounts, price escalation clauses, milestones and bonuses/penalties – active use in negotiations.
• Claims and SLA enforcement: Systematic tracking of service credits, contractual penalties and warranty rights – avoiding ‘money on the street’.
• Cost & supplier consolidation: Identification of redundant contracts/suppliers, bundling of volumes, licence and subscription optimisation.
• Revenue & cash flow effects: Faster signing accelerates revenue recognition; clean milestone and billing logic improves liquidity planning.
• Reporting & KPIs: Savings, avoidance of unwanted renewals, discounts achieved, time-to-contract, first-time-right quota – basis for management decisions.

Practical benefits: Lower overall costs, better negotiation results and measurable savings across the contract portfolio.

What is contract controlling?

Contract controlling is the systematic planning, management and monitoring of all economic, legal and operational aspects of contracts throughout their entire life cycle. The aim is to make costs, risks and obligations transparent, to leverage savings and optimisation potential, and to ensure compliance.

Goals & benefits of contract controlling

• Cost-effectiveness: Actively manage fees, discounts, price escalation clauses, SLA penalties and bonuses/penalties.
• Risk reduction: Keep an eye on termination and renewal periods, liability limits, audit rights, data protection and IP clauses.
• Compliance & governance: Compliance with internal guidelines, regulatory requirements and audit trails (audit security).
• Transparency: Centralised view of obligations, cash flows and performance levels per contract/provider/customer.
• Agility: Early decision templates for renewal, renegotiation, consolidation.

Overview of core tasks of contract controlling

• Inventory & classification: Contract types (purchasing, sales, SaaS/licences, maintenance, projects, framework agreements, NDAs), criticality, terms.
• Deadline & obligation management: Termination and option windows, milestones, deliverables, acceptance and payment plans.
• Financial and performance controlling: Budget reconciliation, TCO, price adjustments, indexation, SLA compliance, contractual penalties/service credits.
• Risk & compliance monitoring: Key clauses (e.g. liability/indemnity, data protection, subcontractors), rule violations, deviations.
• Reporting and decision support: Dashboards, traffic light logic, forecasts, escalations, renegotiation recommendations.
• Lifecycle management (CLM): From requirement/initiation → negotiation → signature → execution → change → renewal/expiry.

Key performance indicators (KPIs)

• Financial: Contract value (TCV/ACV), actual costs vs. plan, savings, price deviations, utilisation of quotas.
• Time/deadline: Days until termination/option deadline, lead times per phase (initiation→signature).
• Performance/quality: SLA fulfilment rate, number/severity of incidents, service credits used.
• Risk/compliance: proportion of contracts with critical clauses, audit findings, policy deviations.

Additional specific criteria and suggested questions for evaluating contract management software:

• Before making a software decision, conduct a thorough market research of potentially suitable solutions. Our tip: Use our free research service without any obligation. Large parts of the tender are taken over, potential solutions are presented in a structured way and the communication with the providers is documented!
• Find out how user rights are assigned. Many workflows contain confidential information that should not be shared with all users or user groups. Can you specify what each user can see and edit? Do changes to the user rights of a workflow affect its execution?
• Ask whether the software solution includes electronic signing via eSignature.
• Test the software's search and filter functions. Can individual contracts be found quickly? Can contracts, receipts and attachments be searched?
• Can the user interface be adapted to department-specific requirements, e.g. for accounting, sales or the legal department?
• If necessary, ask about additional modules or expansion options such as licence management, information about the ordering process, etc.
• Consider how much storage space you will need for the contracts and any attachments. If you want to store contracts in the cloud, ask for an explanation of the different storage options available.
• Do you already store your existing contracts in the cloud? If so, you should ask whether the new solution offers an interface so that the existing data can be transferred.
• Ask whether you are free to design the contract templates yourself.
• Test the solution's reporting functions. Are the reports generated meaningful? Does the dashboard meet your expectations?
• Is the contract management software multilingual and multi-client capable? Can it be used across the entire group?
• Is it possible to scan paper contracts and read them using text recognition software?
• Does the software solution offer interfaces to Excel and Word for data import, contract creation and, if necessary, invoice creation?
• Is it possible to generate invoices automatically and send them automatically by e-mail as PDF documents?
• Are there interfaces for invoicing? For example, can payment receipt data be exchanged between the invoicing software and the contract management software?
• Clarify what data the software should process (master data, addresses, bank details, property relationships, clauses, etc.) and whether this is fully possible with the software.
• Does the software also include legal support functions? Contract-specific comments and assistance can make working with contracts much easier.
• Can all phases of a contract be mapped with the software solution? Can a contractual obligation be mapped?
• Clarify whether all plan values are automatically recalculated when contracts are amended.
• Ask whether the solution can also manage different deadlines (warranty periods, payment deadlines, notice periods, etc.).