What Are The Stages of Contract Management?

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Contracts are undeniably important to any kind of business. Whether it tackles the relationship between an employer and employee or agreements with other organizations, contracts are necessary to make deals legally binding. As such, successful businesses tend to have a team dedicated to managing contracts. An effective contract management process can help businesses increase their effectiveness and efficiency while also reducing risk. It is important for any individual involved directly or indirectly to a business to learn and understand the basics of contract management.

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Contract Management in a Nutshell

Contract management is the process of managing contracts throughout their lifecycle. Contract managers are the ones in charge of managing the creation up to the termination or renewal of all the legal agreements the company took part with. The primary goal of contract management is to maximize operational and financial performance of the business while reducing financial risk.

Why use Contract Management?

When two or more companies decide to do business with one another, a contract specifies the terms and obligations entered and agreed upon by all the parties involved. A poorly phrased contract can lead to one organization losing a lot of money over a simple technical error or misunderstanding. Such risk can be prevented through effective implementation of contract management.

Aside from business agreements with external parties, contract management also applies to freelancers and employees. The ever-evolving employee-employer relationship and changes in government laws and resolutions may warrant the need for employee contracts to be managed and altered accordingly to benefit both parties.

Effective implementation of the contract management process requires the participation of a skilled contract manager and working legal department team. Every word, phrase, and sentence in the contract is crucial in understanding the nature of the agreement and the obligations of each party. Contract management can help businesses form powerful business connections and relationships, but only when implemented correctly.

What is a Contract Lifecycle?

Contract lifecycle refers to the lifespan of the contract, beginning from its inception up to its termination or renewal. The lifecycle of a contract is usually divided into eight stages. Much of contract management responsibilities revolve around the contract lifecycle. Different types of contracts may go through various phases differently. As such, it is important for contract managers to monitor any potential changes or breaches of contract.


The first stage of the contract lifecycle is the contract request stage. During this phase, a company gathers crucial details about the parties, stakeholders, or personnels associated with the new agreements. At the same time, all parties involved in the possible agreement may openly express what they are expecting to get out of the contract.


Also known as the contract writing stage, the authoring phase occurs when contract parties put into writing the terms and conditions of their agreement. Having a standard template for all the contracts can help the companies reduce time and resources in drafting new agreements.


After writing the initial draft of the contract, all parties involved will compare each other’s version of the contract. They will then negotiate on the parameters of the draft. This collaboration between parties may result in multiple versions of the contract. Using a shared document can help track all the changes made by manual redlining or through auto-saving of previous versions.


When both parties are satisfied with the result of the negotiation, the contract will then be lined up for approval. Approval time may take longer depending on how far up the company hierarchy the approval has to go. The contract will be reviewed one last time, making sure that the parameters put in place meet compliance standards, regulations, obligations, milestones, key dates, and special terms of a contract. For a smoother approval process, all parties should have access to an up-to-date record of revisions and versions.


If there are no conflicts in the terms of the contract, a chief employee, administrative officer, or someone with authority to sign on behalf of the organization can then sign the contracts. Contract signing can be done either through pen and paper or by using electronic signature. Digital documents with electronic signatures are legally binding as long as it shows the intent of the signee to enter into an agreement with the other party.

Obligation Management

In this phase of the contract lifecycle, the contract manager will work closely with the project manager to ensure that all deliverables, responsibilities, milestones, key dates, and payments included in the contract are being met by both parties. Improper obligation management can lead to possible breach of contract.


Aside from the terms and obligations specified in the contract, the agreement should also comply with general and field-specific rules, guidelines, regulations, and laws. Proper compliance management will prevent late fees, litigations, and potential setbacks.


In this phase, parties are given the chance to review their existing contract and renegotiate the terms. Contract renewal and expiry dates might be easy to miss. As such, having a contract management software with automatic notification can greatly help in renewing and closing a contract without the risk of late renewal fees and other penalties.

What are the best practices for Contract Management?

Centralized contract repository

Having all contracts in one place can help minimize time and manpower when a certain contract needs to be reviewed or audited. By having a centralized repository for contracts, contract managers can easily find an agreement or keep track of the important dates, terms, and milestones.

Setting Clear Contract Management KPIs

Contract managers should establish clear key performance indicators (KPIs) that can determine whether contract obligations and/or company goals are being met. KPIs should be specific, measurable, achievable, results-oriented and time-constrained. In other words, it should be “SMART”. The three most common KPIs for contract management include contract efficiency, contract efficacy, and contract risk. A proper contract management process should increase efficiency and efficacy while decreasing risk.

Secure storage and access

Contract managers work closely with other departments in implementing and monitoring legal agreements. As such, a company’s legal department and contract management team should determine the appropriate system for contract security and access. Shared drives and calendars may work for smaller businesses, but larger enterprises should consider using contract management software that offers a secure online repository and shared access with varying levels of permissions. This allows different departments involved in the contract to share contract management responsibilities using a centralized repository.

Contact Approval Tracking

Implementing a system to monitor contract approval time can help contract managers optimize the early stages of the contract management lifecycle, increasing the three major contract KPIs. The lesser time it takes to see the value of an agreement, the quicker it is to move through the lifecycle. Tracking the approval time of the contract can also help in determining potential areas in the system that need improvement.

Automation of Contract Communications

Inter-department communications can be made easier by automating the contract management process. Contract management softwares with cloud-based repositories can help in planning, scheduling, and sending contract alerts and milestone notifications. Implementing E-signatures can also help reduce time and resources spent in manually sending physical copies of the contract back and forth.

Audit and Compliance Reviews

Aside from keeping track of the contract lifecycle, contract managers should also monitor changes in industry regulations. Regularly reviewing federal, state, and other legal regulations will help ensure that all active and incoming contracts comply with the current laws and regulations, avoiding penalties and fines.

Anticipating and adapting to change

Business needs may change without a moment’s notice. As such, contract managers should be able anticipate the changing needs of the company and adjust their contracts accordingly. Growing businesses need to renegotiate existing agreements to meet with the increasing demand.

The 7 Stages of Contract Management

Contract management is not all about keeping records of the contracts. It is a complex process that involves a series of stages that ensure that the agreement is understood and agreed upon by all the parties involved. To be a successful contract manager, one should have a clear understanding of what happens at each stage.

Planning Stage

The first step in contract management is knowing the specific weak spots of the current system. The contract management team should be able to determine the approach or system that would best address the current needs and goals of the business. During this stage, it is also important to consider the resources of the company available to be allocated to the improvement and proper implementation of the contract management process.

Implementation Stage

Once the team has determined the proper approach in improving the contract management process, they can start implementing tools, solutions, and systems needed. Simple tasks and obligations, such as tracking deadlines and deliverables, can be handled through manual contract management process. The manual process includes basic solutions like shared drives, calendars, and worksheets. Larger businesses handling multiple complex contracts may invest and implement a dedicated contract management software that can help keep all the contracts in one place and keep track of obligations and important deadlines.

Pre-contract Stage

In the pre-contract stage, the contract management team works closely with the contract administration to understand the important terms and details of a new agreement. Having an advanced knowledge of incoming contracts can help the management team develop specific guidelines that can help in managing the contract more effectively and delivering terms more efficiently.

Handover Stage

The handover stage occurs when the person/group in-charge of negotiating the new contract is not part of the contract management team. A proper handover process involves dedicated meetings that discuss the important details of the contract, including the roles, responsibilities, deliverables, and key terms of the agreement.

Contract Stage

The contract stage starts after all parties involved in the agreement affix their signature on the contract. It is during this stage that the terms and obligations are legally enforceable. Deliverables should be completed within the timeline and budget included in the contract. During this stage, the contract management team needs to stay on track and measure the performance of the agreement. Having proper contract management software that gives automated alerts for key contract milestones, upcoming deadlines, expiring terms, and more can help during this stage.

Pre-renewal Stage

The pre-renewal stage is the small window of time in which companies must determine whether they want to renew, renegotiate, or terminate expiring agreements with other parties. It is important to take note of a contract’s end date. Most agreements include a renewal or renegotiation period within their terms, so contract managers should be well aware of the strict timelines outlined in the contract to prevent penalties.

Post-award Stage

The job of the contract management team does not end when the contract term expires. Contract managers have to perform post-award tasks before they can finally archive the agreement. Expired contracts need to be thoroughly reviewed to make sure that all parties involved in the agreement met the conditions and their obligations. Contract managers also conduct a post-mortem to identify the success points and areas that can be further improved when it comes to the overall contract management process.

Using Contract Management Software

Traditionally, contracts are managed manually through folder and file cabinet storage. However, such an outdated method is full of inefficiencies that could only slow down an organization’s overall development. Automation is the key to alleviating problems caused by human errors, lost papers, and missed deadlines.

In terms of contract management, automation means using a contract management software to organize all legal documents. There are different types of software in the market specializing in one or more stages of contract management. The best contract management software should have a centralized repository, automatic import of legal documents, secure access, and smart notification.

When it comes to the post-award stage, the powerful AI of Zendoc can help the contract management team import, keep track, and review contracts. Zendoc offers four products that can provide organizations everything they need in the post-award stage.

Assistive Tool for Contract Managers

Contract management software is meant to be an assistive tool for contract managers, not to replace them. One of the greatest assets of using a contract management software is giving the means for collaboration. With a centralized repository and secure access, different departments within the organization can work together in revising and reviewing the contract in real time, eliminating the delays caused by sending hardcopy of the contract every time revisions are made.

Zendoc can help contract management teams in four different ways. The first way is through Zengo. With Zengo, organizations can link their different cloud and email services into one place. After connecting with the company’s email and cloud storage, Zendiscover will then search for all the legal documents within the company’s cloud and email. The powerful AI of Zendiscover will sort out the documents into different actionable tags.

The third way Zendoc can help contract managers is through its Zensearch. The AI-powered Zensearch algorithm will search and extract the contract’s key terms and information. No need to manually comb through multiple documents. Just type in the keywords or tags, and Zensearch will do all the work. With all the contracts’ data gathered, sorted, and tagged, Zendoc’s Zenalert will notify stakeholders and contract managers regarding events or milestones that require their attention.

What are the benefits of Contract Management Software?

Keeping all legal documents in one place

In some instances, contract managers or the legal department need to review an existing contract. As such, it is important to know exactly where to go to find the contract needed. Contract management software can help avoid confusions, outdated versions, multiple copies, and loss by providing a centralized location for all of the organization’s contracts.

Automatic import of legal documents

Contract management software has the ability to search legal documents through the company’s cloud storage and email services. Legal documents will then be imported to the centralized repository where it would be analyzed and classified to actionable tags.

Easier data search and extraction

Having a centralized repository of legal documents with actionable tags makes it easier to find any key information without having to manually browse each document one by one. Contract management software equipped with powerful and efficient search algorithms can greatly reduce the time needed in looking for the specific document, making it easier to conduct audits and reviews.

Smart alert and notifications

Contract management software comes with a smart alert system that notifies all parties involved whenever a contract requires some attention. It could help contract managers keep track of any important contract milestones, obligations, and terminations.

Who uses Contract Management Software?

Departments that directly deal with creating, monitoring, and signing of contracts are the ones commonly using contract management softwares.

Legal Teams

The legal team of an organization is typically in-charge of drafting and negotiating a contract. A company’s legal department uses contract management software to manage legal templates and generate documents. Having an available template for recurring projects or deals can save time and effort compared to making one every time there is a new agreement.

HR Teams

As the one responsible for handling multiple contracts within the company, the human resource department benefits from contract management software’s centralized repository. Additionally, HR teams rely on lawyer-approved templates for the contracts of new hires, full-time employees, and freelancers.

IT Teams

The IT department can benefit from the complete automation and integration processes offered by contract management software. Powerful AI automatically gathers all legal documents across all cloud and email platforms.Due to this, the IT team doesn’t need to develop customized API and webhook for every contract of the organization.

Finance Teams

As the one in-charge of the cash-flow of the organization, the finance team needs to have access with the contract repository. Contract management softwares can facilitate secure access for multiple departments, making it easier for the finance team to maintain transparency when it comes to billing, deductibles, and revenue expectations.

Sales Teams

Time is very valuable when it comes to making sales. As such, the sales team greatly benefits from the available templates included within the contract management software. Instead of contacting the legal department to draft contracts for them, the sales team can easily search for the template of the contract needed.

Marketing Teams

Many large organizations typically have a dedicated marketing team that focuses on advertising and promotional campaigns. Such activities require working with third-party marketing agencies for mainstream media, digital media, social media, promotions, account-based marketing, and public relations. Marketing teams may rely on the ability of contract management software to ease the approval process by giving stakeholders access to secure access to the contract. Available lawyer-approved templates can also make the drafting phase easier, eliminating the need to create a new contract from scratch every time there is a new project or deal.

Content Management Software Integrations

Software integration is the process in which various types of software sub-system are brought together under a unified single system. In contract management, software integrations usually include anything from recording sales, keeping track of supplier information, monitoring project performance, storing contract details, and having a cache of employee and customer data.

When using Zendoc, gathering all legal documents across the best cloud and email services is as easy as plug and play. Zendoc is capable of plugging into numerous key cloud services simultaneously, analyzing and gathering all contracts and pertinent legal documents in one place. The format, size, and quality of the document doesn’t matter with Zendoc. Its powerful AI reads all integrations on a regular basis for new legal documents and imports them all on its platform.

Microsoft Integrations

It is undeniable that Microsoft softwares for document management is one of the most used applications of all time. Integration with Microsoft allows users of Zendoc to experience contract management automation while still retaining the familiar document management applications such as Office 365, OneDrive, SharePoint, Outlook, and Teams.

Cloud and Email Services

Having an email and cloud integrations allow contract management software like Zendoc to automatically analyze and collect all legal documents within all the company’s document repositories. This means that organizations can easily monitor their contracts in different platforms like DocuSign, Gmail, Dropbox, Slack, and Box in one platform.

Custom Integration

Custom integration refers to the connection between the contract management software and third-party or in-house applications which are not part of the integration directory of the software. When using Zendoc, organizations can use Application Program Interface (API) like webhooks to integrate any softwares or applications to the Zendoc system.


Contract management is a long and tedious process that can decide the future of an organization’s internal and external relationships. Implementing a contract management software like Zendoc will help streamline the contract management process, enabling key members of the contract management team to spend less time on tedious and repetitive tasks like drafting new contracts and searching for existing contracts for audits and reviews.

About Zendoc

Zendoc is a full-service AI-powered contract automation system that not only organizes all of your agreements into a single database but keeps you up-to-date on what you need to do to extract as much value from your contracts as possible. You don’t have to worry about forgetting your obligations because you don’t have to remember them in the first place. 

We offer a 14-day free trial demo so you can experience relief from the pain of managing your contracts. Try us today!