Your guide to Contract Management

Contract management is how organisations create, store and manage agreements with control and consistency.

This guide outlines best-practice contract management for modern legal teams, including processes, technology and practical implementation.

CONTENTS

What is Contract Management?
Contract Management vs Contract Lifecycle Management
AI-Powered Contract Management
Do I need Contract Management Software?
Choosing Contract Management Software
Implementing Contract Management Software

Get to know Plexus Contract Management

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What is contract management?

Contract management is the process through which an organisation creates, approves, executes, stores and renews contracts. It ensures every agreement is delivered as intended and that obligations across the business are understood and met.

Contracts underpin almost every business activity. They determine what work needs to be done, who will do it, when it must be completed and what it will cost. With so many agreements moving across departments, businesses need a structured approach to managing the entire contract lifecycle and clear accountability at every stage.

What is the contract lifecycle?

The contract lifecycle refers to the stages a contract moves through from initial request to renewal. These stages include:

1. Briefing (Intake): Business stakeholders provide Legal with the details and objectives of the agreement they want the organisation to enter into.

2. Drafting: Legal teams draft the contract using approved templates and standard terms. Modern CLM platforms often support AI-assisted drafting to speed up this stage.

3. Negotiation: Once the draft is shared with the counterparty, both sides negotiate terms. This stage ensures the details, responsibilities and commercial outcomes are clearly agreed.

4. Approval: Most contracts require sign-off from senior leaders, such as a CFO or department lead. Approval ensures the organisation has the capacity, budget and resources to meet the proposed obligations.

5. Execution: After agreement on the final terms, the contract is signed and becomes legally binding. Many companies use electronic signature tools to streamline this step.

6. Storage and Obligation Management: Signed contracts must be stored securely so the business can quickly access terms, obligations and upcoming deadlines. Reminders for renewals, expiries and milestone dates help prevent risk.

7. Renewal: Contracts with expiry dates need to be reviewed and renewed if the relationship is to continue. Renewal often includes renegotiating pricing, deliverables or service levels.

What is a contract management system?

A contract management system (CMS), sometimes referred to as contract lifecycle management software, is the structure an organisation uses to manage contracts from start to finish. The system ensures contracts are stored securely, approvals are followed, timelines are tracked and risk is minimised.

CMS solutions range from simple storage tools to advanced AI-enabled platforms that automate workflows, flag risks and surface insights.

What happens to a contract after it is signed?

In many organisations, the contract is signed and then forgotten. It might be stored in email, on a personal drive or in a filing cabinet. This creates unnecessary risk.

Common issues include:

Missed deadlines for key obligations
Failure to enforce service levels
Inability to locate the signed version when employees leave
Missed renewal opportunities or unintended contract lapses

A lack of visibility over signed contracts exposes the organisation to operational, financial and compliance risk. A signed contract that is not actively managed becomes a ticking time bomb.

Is there a better way to manage contracts?

Yes. More organisations now use dedicated contract management software instead of manual processes. Purpose-built systems improve visibility, speed and compliance across the entire lifecycle.

What is contract management software?

Contract management software centralises the creation, execution and oversight of contracts. It helps organisations:

Create and approve contracts using structured workflows
Execute agreements securely through integrated eSign tools
Store contracts in a searchable repository
Track obligations and important dates with automated reminders
Analyse contract activity for trends, bottlenecks and risks
Identify issues using AI-powered review and summarisation features

The software ensures every contract follows the correct process and gives teams full visibility of the work in progress and completed agreements.

Why choose cloud-based contract management software?

Cloud-based contract management solutions allow Legal and business teams to collaborate in real-time from any location. They provide a single, secure source of truth for every contract.

Platforms like Plexus legal OS give teams:

Visibility into contract status, progress and priority
A central place to store and retrieve legacy contracts
Automated approval workflows
Integrated eSignature
Fast access to contract summaries and risk insights through Plexus AI

The future of contract management

AI-powered CLM systems are shifting contract teams from manual administration to strategic enablement. Tools like Plexus and Plexus AI reduce manual review time, surface risks instantly and help Legal teams focus on higher-value work.

Summary: Why contract management matters

Effective contract management helps organisations:

Maintain accountability across teams
Reduce operational and compliance risk
Speed up contract cycles
Improve visibility of obligations and deadlines
Free legal teams to focus on strategic work

Key differences: Contract management vs CLM

Here’s a comparison of the role the two systems play:

Feature	Contract management (CMS)	Contract lifecycle management (CLM)
Scope	Document-centric: creation, approval, storage	End-to-end lifecycle: request to renewal, contract-to-invoice, obligation management
Focus	Administrative or legal only	Cross-functional: legal, procurement, finance, operations
Automation	Limited workflow or manual	Automates workflows, integrates systems, tracks obligations
Data & insights	Basic tracking (e.g., expiry dates)	Performance analytics, risk dashboards, process bottlenecks
Example outcome	Contract stored and signed	Contract value extracted, risk reduced, process optimised

Why this distinction matters

Understanding the difference is critical because many organisations mistakenly believe they are managing contracts effectively when they only have document management in place. As contract volume grows, complexity rises and risk expands — a narrow contract management approach leaves gaps. CLM offers major benefits: improved visibility, faster cycle times, reduced risk of missed renewals, better compliance, and tighter alignment between contract terms and business performance.

How to choose between CMS and CLM

When evaluating your contract approach and systems, consider:

How many different teams use contracts (Legal, Finance, Procurement, Sales)
Whether you need automated workflows and integration with other systems
Whether you track contract performance, obligations and renewals proactively
Whether your contracts are treated as static documents or strategic assets
Whether your current processes scale effectively with growth

If you are managing contracts mostly through email, spreadsheets and simple filing, you are likely working in a CMS mode. If you need end-to-end automation, visibility and analytics, you should consider a CLM-system approach.

Practical steps for upgrading to CLM

Map your current contract process: from request to renewal.
Identify bottlenecks (e.g., manual approvals, lost contracts, missed renewals).
Select a solution that supports full lifecycle functionality (templates, workflow, negotiation, execution, obligation tracking).
Integrate with other systems (procurement, ERP, finance) to ensure contract terms link to operational outcomes.
Roll out in phases with high-impact use cases (e.g., high-volume supplier contracts).
Track KPIs: cycle time, renewal rate, value leakage, compliance exceptions.

Why modern organisations are adopting CLM

Due to increasing regulatory complexity, global supply chains, vendor risk, digital transformation and contract volume explosion, organisations need more than document storage. The market for CLM solutions is projected to grow significantly.

By moving to CLM, organisations gain:

End-to-end visibility over contract lifecycle
Integration of contract data into business processes
Faster approvals and execution
Automated renewal management
Insight into contract performance and risk

AI-powered contract management

Artificial intelligence in contract management refers to the use of machine learning, natural language processing, and automation technologies to create, review, negotiate, analyse and manage contracts across the entire contract lifecycle. AI-powered contract management systems are designed to reduce manual work, minimise risk, improve accuracy and accelerate time-to-signature.

AI is no longer a future concept. It is now embedded across legal and commercial workflows, transforming how organisations create, review and manage contract obligations. Today’s AI-powered contract lifecycle management (CLM) platforms help Legal and the business work faster, with greater consistency and lower risk.

How is AI transforming contract management today?

AI is reshaping contract management by automating repetitive tasks, improving visibility, and enabling instant analysis of contract data. Modern legal teams use AI to:

Review contracts in minutes
Identify risky clauses before signing
Accelerate negotiation cycles
Generate summaries and obligation lists instantly
Surface insights across large contract portfolios
Reduce administrative workloads by up to 80 per cent
Ensure compliance using real-time regulatory monitoring

What are the benefits of AI in contract management?

Organisations adopt AI in contract management to:

Reduce contract turnaround time
Improve accuracy and reduce human error
Ensure consistent use of preferred terms
Improve visibility of obligations, renewals and risk
Shorten negotiation cycles
Scale legal support and enable business self-service
Free Legal teams to focus on strategic work instead of low-value admin

What does AI-powered contract management look like in practice?

AI capability is now embedded across the entire contract lifecycle. In a typical workflow, AI can:

Generate a first draft using approved templates and clause libraries
Flag high-risk clauses or terms that vary from policy
Suggest alternative language
Summarise complex agreements for fast review
Extract key dates, obligations and renewal details
Route contracts through automated workflows
Auto-classify contracts and store them with metadata
Analyse portfolio trends such as risk concentration or cycle times

Platforms like Plexus AI integrate these capabilities into a single environment, allowing legal and business users to collaborate seamlessly without switching tools.

Is AI replacing traditional contract management systems?

AI does not replace CLM; it enhances it. Traditional CLM systems automate workflow and storage. AI adds intelligence, enabling:

Faster drafting
Instant contract review
Real-time risk detection
Automated summarisation
Predictive insights into renewals, negotiation bottlenecks and value leakage

Modern CLM platforms combine both. The future standard is an AI-powered legal operating system rather than a standalone CLM.

What can I do in AI Contract Management?

AI enhances every stage of the contract lifecycle by automating tasks that traditionally required hours of manual legal work. Core capabilities include:

Drafting contracts from approved templates
Reviewing agreements against policy, fallback positions and risk thresholds
Comparing versions during negotiation and highlighting all deviations
Identifying missing, high-risk or non-standard clauses
Extracting obligations, dates, commercial terms and renewal triggers
Sending automated alerts for expiries, milestones and compliance issues
Analysing historical contract data to identify trends and bottlenecks
Predicting negotiation outcomes using patterns in past agreements

Modern contract management platforms like Plexus' AI-powered legal OS extend these capabilities further with:

Automated clause identification and standardisation
Drafting suggestions that stay aligned to your legal policies and playbook
Instant risk scoring using an intuitive traffic-light system
Real-time insights that explain issues in plain English
Automated obligation tracking, approvals and amendments
Secure, centralised storage with structured metadata for instant search

How does contract management AI work?

AI uses machine learning and natural language processing (NLP) to understand the structure and meaning of contract language. It is trained on large volumes of agreements to recognise:

Clause types
Risk patterns
Variations from standard terms
Commercial implications
Required actions and deadlines

AI then automates or accelerates tasks that previously required hours of manual review.

Which contract management tasks can be automated with AI?

AI is particularly effective for:

First-pass contract review
Redline comparison
Obligation extraction
Drafting simple contracts
Approvals routing
Data entry and tagging
Risk scoring
Reporting across a contract portfolio

What is the difference between AI and traditional CLM software?

Traditional CLM is workflow automation. AI is intelligence.

Traditional CLM	AI-Powered CLM
Focuses on workflow automation	Focuses on intelligence and understanding
Stores and tracks contracts	Interprets and understands contract language
Moves contracts from step to step	Reviews, analyses, and optimises those steps
Provides structure and process	Provides insight and recommendations
Ensures consistency and control	Surfaces risk, patterns, and opportunities
Oriented around administration	Oriented around decision-making

AI contract review: everything you need to know

How does AI perform contract reviews?

AI contract review tools analyse a contract’s text, structure and clauses to:
• Identify deviations from policy
• Highlight ambiguous or missing terms
• Extract commercial and compliance obligations
• Suggest alternative clauses
• Provide commentary and summaries

AI reviews can be completed in minutes, improving both speed and accuracy.

Is AI reliable for reviewing legal contracts?

AI contract review is highly reliable for:
• Identifying clause types
• Highlighting high-risk language
• Comparing versions
• Extracting data
• Spotting inconsistencies

AI is not a replacement for legal judgement, but it significantly reduces the time required for lawyers to complete reviews and improves quality through consistency.

What are the best AI tools for contract review?

The strongest AI contract review solutions offer:
• Real-time clause analysis
• Risk scoring
• Custom policy training
• Summary generation
• Seamless integration with CLM workflows
• Enterprise-grade security
Plexus AI is trained on legal-grade data sets and deeply integrated into workflow automation, providing both speed and risk control.

Can AI speed up contract review for in-house teams?

Yes. AI-driven contract review reduces review time by up to 80 percent, allowing legal teams to focus on negotiation strategy and stakeholder enablement rather than manual clause scanning.

AI contract review and contract analysis

What is AI-driven contract analysis?

AI contract analysis refers to the automated extraction, categorisation and interpretation of contract data. This allows legal and commercial teams to:
• Search contracts by clause, obligation or risk level
• Understand contract exposure at scale
• Compare performance across suppliers or counterparties
• Identify trends such as renewal patterns or frequently negotiated terms
• Generate dashboards for Legal Ops and executive reporting

How accurate is artificial intelligence in reviewing contracts?

Accuracy depends on model quality and training data. Leading legal AI tools consistently identify clauses and risks at a level equal to or better than human reviewers for standard agreements. Complex contracts still require human supervision, but AI dramatically accelerates the initial review.

How do lawyers use AI for contract review?

Lawyers use AI to:
• Complete first-pass review
• Flag risks before negotiating
• Generate summaries for stakeholders
• Draft amendments and fallback positions
• Search for clauses across thousands of agreements
• Validate whether commercial terms match policy

Can AI help reduce contract risk?

Yes. AI reduces risk by:
• Improving compliance with playbooks
• Ensuring obligations are tracked and not missed
• Flagging deviations from standard terms
• Increasing visibility of contract data
• Providing early warnings for expiries and renewals
• Detecting inconsistent language and duplicated terms

Why organisations choose AI-powered CLM

AI enhances every stage of the contract lifecycle:
• Intake: AI categorises requests, recommends templates and pre-fills data
• Drafting: AI generates first drafts and ensures approved language is applied
• Negotiation: AI compares redlines and suggests alternative clauses
• Approval: AI identifies required approvers and routes workflows
• Execution: AI checks signature completeness and metadata
• Storage: AI auto-tags and classifies contract documents
• Renewal: AI identifies upcoming deadlines and potential risks
• Analysis: AI surfaces portfolio insights for optimisation and cost control

AI-powered CLM platforms support the entire business by improving visibility, consistency and speed across contracting. They reduce risk, accelerate growth and free legal teams to focus on high-value work.

Plexus for modern contract management

Plexus AI brings together instant contract review, AI-powered drafting, automated workflow, advanced search, portfolio analytics, integrated eSignature, enterprise security and rapid onboarding It is designed for in house legal teams needing to improve speed, reduce risk and scale support across the business.

Why have a contract management system?

Because contracts are too important to manage informally. A contract management system gives organisations a structured, reliable way to create, approve, execute and manage contracts at scale. As contract volume grows and teams move faster, informal processes such as email, shared drives and manual approvals introduce risk, delays and lost value.

What problem does a contract management system solve?

Contracts underpin almost every business relationship, from customers and suppliers to employees and partners. Without a defined system, contracts become difficult to control, hard to find and easy to mismanage.

Common challenges organisations face without contract management software include:

• Contracts stored across inboxes, desktops and shared drives
• Long delays between drafting and signing
• Unclear approval responsibilities
• Inconsistent contract language
• Missed renewals or notice periods
• Limited visibility into risk and obligations
• Legal teams overwhelmed by low-value work

A contract management system solves these problems by replacing ad hoc processes with structured workflows, clear ownership and a single source of truth.

Key benefits of a contract management system

Mitigate legal and commercial risk

One of the primary reasons organisations implement contract management software is risk reduction.

By defining clear rules for when Legal must be involved and embedding approval workflows, the business is less likely to enter agreements that fall outside policy or risk appetite. High-risk contracts are flagged early and routed appropriately.

Digitised workflows also create an auditable record of decisions, approvals and changes, supporting compliance and accountability. Permission-based access and encryption ensure sensitive contracts remain secure.

Accelerate time to contract execution

Contract management systems significantly reduce the time it takes to move from briefing to signature.

Automated workflows notify stakeholders as soon as action is required, eliminating delays caused by manual follow-ups. Integrated eSignature allows contracts to be signed remotely without waiting for physical documents.

Faster execution means deals close sooner, suppliers are onboarded faster and revenue is realised earlier.

Create a single source of truth for contracts

Without a central system, contracts are difficult to locate and manage over time. This creates operational risk and weakens institutional knowledge.

A contract management system provides a single, structured repository where all agreements are stored alongside key data such as parties, dates, values and obligations. Teams can quickly find the right contract, understand its status and make informed decisions.

Improve organisational efficiency and consistency

A defined contract management system standardises how contracts are created and handled across the organisation.

Approved templates, standard clauses and guided workflows reduce variation and rework. Business users can generate low-risk contracts themselves without waiting on Legal, while Legal retains control over policy and risk.

This consistency simplifies contracting for everyone involved and reduces friction between Legal and the business.

Support compliance and audit readiness

Contracts often underpin regulatory, financial and operational obligations. A contract management system provides clear audit trails, approval records and version history, making it easier to respond to audits, disputes or regulatory inquiries.

This is particularly valuable for organisations operating in regulated industries or managing large supplier and customer ecosystems.

Improve visibility and reporting

Contract management software provides insight into contract volume, turnaround times, bottlenecks and risk exposure.

Legal leaders can see where work is coming from, how long contracts take to execute and where processes can be improved. This data supports better resourcing decisions and continuous improvement.

Who benefits from a contract management system?

While Legal teams typically own contract management, the benefits extend across the organisation.

Legal teams reduce administrative burden and focus on high-value work.
Sales teams close deals faster with fewer delays.
Procurement teams manage supplier risk and obligations more effectively.
HR teams manage employment and contractor agreements consistently.
Finance teams gain visibility into commercial commitments and renewals.

Any organisation that relies on contracts to operate benefits from having a system in place.

Why contract management systems are now essential

As organisations scale, contract volume and complexity increase. Gartner consistently positions contract management as a foundational capability for legal and procurement functions because contracts sit at the centre of risk, revenue and compliance.

Manual processes do not scale. They create hidden risk, slow down the business and erode trust between teams.

A contract management system provides the structure, automation and visibility required to manage contracts confidently in a modern organisation.

How Plexus supports contract management

Plexus provides a modern contract management platform that helps organisations standardise contracting, reduce risk and accelerate execution.

With structured workflows, approvals, secure storage, eSignature and reporting, Plexus enables Legal and the business to manage contracts with control and consistency. Contracts move faster, risk is clearer and teams spend less time chasing paperwork.

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