Dynamics 365 Contract Management: Features, Benefits and Process

Contract management has become an essential part of businesses that want to streamline growth. You will support me when I say, “The manual ways of managing, tracking, and maintaining contracts have been a factor in loss and inefficiency, restricting business growth.”

This is a common issue that business owners and contract managers have to face. But with an ERP implementation like Dynamics 365, you can automate different processes while getting better visibility into contract-related data. This can empower you to make informed decisions about contracts and drive greater operational efficiency.

In this blog, we are going to discuss what exactly contract management is, the challenges faced by businesses, and how Dynamics 365 can support contract management with its capabilities and integrations.

What is Contract Management?

Contract management consists of different complex processes that include creating a contract, negotiating terms, executing processes, monitoring contracts, and streamlining processes.

All such activities must be followed to ensure the involvement of all personnel related to a contract. Also, all personnel must be notified about the status of the contract and ongoing processes. It enables the business to resolve any dispute or issue without hassle until the completion of the contract.

From the start to the end of the contract, there are a few stages, which are:

• Pre-contract: This stage includes identifying the requirements of contracts, finding suitable vendors, and negotiating different terms and resources.

• Contract Information: Once we have the requirements and are done with negotiations, it is time to draft the contract. After this, we can proceed to review it and get signatures from all parties.

• Contract Execution: After signatures, we can move forward with executing the contract based on the agreed terms and conditions, such as the delivery of services or goods.

• Contract Administration: Managers can track the performance of contracts to help ensure they remain on track. They can also resolve disputes and make important changes to the contract where required.

• Contract Termination: Once the service is completed or the agreement reaches its end date, the contract can be terminated according to its terms and conditions.

What is Dynamics 365 for Contract Management?

Dynamics 365 can support contract management by connecting contract-related processes with business applications such as procurement, supply chain, sales, finance, and field service. Rather than being a single standalone contract management module, the capabilities available depend on the Dynamics 365 application and the type of contract a business needs to manage.

For example, Dynamics 365 Supply Chain Management provides built-in capabilities for operationalising contracts through purchase agreements, rebate agreements, brokerage agreements, and regular purchase orders. It can also integrate with an external contract lifecycle management (CLM) solution when businesses need more comprehensive contract management capabilities.

D365 contract management can help businesses centralise relevant contract information, connect contracts with operational processes, automate selected tasks, and improve visibility into contract-related activities. The exact capabilities depend on the Dynamics 365 applications and integrations used by the business.

What is Contract Lifecycle Management (CLM)?

Contract lifecycle management (CLM) is the broader process of managing a contract throughout its lifecycle, from creation and negotiation to approval, execution, administration, amendment, renewal, and termination.

CLM is particularly useful for businesses that manage a large number of supplier or commercial contracts and need structured processes for contract creation, authoring, redlining, negotiation, signing, amendments, and termination.

Dynamics 365 Supply Chain Management provides an integration framework for connecting with an external CLM solution. Microsoft states that this integration can support more advanced CLM processes while connecting contract information with Supply Chain Management.

How does Dynamics 365 for Contract Management benefit businesses?

Businesses have to deal with numerous challenges while they streamline different contracts altogether. In such a scenario, contract management with Dynamics 365 can provide tools and connected business processes to help tackle these challenges and improve operations. Some of the benefits are:

Centralised Data Storage

Store data along with contracts in a unified and accessible environment, allowing authorised users to access relevant information whenever needed.

Track Changes

Dynamics 365 can help users track contract-related information and important dates throughout the contract lifecycle. Where CLM integration is used, users can also access contract status and other information from Supply Chain Management.

Advanced Search

Dynamics 365 and connected contract management solutions can help users find specific contract information using available search, filtering, and sorting options.

Automated Workflows

Businesses can use workflows and automation capabilities to reduce repetitive manual tasks, such as approvals, notifications, reminders, and other contract-related processes.

Access Pre-built Templates

Pre-built templates can help businesses create contracts and other documents with less manual effort. Where a dedicated CLM solution is integrated with Dynamics 365, additional authoring and template capabilities may be available.

Customisable Dashboard

Based on your role and business requirements, you can customise views and dashboards to focus on useful and actionable information related to contracts and business processes.

Obligation Tracking

Track contractual responsibilities, payment terms, service-level requirements, and other obligations to help ensure that important commitments are not overlooked.

Risk Assessments

You can identify potential risks associated with a contract or supplier and take appropriate action before they affect business performance.

Renewal Reminders

Contract-related processes can help businesses monitor important dates and remind responsible users about upcoming renewals, expiries, services, or compliance requirements.

Supplier Performance Management

Evaluate supplier or vendor performance against agreed contract terms and use relevant business data to identify areas for improvement.

Seamless Integration

Dynamics 365 can connect contract-related processes with other Microsoft business applications and external solutions. For example, Supply Chain Management can integrate with external CLM systems to connect contract processes with purchase agreements and supplier information.

Security and Compliance

Dynamics 365 provides security and access-control capabilities that can help businesses protect business information and manage access according to user roles and responsibilities.

How Does Dynamics 365 Contract Management Work?

The exact process depends on the type of contract and the Dynamics 365 application being used. However, a typical contract management process can include the following steps:

1. Identify contract requirements: Define the purpose of the contract, stakeholders, suppliers, customers, services, products, and commercial requirements.

2. Create and review the contract: Prepare the contract using the required terms and supporting information, then review it with the relevant stakeholders.

3. Negotiate and approve: Negotiate the terms and obtain the required internal or external approvals.

4. Execute the contract: Finalise and sign the agreement before putting the agreed terms into operation.

5. Monitor the contract: Track important dates, obligations, services, payments, purchase agreements, and other relevant activities.

6. Renew or terminate: Review the contract before its expiry and renew, amend, or terminate it according to the agreed terms.

Which Dynamics 365 Applications Can Support Contract Management?

There is no single Dynamics 365 application that handles every type of contract. The right application depends on the business process and type of agreement being managed.

Dynamics 365 Supply Chain Management

Dynamics 365 Supply Chain Management is particularly relevant to supplier and procurement contracts. Its purchase agreement functionality allows organisations to commit to purchasing a specified quantity or amount over time, while CLM integration can connect it with an external contract lifecycle management solution.

Dynamics 365 Field Service

For service-based businesses, Dynamics 365 Field Service provides customer agreements that can automatically generate recurring work orders and invoices based on predefined details, frequencies, and date ranges. This can be useful for maintenance, inspections, and other recurring services.

Dynamics 365 Sales

Dynamics 365 Sales can provide the customer and sales context around commercial agreements, including accounts, opportunities, quotes, and customer interactions. Connecting these processes with the relevant business applications can give teams better visibility across the customer lifecycle.

Dynamics 365 Finance

Contract terms can also affect financial processes such as invoicing, payments, financial reporting, and other transactions. Connecting contract-related information with Dynamics 365 Finance can help businesses manage the financial aspects of their agreements alongside their wider business processes.

Dynamics 365 Contract Management for Supplier Agreements

Supplier contract management is an important part of procurement and source-to-pay operations. Businesses need to manage agreed pricing, quantities, delivery terms, supplier obligations, and other conditions throughout the relationship.

Dynamics 365 Supply Chain Management provides purchase agreements that commit an organisation to buy a specified quantity or amount through multiple purchase orders over time. These agreements can help businesses apply agreed terms and pricing when purchasing from suppliers.

When more advanced contract lifecycle capabilities are required, Supply Chain Management can be integrated with an external CLM solution. This can support processes such as contract authoring, redlining, negotiation, signing, amendments, and termination.

Dynamics 365 Contract Management for Service Agreements

Contract management is also important for businesses that provide recurring services. Instead of manually creating work orders or invoices for every scheduled service, Dynamics 365 Field Service agreements can be configured to generate recurring work orders and invoices based on predefined schedules.

For example, a business providing scheduled maintenance could use an agreement to generate recurring work orders for planned services. Field Service can also support recurring invoices for predefined products and services.

What Are the Common Contract Management Challenges?

Businesses managing contracts manually can face several challenges as their contract volume grows. Common issues include:

• Disorganised contract documents

• Difficulty finding the latest contract information

• Manual approval processes

• Missed renewal or expiry dates

• Limited visibility into supplier agreements

• Difficulty tracking contractual obligations

• Disconnected procurement and contract processes

• Manual data entry and repetitive administration

• Limited visibility into contract performance

• Difficulty managing contracts across multiple stakeholders

How Can Dynamics 365 Help Eliminate Contract Management Challenges?

If you are dealing with a lot of contracts and facing numerous issues, like disorganised documents, missed deadlines, and critical risks, Dynamics 365 can help connect contract-related processes with the wider business operation.

For organisations that need more comprehensive contract lifecycle management, Dynamics 365 Supply Chain Management can also integrate with an external CLM solution. This allows businesses to connect contract lifecycle activities with procurement and supplier processes rather than managing them separately.

Being a reliable, trusted, and cost-effective Microsoft Solutions Partner, Dynamics Square UK can help you with Dynamics 365 implementation. We have 150+ solution experts who understand the complexity of businesses and offer solutions aligned with their business requirements.

How Can Dynamics Square UK Help With Dynamics 365 Contract Management?

Managing contracts efficiently requires more than simply storing documents. Your contract processes need to work with the wider systems used for procurement, finance, sales, service, and operations.

Dynamics Square UK can help you assess your existing contract management processes, identify the appropriate Dynamics 365 applications, configure workflows, plan integrations, and implement a solution around your business requirements.

With experience in Dynamics 365 implementation services, our team can help you connect contract-related processes with the wider Dynamics 365 ecosystem and provide ongoing support where required.

If you want to improve contract visibility, reduce manual administration, manage supplier agreements, or connect recurring service agreements with your operations, Dynamics Square UK can help.

To streamline your contract management activities, feel free to write us a message at info@dynamicssquare.co.uk or call us directly at 0203 769 7689 to discuss your requirements.