Contracts can be extremely difficult (or more impossible) to sort. They are all over the place, scattered over a multitude of repositories and multiple locations. They are not accessible to everyone, making managing them difficult. This leads to the possibility of missing crucial business opportunities that lie in these sources.
The manual management of these contracts gets more complicated when you have to deal with modifications, terminations, and the most important, renewals of contracts. That's why the need to automate contract management came into the picture, with various contracts lifecycle management (CLM) solutions being developed.
Next was to unlock secrets in contracts. The combination of the power of artificial intelligence (AI) and the contract management system has changed the way businesses operate by defining the true possibilities of the contracts hidden in millions of folders and files for years. Fortunately, contraSafe.com offers a software that’s integrated with AI.
Artificial intelligence can transform unstructured contracts into structured enterprise data. Utilizing AI in contract management could aid the business in identifying risks to business and opportunities. AI can comprehend the language used in contracts and the nature of clauses. It transforms the contract management from a basic document management database to a live, strategic machine.
In this article, we'll look at ways that an AI enabled CLM will enhance this Contract Management process for companies and dramatically reduce the risk:
Smart Contract Authoring
AI-enabled CLM solution assists in delivering intelligent contract design through automatically finding and organizing contracts within the contracts library. Machine Learning algorithms help CLM solutions study the archives of past contracts and find patterns that can suggest suitably approved contract clauses and pre-defined key terms.
The most notable aspect of an AI-based CLM is its analysis based on context. It means the CLM solution can find the clauses to be utilized in particular contracts while creating a contract. For instance, it may suggest including an exchange rate clause when making a procurement contract even if the vendor isn't in the same nation and is situated in a different country.
Contract Data Extraction
There was a time when BPO firms extracted the clauses from contracts manually and then stored them inside the CLM system. But, the latest Machine Learning (ML) algorithms have made significant progress in the area of the contract's clauses, and terms can be extracted with quite a high level of accuracy. There is no need to open the document to read the terms and then save them in an Excel document to keep track of the deadlines, expiry dates, and much more.
The required information is automatically extracted by sophisticated ML algorithms, even when the contract is in image scan format. However, if the contract is written on paper, it is essential to process these contract documents through scanning and storing these in a central location before triggering the ML algorithms. This old data extraction method can set you up to take advantage of the next stages of AI adoption by supplying the data needed to allow ML engines to be more mature. The new engine is data.
To reduce the amount of time and money wasted from poor workflows for contracts, contract administrators must keep track of the period within which assignments are finished and the tasks causing delays and increasing cycles.
A reliable, AI-powered CLM software offers automated workflows that are intelligent and can support the monitoring of task-related performance. Contract managers can determine the length of time employees need to complete tasks, thus promoting accountability. Then, the tasks are quickly increased in time to keep the contract's lifecycle in motion.
Alongside ensuring deadlines are adhered to, contract management professionals equipped with contract AI effortlessly monitor the amount of time the contract is in at each phase of the contract's lifecycle. The visibility of contracts can dramatically increase thanks to visually appealing representations of workflow analytics and reports. Thus, the bottlenecks within the workflow process can be identified, and the inefficient practices of managing contract lifecycles can be removed.
Advanced Analytics for Risk Assessment and Mitigation
AI-enabled solutions employ natural language processing to read through documents, categorize clauses and highlight the variations between document versions. This allows the system to analyze agreements and flag the clauses or terms that are not beneficial to the company. It will suggest alternatives clauses that minimize the risk to the company and protect it.
By Using Pattern Recognition Algorithms, AI Can Spot Areas for Improvement.
With thousands and hundreds of legal documents transferred to an online contract management system, it is a hassle to label every clause manually to allow for further processing. Machine learning algorithms can determine the title of the clause basis of the content.
You can upload documents to a contract management program with this trained model, and tags will automatically be applied to the documents. Suppose the algorithm determines that a clause is not correctly labeled. In that case, you can provide the correct title for a specified text, and it will adjust itself after a few repetitions of the clause and not repeat the mistake.
These days, the applications of AI are truly mind-boggling--there's hardly an industry or process that can't be improved with the right artificial intelligence or machine learning technology. AI-enhanced CLM software will help your company increase efficiency and gain more insight and make the right decision more quickly.