Nearly every organization hopes to reduce contracting costs, but 99% of large companies report that they lack the technology needed to improve the contracting process. As the competition for contract management increases, leading organizations look for technologies that will achieve a higher ROI in their contract management lifecycles by reducing contract processing time and downsizing unnecessary labor, including outsourcing.
AI-assisted tools can generate, analyze, and compare contracts far more efficiently than manual methods. Moving forward, these tools will play an integral role in enhancing the value of the contract management process across industries. This article examines how AI-assisted contract management software can streamline the contract management process for large organizations, including contract creation, regulatory compliance, and risk management.
Manual contract management is outdated
Although most large organizations report a lack of improvements in their contract management process, 7 in 10 businesses have deployed a formal contracting strategy that includes contract management technology. New AI-assisted tools can close this gap by addressing these organizations’ most common contract management pain points in 2024, which include:
- Mitigating contract-related risks
- Reducing contract management costs
- Managing liabilities
- Maintaining regulatory compliance
Across industries, top leadership is increasing its focus on reducing risk by focusing more directly on process management. Using outdated process management methods, such as manual contract management workflows and non-AI technology solutions, organizations increase their risk for document inconsistencies and data entry errors while slowing down the entire review process.
This is why an increasing number of CEOs now focus on data-driven solutions to risk management processes, which can centralize the contract creation, storage, analysis, and review processes using advanced AI algorithms.
What is contract AI technology?
Using AI for contract management allows organizations to offload the manual document generation process onto advanced algorithms. However, modern AI-assisted tools can do much more than reduce labor time and cost. By analyzing, comparing, reviewing, and finalizing contracts, AI contract management solutions avoid inconsistencies, make informed suggestions, and reduce the risk of exposure more effectively than manual methods.
Using contract AI technology, organizations can also eliminate the cost of outside counsel in the document review process and handle the risk management and compliance processes in-house. Centralized contract management systems can integrate with existing accounts such as SharePoint to help businesses navigate complex contract management workflows with ease.
Most modern organizations face a large skills gap when upgrading their contract management processes. Without the right technology solutions, contracts can be difficult to draft consistently, difficult to retrieve efficiently, and impossible to monitor for compliance deviations. Contract AI offers large organizations a systematic approach to contract management, one that mitigates risks while cutting labor costs in the process.
What can contract AI do?
AI-assisted contract management software offers numerous ways for organizations to reduce contract management risks and improve compliance.
1. Document generation
AI-assisted tools can generate contracts based on standardized templates that incorporate your industry’s compliance requirements. If needed, these templates can be customized with predefined clauses that address specific risks while including all necessary contract clauses (indemnity, force majeure, limitation of liability, etc.).
2. Automated contract review
Advanced AI can examine contracts and compare them to standard clauses to detect unusual terms, missing clauses, and any other deviations. In seconds, an AI scan can identify potential risks related to regulatory compliance, delivery schedules, payment terms, and more. In-house or outsourced labor could take hours or days to achieve the same results.
Related Article: Using Contract Management Software to Migrate Contracts
3. Centralized storage
Contract management AI can store an organization’s contract in a central repository. Managers with access can retrieve the exact contract they need without risking misfiled or missing documents. This applies to documentation management as well. In the event of a contract dispute, management software stores all essential documents in one place for easy retrieval.
4. Continuous monitoring
Contract management software continuously monitors contract creation and performance to make sure that they stay compliant. When a deviation is detected, the program makes timely suggestions to encourage staff to remain proactive and correct issues early.
5. Regulatory compliance
Regulations and compliance standards change frequently, which can be difficult to track for manual contract management workflows. AI-assisted tools allow contract managers to track relevant regulations, prepare for compliance audits, and maintain a clear audit trail with detailed contract histories.
6. Identify and reduce liabilities
AI tools can monitor contractual obligations, including indemnities and warranties, in one centralized system to keep managers informed on all potential liabilities, including hidden ones. Additionally, contract management software clearly defines the scope of the contract, including responsibilities and deliverables, to reduce the possibility of a contract dispute.
7. Clause comparison
Contract management software can analyze contract clauses and compare them to standards to find deviations, recommend alternatives, and flag unusual terminology. If it detects missing protective clauses, such as indemnities and warranties, the software can alert the team to help them respond quickly.
8. Multi-platform collaboration
Versatile AI-assisted tools seamlessly integrate with existing technology workflows, such as an organization’s SharePoint and Microsoft 365 accounts. They also provide options for collaboration, allowing multiple stakeholders to monitor contract generation and comment on the process in real time.
9. Streamlined approval workflow
AI-assisted tools make contract approval workflows more efficient by delivering the contracts to the required personnel automatically. Managers can set conditions for approval in the program to make sure that high-risk contracts are reviewed as meticulously as needed to meet the needs of risk management directors.
This includes detailed change logs, interdepartmental communication tools, e-signature integration, and key date reminders for renewals, expiration dates, and milestones for each contract.
Request a demo to learn how AI tools can make your contract lifestyle management more efficient
AI-assisted contract management software streamlines an organization’s contract workflow by efficiently generating contracts, analyzing and comparing clauses against industry standards, recommending strategic changes, and leaving a clear trail for auditors to examine.
For contract managers and risk management directors, the nuances of regulatory compliance represent major pain points in rapidly expanding industries. For a detailed understanding of how AI-assisted contract management solutions can benefit your organization, request a personalized demo today to streamline your organization’s digital transformation with advanced contract management tools.