In an age when updated performance data is crucial for effective contract management, many businesses struggle to adapt their legal workflows to collect and maintain accurate records. This negatively impacts their contract management process and can even pose compliance risks.
With AI-driven contract management software, businesses can leverage automated, data-backed strategies for contract generation to optimize their legal departments while eliminating tedious administrative labor. While adopting machine learning (ML) and AI in contract management comes with an adjustment period, AI-powered contract management software is rapidly integrating with numerous industries. These tools empower businesses to generate, review, and rewrite contracts instantly with databases that are updated in real-time with historical data and current objectives.
With 82% of businesses reporting AI systems as a priority in transforming their financial workflows, contract management teams should take note of the potential for AI to similarly transform their legal processes. By mimicking human intuition while offloading human labor, contract management solutions empowered with AI can deliver these 8 key benefits to businesses, provided they put in the time and effort required to integrate them.
1. Automated Contract Generation
AI-powered contract management software provides standardized templates for businesses to generate high-quality contracts more efficiently. This allows them to lower their contract cycle times while decreasing administrative labor.
When generating contracts, AI systems can recommend additional clauses or alternate wording to better reflect the business’s requirements. It can compare the finished draft with company policy, legal standards, and past contract data while checking for errors and inconsistencies faster than conventional revision processes.
2. Automated Contract Review
AI-powered contract management systems can organically process language using advanced algorithms that can understand the purpose of a clause, not just the wording. Using these systems, contract management software can automatically identify inconsistencies with company policy, legal precedents, new regulations, or current objectives and seamlessly notify the contract management team.
Once the contracts have been generated based on past documents and new parameters, the system can automatically export the relevant data, such as payment terms and obligations, to the appropriate parties. With automatic renewal reminders, businesses that use AI in contract management will never miss a deadline.
Without the need for labor-intensive compliance checks, your legal team can focus on strategic decision-making. While the AI software analyzes and compares clauses following company guidelines, your team has more time to choose alternatives and manage negotiations.
Related Article: Are Contract Renewals Costing You More Than They Should?
3. Mitigated Liabilities
In addition to automated contract management, AI-driven contract management software also automates compliance. While a human legal team devotes dozens of manhours to keep up with regulatory changes and alter their contract generation process accordingly, AI systems update in real-time with the latest regulations.
Additionally, software-generated contracts from a verified contract lifecycle management (CLM) vendor use encrypted storage and messaging systems to protect your company’s sensitive data and mitigate the risks of costly data breaches.
4. Better Data Management
Data is the future of business management, as all industry leaders know. As data becomes more plentiful, gathering information has become a less pressing issue than organizing it into a coherent strategy. With so much data on hand, businesses can no longer make what PwC calls the “needle in a haystack defense,” which used to refer to when a business lacked the performance data needed to identify bottlenecks.
With AI-driven contract management, businesses can easily manage larger datasets. The software identifies relevant industry patterns, sorts out outliers, and recommends courses of action based on real-time analysis. With real-time data visibility, companies can manage the contract lifecycle more effectively, from generation to renewal and termination.
Using AI-enabled contract management systems, your legal team will no longer miss opportunities for negotiation or neglect to correct mistakes in their compliance process. Their performance and compliance data will always be updated in real-time to be analyzed and optimized. Since data availability is no longer an excuse, businesses should take advantage of the chance to use these tools to their advantage.
5. Efficient Problem-Solving
One of the key benefits of using AI in contract management is that in addition to collecting more data than human legal departments can, the software can also organize, interpret, and react to that data faster and more accurately than was previously possible.
The time your department saves on previously manual administrative duties can now be devoted to interpreting and deploying their contract management software’s strategic changes.
6. Lower Costs
Businesses that adopt AI in contract management gain opportunities to optimize their finances by streamlining the process. First, the algorithm offloads administrative labor, requiring fewer man-hours to complete tedious tasks. Second, AI systems can refine your legal teams’ workflow to make sure they prioritize contracts with the most relevance.
This results in a streamlined contract management process and reduced payment turnaround. By automatically checking for regulatory compliance, AI-driven contract management also saves businesses money in fines and legal fees from compliance mistakes.
7. Shorter Contract Lifecycles
This efficiency in AI-powered contract management equates to a shorter contract lifecycle. Your legal team will need less time to generate, evaluate, analyze, and deliver contracts to relevant parties.
A shorter contract lifecycle leads to better collaboration since multiple parties can receive communications and review or approve them in real-time, better security using email-integrated contract delivery systems, and fewer liabilities.
Related Article: Good Contract Management Saves Time and Money
8. Integration with Current Systems
Deploying AI in contract management can be a double-edged sword. Despite these benefits, software that fails to integrate with a company’s current technological workflow can impede improvements while increasing administrative labor to ease the transition.
Versatile contract management systems integrate with common workflows, such as those using Microsoft 365 Sharepoint, to improve audit tracking and streamline the contract management lifecycle without conflicting with current systems.
With a central contract repository that seamlessly communicates with existing infrastructure, companies can create, recall, approve, and distribute contracts to all relevant parties instantly. To avoid counter-productive technology solutions, request a demo with your contract management software vendor to make sure the system improves rather than impedes your legal workflow.
Learn How Contract Management Solutions Can Improve Your Legal Workflows with AI
Outdated contract management workflows can eat into a business’s revenue, lower its chances of maintaining regulatory compliance, and negatively impact its relationship with its trusted partners, clients, and employees.
Modern contract management solutions call for data-backed strategies that efficiently generate, review and deliver high-quality contracts without overstraining human workers with unnecessary administrative tasks. AI-powered contract management optimizes a business’s contract lifecycle with less labor and fewer liabilities, leading to better data, better visibility, and better strategies.
Contact the team at ConvergePoint to learn how advanced AI software solutions can improve your contract management workflow. Learn why major businesses in diverse industries like healthcare, banking, manufacturing, and national defense trust our software with their valuable contract management processes.
Originally published at convergepoint.com
