Contracts are the cornerstone of a successful company. Unfortunately, many businesses fail to recognize the importance of airtight contracts and lose time and money dealing with legal issues due to improper contract management.
Large companies typically have a high volume of contracts to keep track of from employee contracts to vendor agreements, and the sheer number makes organizing, updating, and tracking these contracts extremely difficult. Most companies do not have a centralized storage location for all of their different types of contracts, let alone an efficient way to extract data, and companies can waste hours of work searching for a single piece of information. Today, more and more companies are turning to AI contract management software to track and monitor their legal agreements.
Centralized Storage and Analysis
In the past, contracts were typically stored in multiple locations and were manually managed by a legal team. Document storage software has existed for years and has helped companies store and organize their legal agreements. However, the implementation of AI in contract management raises the bar for what a contract management tool can do.
Not only does AI contract management software provide companies a centralized storage location for all of their legal agreements, but it can also identify different contract types based on keywords. Also, it can train its algorithm to detect patterns and extract critical information from each contract. This makes locating separate contracts and identifying important information faster and more straightforward, saving the company hours of work.
AI contract software management gives companies the ability to sort contracts based on the parameters they find most valuable, like renewal dates, specific clauses, or the type of contract. AI can review contracts and make sure company policy is being followed as well as point out any discrepancies.
AI software can also provide analytics about different contracts in minutes that would take a team hours to complete. For example, a company can analyze all of its vendor contracts and pick out variations in terms and conditions as well as penalty and damage provisions. Moving forward, AI can then standardize these provisions and make it easier for a company to quickly recognize and stop instances of noncompliance from their vendors that may have previously gone unnoticed.
As an AI contract management software continues to learn, it can effectively negotiate prices by first analyzing the market and adjusting future vendor pricing based on supply and demand. Using machine learning, companies can go into the contract negotiation phase armed with relevant data to support the prices they demand. AI can also be a great tool to help companies budget and plan future business ventures as it can help predict future earnings based on past performance data.
With AI contract management software, the days of forgetting a contract’s expiration date and failing to renew in time are over. With AI, contract managers can set reminders to notify them of upcoming expirations dates, so they have time to start the renewal process. AI can also pull renegotiation terms so companies can limit the risk of contract disputes. AI software can manage the entire lifecycle of a contract from the writing stage to the renewal process.
Automated Contract Clause Suggestions
Because artificial intelligence learns as it works, it can start to pick up on repeat language that appears throughout your company’s contracts. It can then suggest clauses to keep terms and usage consistent across contracts. AI software can even detect discrepancies between different contracts and instances where your company may be noncompliant.
AI also speeds up the process of drafting new contracts and can save your company time and money by speeding up the writing process, leaving more time for complex negotiations that can’t be done by a computer. AI systems can also scan legal documents and flag language that puts your company at risk. It will then suggest alternative clauses to safeguard your organization.
Educated legal professionals within a company spend too much time doing basic administrative work or coding, which requires no specialization. AI software management tools allow your company’s legal team to focus on applying their training and expertise to your company’s complicated legal problems rather than administrative work.
Contract management can be repetitive and tedious, but its importance within a company cannot be overstated. AI is changing contract management by streamlining operations and improving a company’s overall efficiency. The time saved from using AI software can save your company money while freeing up the creative capabilities of your company’s workforce.