Why Your Business Needs AI for Contract Life Cycle Management

Your business may have several contracts with third-party vendors. How do you create and monitor all these contracts across their life cycle?

Do you still rely on paperwork and manual, time-consuming processes for creating and managing supplier contracts? How do you ensure contracts are being fully utilized and negotiated terms get converted into actual savings?

Managing contracts in this manner is painstaking. It makes it difficult for the team to keep track of multiple agreements, deadlines and revisions. Moreover, without AI-driven analytics, organizations lack the insights needed to make proactive decisions and spot areas of improvement in terms and negotiations.

Overall, a manual paperwork-based approach in CLM results in a reactive rather than proactive approach to contract management. In this approach, businesses often find themselves firefighting issues as and when they arise, instead of strategically optimizing processes to mitigate risks and boost efficiency.

Contract life cycle management (CLM) is more than just a filing system for contracts. Leaders can now use AI-powered CLM tools to optimize this process.

The benefits of a modern, AI-powered approach to CLM extend beyond file organization into core operations and compliance.

Let’s look at how AI can simplify tasks at each stage in contract life cycle management.

Contract Creation

The traditional method of drafting contracts is time-consuming, resource-intensive and prone to error. However, AI-powered contract life cycle management solutions are changing this now. They utilize advanced machine learning algorithms to analyze existing contracts and extract relevant clauses and terms. These clauses and terms are then used to generate new customized contracts. This not only reduces the time and effort but also enhances accuracy and consistency in contract creation.

Also Read: AI Takes On Procurement Contracts

Contract Review and Analysis

Contract review is a critical aspect of the contract life cycle to mitigate potential risks and ensure top-notch legal and regulatory compliance. AI-powered CLM software leverages natural language processing and machine learning algorithms to conduct contract reviews by quickly and accurately identify discrepancies, inconsistencies and potential areas of improvement within contracts. AI-powered contract review and analysis also eliminates the risk of human error.

Contract Management

Managing a large volume of contracts across various departments and stakeholders is not easy. AI-powered CLM solutions offer centralized repositories that provide organizations with a comprehensive view of their contract portfolio. These solutions use intelligent tagging and categorization to organize contracts based on key attributes such as expiration dates, renewal terms and contract values, making it easier for organizations to track and manage their contractual obligations. Additionally, AI-driven search functionalities allow users to quickly locate specific contracts or clauses within large contract repositories, which enhances both efficiency and productivity.

Contract Negotiation and Collaboration

Effective contract negotiation and collaboration is key to reaching mutually beneficial agreements and ensuring maximum utilization. AI-powered CLM solutions facilitate collaboration by providing secure, cloud-based platforms that enable real-time collaboration and communication among stakeholders involved in the contract negotiation process. These platforms offer features such as version control, comments and annotations, allowing stakeholders to collaborate seamlessly and track changes throughout the negotiation process. Furthermore, AI-driven analytics provides insights into negotiation patterns and trends, enabling organizations to make data-driven decisions and optimize contract terms for maximum value.

Data-Driven Decision-Making

AI-driven analytics provides businesses with valuable insights into their contract portfolio and performance. By analyzing historical data as well as emerging trends, AI-powered solutions not only spot opportunities to drive savings and mitigate risks but also boost revenue. These data-driven insights empower businesses to make informed decisions, optimize strategies and proactively manage their contractual relationships to derive utmost value.

Conclusion

AI is revolutionizing contract life cycle management by offering advanced capabilities that streamline contract creation, negotiation, review, management and analysis. By leveraging AI-powered CLM solutions, organizations can enhance efficiency, reduce risk, improve collaboration and drive strategic decision-making.

As businesses continue to explore use cases of AI in contract management, we can expect to see further innovations and advancements that will reshape the future of contract life cycle management.

Here’s how GEP can help.