What is AI Based Contract Management Software?

Contracts form an integral part of business, and effective contract management is vital in order to mitigate business risk. Within clauses for a range of agreements and situations, organisations can encounter terms that impose financial, legal, compliance, and operational risk, therefore the diligent storage, review, and analysis of contracts is crucial.

However, with many businesses dealing with considerable numbers of contracts, manually managing them can be time consuming, resource-draining, and costly. In order for organisations to remain competitive, it’s important to strive for operational efficiency and streamlined processes that not only save time and resource but improve accuracy and reveal new insights and opportunities.

AI contract management software provides a solution, by utilising state-of-the-art machine learning to provide deeper understanding of key obligations, financial data, and the underlying risk associated with contracts, all while driving efficiency through automation.

In this blog, we will outline the key features of AI contract management software, and the benefits it can deliver to contract managers and teams dealing with contracts, leases, and agreements.

What is AI contract management?

The past few years have seen significant developments in machine learning, facilitating its increased application across a range of tasks.

In contract management, AI is able to streamline tasks including contract creation, implementation, and review. Using automatic data extraction, smart contract analytics, and reporting features, AI contract intelligence software can transform the way businesses operate around contracts, leases, and agreements.

How does AI change contract management?

By design, AI allows unstructured contracts to be broken down into accurate and consumable blocks of information which would otherwise be difficult to interrogate. By transforming the data included in a contract into machine-readable text and storing it in a way that enables intuitive analysis, AI contract management simplifies, streamlines, and drives additional insights within the process.

This provides a host of benefits towards completing many key contract management tasks:

Contract Risk Analysis

AI contract management software enables businesses to identify and assess contractual risk with increased accuracy and expediency.

By digitising and storing documents, contract management AI allows users to search and extract information and clauses within contracts that are known to carry risk profile. This enables contract management teams to access insightful data quickly, accurately, and in real time, mitigating risk across the business.

Customisable reporting features also help to identify and communicate contractual risk, as well as provide a robust basis for informed decision making.

Bulk document organisation

Businesses can manage considerable amounts of contractual documents, including real estate leases, asset leases, data centre leases, telecom contracts and loan agreements. Effective organisation of these documents can be time consuming when using manual methods; however, with AI-based contract management software, documents can be digitally stored and managed.

Machine learning can convert the contents of the documents into a searchable database, facilitating the fast location of key clauses or information, and include links to the source document to allow for validation and auditing.

Through the storage of document information in a centralised repository, accuracy levels are increased across the business as all departments are able to access a single version of the truth, ensuring all teams are working from the same, accurate data.

Smart contract review

AI contract management software enables businesses to swiftly review and understand the key underlying risks associated with individual contracts through the use of automated lease abstraction and the provision of centralised, searchable digital contract storage.

The time-saving benefits of this mean that staff responsible for contract management are able to shift their focus from manual data entry and administration tasks onto more analysis and risk mitigation tasks, driving efficiencies and boosting output.

Improved accuracy in the contract reviewing process is also provided by AI contract management software, as it can quickly identify and flag discrepancies within data, as well as reduce input errors.

Data Extraction

Extracting data from hundreds, thousands, or even millions of contracts can be time consuming and prone to error when using manual processes. AI data extraction platforms, such as MRI Contract Intelligence, extract key data from paper-based documents and link each extracted point to the source information. The extracted data is then validated by the platform, ensuring additional layers of accuracy and data confidence.

With such platforms, businesses can accelerate data extraction processes by up to 75%, meaning that employees can complete strategic, value-adding tasks, safe in the knowledge that contract data is accurately extracted and securely stored.

Extract additional insights from contract data

As well as administrative and extraction tasks, AI based contract software can also help to identify additional prospects. Through the creation of custom reports, contract data can be leveraged to identify opportunities that would otherwise have gone unnoticed, including openings to cut costs and drive further income streams.

With the addition of end-to-end integration, contract data can be used in conjunction with other business-critical data and metrics to reveal new insights and provide additional foundations on which to make decisions.

Intelligent workflow automation

The integration of AI contract management software with an organisation’s intelligent workflow automation system enables a much higher volume of contracts to be reviewed over a shorter period.

Automation and AI-driven functionality means that operational efficiency is improved, and the risk of human error and oversight in creating, managing, and reviewing contracts is vastly reduced.

The AI powered, intelligent workflow automations monitor contract performance against predefined terms and conditions to ensure that terms are met and the risk of non-compliance is reduced. Any deviations from contracted requirements can trigger timely alerts, enabling proactive measures to be taken to mitigate risk and prevent legal disputes.

Clause analysis

Thanks to machine learning and advanced optical character recognition capabilities, AI contract intelligence can not only extract data, but also analyse meaning and offer insights into the intention and essence behind a contract clause.

This means that users can gain an enhanced understanding of the implications and risks of a contract and operate on a basis of clarity.

What are the benefits of AI contract management?

Improve data access – AI -based contract management software has the capability to transform operations by providing better and easier access to relevant information.

Drive efficiency – By automating routine tasks, organisations can optimise resources and reduce operational costs, allowing employees to focus on the more strategic elements of contract management. More time can be spent acting on contracts rather than reviewing them.

A single source of truth – Data silos are also reduced across organisations as the AI contract management platform creates a structured and centralised contract data repository, accessible by multiple departments, to ensure that each team is working from the same data.

Inform decisions – Additionally, organisations benefit from better informed decision-making, as AI contract management software can offer a deeper understanding of contract performance, supplier/vendor relationships, and negotiation patterns. By leveraging this information, businesses can make informed decisions in contract negotiations, optimising terms and pricing models to maximise the value derived from each contract.

Adaptability – agility and adaptive working are both vital for organisations to remain competitive. AI-powered contract management systems can quickly adapt to evolving regulatory changes and market trends. This adaptability ensures that contracts remain compliant and aligned with the latest industry standards, minimising potential risks and liabilities.

What considerations should be made when implementing AI contract management?

Implementing AI -based contract management software will transform operations, causing a momentous change in an organisation’s usual processes. It is therefore crucial to ensure all stakeholders are on board and buy-in to this change.

The transformation in procedures should be managed carefully and communicated effectively to everyone who has a touchpoint with contract management. This will ensure that the switch to AI-driven contract management goes smoothly and that organisations are able to utilise the platform to its full potential.

To find out more or arrange a demonstration of MRI’s Contract Intelligence software, please contact us today.

FAQs about AI contract management