5 Ways AI Contract Review Improves Efficiency and Workflows
Contract Management Software
Business analysts regularly point to improving contract management as one of the largest opportunities within the enterprise to yield savings and improve profitability. According to a review from EY, “having commercially-efficient contracts, effectively managing these throughout their operational life and minimizing waste in business activities with suppliers, an organization can typically save between five percent to 15 percent of contract spend.”
But as artificial intelligence and automated processes are introduced to the area of contract management, it’s possible that the improved value and savings effective contract management can deliver could grow even higher. This is due to improved efficiencies and a reduction of the human resources that were historically required to navigate the contract lifecycle.
Prior to automation, many of the tasks associated with implementing contract management systems, categorizing contracts, monitoring performance and other important milestones required a great deal of time and manual work to fulfill. However, the application of AI to contract management technologies can greatly reduce the manual burden of this work by automating some of the routine tasks that are required. AI contract review can reduce the implementation time for new contracts by automating the work of reading within documents and tagging them appropriately. From there, the rippling effects of this automation can result in improvements to workflow efficiency right across the contract management lifecycle.
Here are five ways AI contract review can improve contract management efficiency and workflow processes.
1. Organizing and migrating your contract repository
A well-organized database of all of your contracts is one of the fundamental requirements of effective contract management. But one of the most onerous tasks of creating a contract repository is reading through each contract and categorizing it in order to apply your organizational structure.
For many contract managers, developing an organizational structure isn’t even the hard part – moving hundreds, or even thousands, of legacy agreements online and then getting them organized is. AI can dramatically reduce the time and effort required to migrate your contracts to an online repository as it eliminates the critical pain point of having to review and tag each and every agreement.
2. Reduce search time
There are numerous occasions within the contract lifecycle where you will need to refer back to your agreement, whether in order to conduct routine monitoring or to deal with unusual circumstances that might arise. If you’re storing contracts in random desk drawers and filing cabinets, the task of searching for the right agreement might very well be impossible; and even if you’ve migrated your contracts online, if they haven’t been effectively classified and organized, you still might have a hefty task ahead of you. Automated tagging helps you quickly and easily assign the right categorizations to each and every contract, so that when the time comes to retrieve a specific document, you’ll have an easier time finding it.
3. Easier auto-reminders and alerts
How do you make a feature that is already designed to reduce the chaos of paper and other manual reminder systems? By reducing some of the burden of setting up even your automated reminders. Tag templates allow you to flag in advance what information needs to be tracked over the course of a contract based on its type. As such, automated tagging can also improve the efficiency of setting up auto-reminders and alerts because you don’t need to figure out which metrics to monitor every time you onboard a new contract.
4. Leverage past contract successes (and reduce risks)
Establishing boilerplate contracts for standard scenarios is one way to optimize the efficiency with which you manage contracts. But there’s a good chance those contract templates will not address each and every business scenario that will arise, and that you will likely have to create new custom contracts from time to time. You can reduce some of the risks and improve your ability to maximize the value of these non-standard contracts by looking at comparable terms or agreements that already exist in your repository. First analyze how effectively those terms or contracts have performed and then incorporate the desired language into your new custom agreement.
AI contract review can help you to home in on relevant contracts more easily. Because you may not have a clear sense of what you are looking for, browsing your contracts by tag can help you to identify agreements that might be relevant to your current situation. But this discovery hinges upon having tagged those contracts effectively at the outset. Automated contract review optimizes the initial task that is required to later be able to leverage those documents, by improving the speed and accuracy by which you can assign tags.
5. Determining what to archive
One reason even highly organized online contract repositories can start to get unwieldy is that over time they can fill up with outdated contracts you don’t actively need – but also aren't ready to throw out. Thus it’s important to have an archiving strategy, which includes a folder or repository for expired agreements and old versions of contracts you may be required to keep and/or reference. The better your tagging, the easier it is to spot inactive contracts that can be moved to your archive instead of cluttering up your system.
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