As a business owner, you track the performance of your contracts at each stage of the contract lifecycle, from request to renewals and from contact to close. At each stage that the contract moves through to renewal and with each new contract you sign, the information you track is critical. Hence, the contract analytics you deploy needs to be accurate and easy to understand.
If we take an example of a vendor contract, while many focus on the monitoring of contract terms and performance, few focus on the monitoring of contract execution.
No matter what you prioritize to track and monitor, obtaining accurate, timely, and unbiased data about contract execution can provide invaluable insight into a vendor’s performance. Failure to do correct analysis can leave you exposed to the effects of non-compliance and could potentially damage your brand. Such non-compliance could eventually prevent you from making informed decisions to grow your business.
Let’s take a look at how you can level up your contract analytics with AI-enabled contract analytics visualization and dashboards.
1. Turn Data into Actionable Insights
As per McKinsey, the contract risk can cost a company up to 9 percent of its annual revenues.
It is common for companies to sign contracts without absolutely understanding what they mean. When you have a pile of contracts from your business dealings with customers and suppliers, it could be challenging to comprehend how each contract affects the future of your business.
AI-enabled contract analytics can easily take away this mental burden from you. Contract analytics is more than just the reporting of raw data in the format of graphs and bars. It goes beyond that and sheds light on the actionable insights.
Solutions like Aavenir’s Contractflow can track and analyze all your contracts, display key information in visual dashboards and produce actionable insights and recommendations. It also improves your efficiency to create, negotiate and approve contracts.
2. Map Contract Volumes and Top Vendors
According to Aberdeen Strategy & Research, you can reduce the average contract approval time by an unbelievable 82 percent with contract analysis.
Dealing with multiple vendors and managing multiple contracts often requires effective mapping to reduce contract approval time and improve vendor relationships. This mapping helps understand which are top-performing vendors and which are the contracts that need to be prioritized. However, manual evaluation is tedious and time-consuming. It may not even provide you timely as well as precise findings.
AI-powered algorithms identify and extract key metadata for dates, terms, clauses, provisions, and the like which help you make the right decision at the right time. The visual representation of curated data allows contract managers and other stakeholders to pinpoint the most successful vendors and most lucrative contracts in a specific region.
Smart insights from AI could also help business owners reduce the risk of over-allocation of staff and resources on unprofitable deals, and a better negotiating position with the top vendors.
3. Prevent Revenue Leakage
As per IACCM, the cost of a standard, low-risk procurement contract from draft to signature has gone up by 38% in 6 years costing almost $6,900.
To prevent (or reduce) such unnecessary revenue leakage, you need insights at your fingertips. AI-enabled contract analytics do the same. Contract management solutions, with the help of artificial intelligence and machine learning techniques, automate contract extraction, risk analysis, and review of unstructured contracts. The visual insights help you identify the anomalies, call alerts to rectify the same and help fulfill the contractual obligations, thereby preventing revenue leakage.
4. Gain Real-time Insights
9.2% of revenue is lost by organizations resulting from poor contract management and oversight.
Contract managers might be able to find the volume of contracts in a centralized repository but monitoring their lifecycle stage and getting real-time insights is a real nightmare task.
The CLM solution’s visual contract analytics dashboard would give real-time visibility over the volume of contracts in each contract lifecycle stage. It gives you complete visibility into how many contracts are active, how many are in drafts, what all are still pending for review and approvals, when they are due for expiration, etc. Also, contract managers can prepare automated reports at their fingertips by slicing and dicing vendor data, customer data, geography, etc. to track the real-time status and take the next action. In short, a granular level of contracts’ performance analysis is possible.
5. Reduce Cost-Per-Contracts
Based on IACCM studies, costs for a mid-complexity contract stands at $21,300 and high complexity contracts run into hundreds of thousands of dollars.
Contract lifecycle stages involve contract creation, review, negotiation, approval, and renewal. At each stage, costs are incurred due to the involvement of the multiple individuals in an organization required to iron out the contract details.
CLM solutions reduce the man-hours spent in the contract workflow (involving drafting, review, approval, negotiation signature, performance management, renewal, and termination), thus reducing the overall cost per contract as well as cost per contract processing. Furthermore, it can provide complete visibility on user workload, the number of contracts, contract turnaround time, and the number of persons involved, etc.
End-Note: Get a Multi-faceted View of Every Deal
Contract management is a broad field, with a wide range of issues to address (e.g. customer service, sales, safety, and security).On a day-to-day basis, it is hard to keep track of all the contracts signed in the past and the terms that are currently in place. With AI, you can spend less time on administrative tasks and more time on strategic decisions. Contracts’ visual dashboards provide a multi-faceted view of every deal. It simplifies the management of your contracts, so you can focus on the bigger picture. With AI-powered contract analytics and visual dashboards, identify and tackle performance issues before they escalate, analyze an entire contract portfolio to identify risks and improve performance.
CLM solutions reduce the man-hours spent in the contract workflow (involving drafting, review, approval, negotiation signature, performance management, renewal, and termination), thus reducing the overall cost per contract as well as cost per contract processing. Furthermore, it can provide complete visibility on user workload, the number of contracts, contract turnaround time, and the number of persons involved, etc.
Tip: Now you no longer need to wait too long for data analysis and reports. Try Aavenir Contractflow, built on Servicenow, it can monitor your contracts and deliver real-time dashboards to facilitate effective management.
