From digital assistants and smart home devices to personalized shopping experiences and health diagnoses, we have come a way forward with AI. And, it can do wonders with Contract Lifecycle Management too !! Regardless of the industry, business function, or contract type, AI helps to solve all the challenges faced in managing third-party contracts.
Challenges in Managing Third-Party Contracts
Before we directly jump on challenges, let’s look at a few questions that every contract manager should ask themselves to review existing third-party contract management processes.
- How reliable and latest your managed contract documents are, whether they are lying on Google Drive, Dropbox, Inbox or properly formatted excel sheets?
- Are you easily able to locate all necessary contact information from a centralized place, in real-time?
- Is your existing format of contract documents and details enough to extract the required metadata for negotiation, processing and monitoring?
- How often have you struggled with extracting useful insights from third-party contracts?
- Are you able to maintain and track a single version of truth for key contract information, dates and timeframes?
You know the answer! These are practical challenges and every organization is looking for a permanent solution to overcome them.
Third-party contracts can be especially challenging to effectively review due to unfamiliar terms and clauses. And hence, processing third-party contracts exposes companies to serious risk as the room for human error is high. Inability to track important clauses introduces legal risk.
Even though you have a proper contract management system in a place that takes care of the organization of contract documents, a manual review of high volumes of lengthy contracts is labor-intensive and time-consuming. And, poor visibility into important clauses and obligations introduces business risks.
AI for Intelligent Contract Metadata Extraction
Businesses have a hard time getting the data they need from third-party contracts. Organizations would have to check large repositories of contracts for key information and datasets to extract any information at any point of time. Manually scanning thousands of active or legacy contracts is often a slow and tedious process. AI-powered contract digitization could help contract managers across business functions to save efforts and time in the processing. One can also eliminate manual data entry with AI-enabled contract extraction.
How Automated Extraction of data from Unstructured Contracts using AI works?
- Scale data and analyze results in real-time
AI-enabled contract management solutions can automatically analyze and extract data from contracts, making them accessible to software for further processing. With AI-enabled contract management systems, you can import contracts in any electronic format—even PDFs and images—into the software, from where the data gets analyzed and processed with machine learning algorithms. It helps organizations access data at scale and analyze the results in real-time.
- Process multiple formats in no-time with no-error
The use of AI in contract management offers the ability to identify hundreds of common data points and clauses in sales contracts, vendor agreements, commercial contracts, employment agreements, NDAs, leases, licenses, and more. AI processes contracts in dozens of formats (whether .PNGs, .BMPs, .TIFs, .JPGs, .PDFs – image or text-based) and automatically converts them to machine-readable text for extraction of relevant data. It comes with workflow tools that allow your team to verify the outcomes before they’re entered into your system.
Let’s take the example of finance and insurance firms. When it comes to paperwork including submissions, quotes, and loss run reports, they face difficulties because of the unstructured nature of the data, and the sheer volume of content. The manual process of extracting related information in a relevant format is simply tedious and time-consuming. Any sort of mistakes, either human or resulted from legacy solutions, can be quite expensive for the firm. Here, using AI-enabled contract management solutions can easily extract data and clarify the content of contracts.
- Streamline contract review, renewal and negotiation process
With AI-based contract metadata extraction, companies and their advisors can complete a review and analysis of the project in half the time and increase the accuracy of their review. Legal professionals can streamline the contract review process by extracting all the structured data from unstructured data formats, such as PDF, image files, Microsoft Word.
Read More – AI in Legal Contract Lifecycle Management
Any number of contracts’ renewal dates and renegotiation terms could be easily pulled and organized. It can let companies review contracts more rapidly, organize and locate large amounts of contract data more easily, decrease the potential for contract disputes (and antagonistic contract negotiations), and increase the volume of contracts it is able to negotiate and execute.
Signing off - Bring Third-party Contracts to Life
If you are considering the adoption of AI-based solutions, AI-enabled contract management software, like Aavenir ContractFlow, uses machine learning and natural language processing to extract the most relevant data from contracts and documents so information is readily available and easily understandable. With this technology, enterprises can foster a customer-centric business model.