Contracts are the most complicated to skim through. They span across verticals and have functional roles across all verticals. The issue of information being inaccessible makes it even more challenging to manage them. There is a risk of losing out on business opportunities that may go unnoticed in this chaos.
When contract management is done manually, it becomes even tougher due to numerous amendments and recurring renewals. As the contracting base grew with exploding business activities, the need for a comprehensive contract management system was felt. That’s how Contract Lifecycle Management (CLM) was conceptualized.
With CLM solutions coming into play, the landscape for contract management started changing rapidly. More was expected in less time now that an automated software was in place. The markers that provided CLM solutions had to expand their horizons and offer more than just contract management. Thus the work on contract intelligence began
Contracts hide a lot of information. It has a lot of intelligent insights that could help businesses analyze risks, recognize cost-saving opportunities, limit liabilities, so on and so forth. By inculcating AI with a CLM, the innovators found a breakthrough to chart out these insights and convert them into actionable items. For example, using AI, the tool could identify and decipher unstructured data into structured enterprise data.
AI today has the capacity to generate MIS reports based on the contracts that are stored in the system. It understands the meaning of clauses and contracting language. This helps revolutionize contract management from simple document management to a fully equipped system that gives a complete overview of the contracting portfolio.
With the help of advanced machine learning algorithms, it is now possible to analyze clauses and other data. It makes it easier for the companies to review contracts and quickly streamline the processes required for a large amount of contract data. This in turn smooths out the negotiation process directly affecting the turnaround time for contracts.
Here are a few quick examples of applications of AI & ML in contract management:
AI & ML has always been a complex and dynamic field that is loaded with intricacies. It gets more convoluted when it is applied to an already lively field of contracts. Let us see a few scenarios in depth.
Automatic extraction of important information:
An important and upcoming field is contract abstraction and migration. It automates the entire process of extracting information from your contracts. With the power of Natural Language Processing (NLP) based ML, intelligent AI algorithms can withdraw the data with remarkable speed and accuracy. It can also create an index of all keywords, critical fields, obligations, and compliances.
This implies that you can automatically derive information like party names, addresses, vendor information, signature date, renewal dates, so on and so forth. Auto-tagging can also play a critical part to bring together the right data and the right people on a single platform.
Pro Tip: Read about the benefits a CLM can bring for your business so you can make an informed choice.
Deriving actionable insights:
When a system is in place, it is obvious that there will be thousands of legal documents that will be uploaded on it. Now imagine, that you would have to go out and tag each of the clauses or important points manually for the process ahead. But with AI & ML, it has now become possible to let the system learn these taggings and automate the entire process. With a trained model, you can now upload a document in the software and it will automatically inculcate the tagging that it learned.
A comprehensive CLM offers tremendous potential to help your business migrate to more robust operations. The impact of advanced AI & ML on CLMs is surely a step ahead, it unearths and unlocks the hidden potential that contracts can offer to the business.
PracticeLeague’s CLM has been proven instrumental in being able to fit our client’s needs like a glove - the reason being, we are able to offer unlimited. Read more about why our CLM will be your best choice.