Benefits of Using AI to Review Contracts
AI or Artificial Intelligence has revolutionised contract management from a traditionally labour-intensive process into a more efficient and streamlined process. It works by automating routine tasks like document scanning, extraction of data and contract analysis. This not just speeds up the contract management lifecycle but also reduces scope of human errors.
In this article, we will primarily be discussing using AI to review contracts.
What are Contract Management Softwares?
Contract Lifecycle Management (CLM) software refers to digital platforms built for managing contracts for different businesses, enterprises, companies, etc. It works in automating and streamlining the whole contract lifecycle management process.
Benefits of AI in Contract Management
Nowadays, as contracts become more complicated and the regulatory policies become even stricter, the integration of AI into management of contracts serves as a pioneering approach to address all of these challenges.
Artificial Intelligence (AI) has a vast impact on all the key phases of a contract's life cycle. Here are a few benefits that they pose for contract management:
1. Contract Drafting
AI helps in drafting the legal documentation process. It uses Large Language Models (LLM) and ML algorithms to accelerate the drafting process. This enables a faster and accurate contract creation.
AI models work by identifying all the relevant clauses, potential discrepancies and standard wording to curate a well-drafted and structured contract. It scans a large database and includes all the relevant clauses and laws which are applicable for the particular contract that it is drafting.
2. Review and Analysis
The process of review and analysis done by AI is more swift as compared to traditional and manual processing as were done earlier.
AI-powered contract management systems have the ability to automatically extract the more important information from contracts. For example, obligations, payment terms and obligations.
Contract management systems powered by AI have the capability to identify the discrepancies and potential risks.
3. Negotiation of Contract
In general, contract negotiations are a complex and time-consuming process. AI streamlines this process by analysing past negotiation data. It works by identifying trends and patterns.
These AI systems also track any changes done during the negotiation process, and foster accountability and transparency. The system also sends relevant notifications to all of the involved entities so that they can be aware of the modifications, changes made to the contract.
4. Life Cycle Management of Contracts
Managing contracts throughout their lifecycle is an important aspect of contract lifecycle management. The AI-powered contract management systems enable businesses and companies to automate contract reviewing, renewal and closure.
These systems also send notifications of contract expiration, renewal and more so that users do not experience missed opportunities. These systems also have the ability to track the changes made during negotiation.
This provides accountability and transparency to all of the parties involved. Hence, Artificial Intelligence powered contract management lifecycle systems improve the overall workflow.
5. Managing Risk and Ensuring Compliance
AI plays a very important role in managing risk and compliance with policy regulations. By actively tracking and reviewing contracts they ensure regulatory compliance by overviewing modifications or changes made in laws.
By using AI Contract Management Software, businesses are able to minimise penalties, damage and litigation to their reputation.
Is It Beneficial for Your Business?
If you are confused about whether an AI-powered Contract Lifecycle Management software is for you, then opt for a demo. The majority of the companies which provide this service actually provide a free demo for their potential buyers. By using the demo, you would be able to determine whether it is actually beneficial for you.
Conclusion
As you can tell, usage of AI in contract management can greatly decrease labour costs and save on time as well. It also minimises the scope of any human-made errors. Organisations are to benefit vastly from AI managing their contracts if the technology automates the routine activities by simply just writing and reviewing contracts for identification of risks and opportunities.
Finally, the benefits of AI in contract management go way beyond and contribute towards long-term benefits in risk compliance.
