Contract compliance is perhaps the most fundamental aspect of creating a successful partnership. Failure to adhere to regulations or comply with the contract can lead to severe punishments, something everyone wants to avoid at all costs. With the right tools, AI improves your contract compliance monitoring by providing real-time insights, automating complex analysis, and reducing the risk of human error.
What Is AI Contract Compliance?
AI contract compliance is all about implementing a contract compliance program that implements machine learning and automation. This streamlines contract adherence operations and makes sure you meet all contract obligations.
Contract compliance means avoiding reputational damage, fines, and other legal issues. Before implementing AI contract compliant services, you must first identify your needs. Then, you need to choose the right AI technology tools and train your staff on them appropriately.
Implementing any new system requires buy-in from all stakeholders. This is particularly true for transformative AI in contracts due to the novelty and common misunderstanding of how these systems work.
How AI Transforms Traditional Contract Review Processes
Regular contract reviews guarantee you remain compliant with all legal requirements. AI transforms traditional contract tracking by offering a real-time comprehensive analysis with a dramatically reduced error rate.
Contract managers' roles have changed accordingly. Instead of carrying out these contract audits, they manage AI and respond to its recommendations. AI can stay on top of all compliance regulations and cross-reference this with contractual obligations. Real-time notifications and predictive AI promote the highest level of contract performance as long as you properly train the staff to use them.
The Power of AI in Contract Compliance Monitoring
When AI powers your contract compliance software, you will quickly see efficiency and accuracy improvements in several areas. Here are four key fields to consider when AI takes charge of your contract compliance monitoring.
Automated Contract Review and Analysis
Natural Language Processing (NLP) can extract contract data automatically. You can train the NLP model to recognize contract templates and clauses to streamline contract reviews that usually demand large staff hours.
Depending on each project's objective, you can train the AI on different review criteria. When you combine this training with machine learning, the AI becomes progressively more efficient and accurate at identifying the issues you're looking for.
An AI system that tracks versions of each contract and maintains a real-time audit trail makes certain that all stakeholders know about any changes. Automated alerts will keep everyone up-to-date with changes and works in progress. This prevents confusion and increases transparency.
Finally, your AI program will use NLP to provide you with written analysis. This could come in the form of risk assessment scoring or a summary of key takeaways. Both of these contract analytics greatly improve the contract manager's ability to make informed decisions.
Real-Time Risk Identification and Mitigation
AI can do everything in real time. This means you can identify and mitigate risks before they become bigger issues.
In fact, AI can predict them before they happen. It is excellent at recognizing patterns, which means it can easily detect anomalies in patterns.
Any anomaly, by definition, represents something unusual. If there is something unusual, then it is potentially something unknown and inherently carries risk.
By analyzing large amounts of historical company, contract, and market data, contract intelligence systems can accurately predict events on active contracts and assign them a risk score. Scenario modeling and impact analysis help explain the risk scores, making them easier for people to understand and trust.
These risk scores help staff prioritize their efforts on the most pressing issues. If they need help handling them, AI can recommend mitigation strategies based on the problem at hand.
Intelligent Compliance Alerts and Notifications
The contract compliance process doesn't stop after a contract is signed. Having AI track potential risks in real time is an invaluable asset.
Artificial intelligence is perfectly positioned for contract compliance tracking. Contract intelligence systems will understand your contracts' agreements, clauses, and intentions, comparing them to updated regulatory requirements. If something changes in the compliance standards, instant alerts and notifications allow you to act before you are in breach of contract.
The system sends smart notifications across multiple channels, assigning documents only to the appropriate people. This means the information gets to the right person using their preferred communication tool. There can be no room for communication failure when it comes to compliance.
Contract compliance reporting then guarantees everyone is made aware of any changes in a timely fashion. This may be a summary of actions taken, paired with audit-ready reporting if necessary.
Integration With Existing Contract Management Systems
Having a contract repository becomes necessary once you are dealing with compliance standards for more than individual contracts. This allows you to easily access any contract you need to review at any time. In addition, it strengthens machine learning within your AI platform by providing a greater range of data.
Once your centralized contract repository is up and running, it's time to integrate with existing contract management systems. AI makes this process easy, as it can easily change the data structure to provide compatibility with any system. Synchronizing data over existing systems simplifies workflows by reducing the need for additional staff training.
These integrations also facilitate better information transfer between all stakeholders. Staff can access AI insights while easily communicating with one another. Accessing contracts from anywhere at any time ensures you deal with compliance issues as quickly as possible.
Reduce Risk With Terzo
Contact Terzo today if you're ready to see how automated renewals, indexed critical contract terms, and AI-powered governance forecasting can benefit your compliance goals.
One of our experts will guide you through which AI tools are right for your business goals and implement a strategy to enforce compliance throughout all your contracts.
