Contract management is a critical aspect of any business because contracts define the rights, obligations, and responsibilities of each party involved in a business relationship. Effective business contract management keeps these relationships intact, ensuring that nothing slips through the cracks. However, AI is changing the landscape of this process for the better. In this article, we'll take a look at the future of contract management and how using AI for contracts will simplify the process going forward.
The Evolution of Contract Management
Traditionally, contract lifecycle management has been a long, arduous process that takes numerous labor hours. From contract negotiation to running contract management analytics, there were manual processes at every step of the way. These manual processes left a lot of room for human error, and legal teams had to keep a close eye out for potential risks.
With the advent of digital technologies, the landscape of contract management has undergone a profound transformation. Organizations are increasingly turning to automated solutions to streamline contract creation, negotiation, execution, and management processes. This means that instead of being on the front lines, inputting data by hand, contract managers can spend more time reviewing contracts, deep-diving into contract analytics, and improving processes on a large scale.
In addition to making contract management more efficient, new technologies also allow businesses to provide more transparency regarding their contracting processes and more accessibility to contract terms and agreements. Cloud-based platforms allow stakeholders to access contract data from anywhere, which can foster a sense of collaboration between the two parties on a contract. Ultimately, this accessibility and collaborative contract nature leads to stronger, mutually satisfying contracts that foster more meaningful relationships between businesses and their clients.
Key Technologies Shaping the Future of Contract Management
Advances in contract management software are shaping the future of contract management. Within this software, key technologies work together to change the entire contract lifecycle, leading to more robust contract management. This includes AI and machine learning technology, blockchain technology, cloud-based solutions, and contract intelligence solutions.
AI and Machine Learning in Contract Analysis
Using AI in contract management helps teams automate the processes — from contract review to compliance monitoring — that are the most time-consuming and most prone to human error. A combination of natural language processing (NLP) and machine learning ensures that the longer a business employs a specific AI model, the more accurate and useful its contract reviews will be.
One of the things that sets AI technology apart is its ability to extract and analyze large volumes of contract data. Algorithms allow AI technology to work much more efficiently than humans could. AI can extract more robust data from contracts, leading to more insightful analytics and reporting down the road.
Because of machine learning technology, this capability not only streamlines contract review processes but also lays the groundwork for more insightful analytics and reporting in the future. As businesses continue to employ specific AI models over time, the accuracy and usefulness of contract reviews continue to improve. This means that the earlier a business begins using a specific AI model, the greater its advantage will be over its competition.
Blockchain for Secure and Transparent Contracts
Contract security is an important concern for legal departments in a business setting. After all, contracts often include sensitive or proprietary information. If this information gets out, clients may lose trust in the businesses they work with.
Blockchain technology operates on a decentralized network of computers, known as nodes, rather than storing all information in one place. Transactions are grouped into blocks, each containing a unique identifier (hash) and a reference to the previous block, forming a chain of blocks. Because these blocks are distributed across multiple nodes, the information has a strong defense against tampering or hacking attempts.
Using blockchain technology doesn’t just make data more secure, it serves another purpose as well. When clients know that each transaction is cryptographically secured and that there is a verifiable audit trail at all times, it fosters confidence. This strengthens the credibility of business agreements, ultimately leading to stronger relationships.
Cloud-Based Solutions
In a traditional environment, contracts would be kept in a business’s computer system. While this worked when contract managers tended to be in their offices from nine to five every day, in today’s modern digital landscape, it’s no longer a practical solution. Many contract managers work remotely at least part of the time. And even if your team is in-house, the clients you work with are not.
Cloud-based contract management means that authorized parties can access information asynchronously from anywhere in the world. In the contract negotiation stage, this means that multiple parties can view the contract, collaborate, and suggest changes.
As the AI contracting life cycle continues, cloud-based contract intelligence means that team members can continue to access contract terms and collaborate with one another from anywhere. This leads to a more efficient and scalable business model.
Advanced Analytics and Reporting
One of the most exciting advancements in AI contract management is that it allows businesses to gain deeper insights into contract portfolios. With advanced analytics and reporting technology, businesses can identify trends, patterns, and performance metrics.
Based on the insights they receive from contract intelligence, organizations can optimize contract terms, identify potential risks, and improve contract outcomes. By leveraging these insights as contract management examples, businesses can gain a competitive edge over others in the industry.
Leverage the Future of Contract Management
If you’re ready to say goodbye to outdated contract management methods, long meetings with legal professionals about contract language, and easily avoidable errors cropping up in contractual agreements, it’s time to embrace the future of contract management.
Terzo offers high-quality AI-as-service. From data extraction services to contract analytics, Terzo offers a turn-key solution to all your business’s contract AI needs. Contact our sales team and begin leveraging the future of contract management today.
