Contracts are vital for business operations, serving functions as diverse as documenting agreements between parties, preventing conflicts, mitigating risks, ensuring compliance, and, of course, generating revenue.
So, it’s surprising that contract management is, for many businesses, a relatively inefficient process. Recent reports suggest that contract mismanagement can cost companies 9% of their annual revenue. Failure to manage and understand contracts properly can also lead to missed deadlines, failure in regulatory compliance, and business decisions made based on incomplete or inaccurate data.
For many companies, the biggest logistical hurdle is the sheer number of complex contracts they must abide by. Artificial Intelligence (AI) is not daunted by big data, which is why companies across industries are harnessing the power of AI for contract analysis. Firms using contract analytics solutions see an increase in productivity and efficiency in their contracting.
Advanced AI Contract Review – Review Contracts Faster
According to Gartner, “By 2024 the current amount of manual effort for contract review will be reduced by 50% due to adoption of AI-based contract analytics solutions.” Traditional contract management software stores and organizes contracts in a database to be accessed by a variety of users and stakeholders. However, it is difficult to reach a comprehensive understanding of the data contained in even a small database. Traditional strategies necessitate teams of lawyers, brokers, or internal staff to spend immense amounts of time reviewing paper documents manually to extract important information about terms, conditions, and risks. The scope of their work can be so vast, that by the time the analysis is completed, the question at hand may have changed…
AI-based contract analytics changes that. With contract analytics companies can transform legal data and content into relevant and contextualized information, , leading to more informed business decisions with more accurate information. Accuracy is improved substantially with the flexibility and speed to ask questions across all records at once, not just a subset due to time and human bandwidth constraints. Optical character recognition (OCR) algorithms are trained to recognize clause, date, and party information contained in contracts, automating the process of organizing and classifying enormous amounts of data.
Contract analytics software unlocks an incredibly powerful suite of abilities allowing companies to separate the signal from the noise. Similar content across contracts isn’t always uniformly presented. Clauses can be written or interpreted differently, and connections between disparate provisions can be overlooked, even by experts. Trained AI algorithms enable quick comparison of information taken from all contracts within a company’s portfolio, enabling employees to make hitherto unseen connections between contracts and the actions they require.
Contract analysis software automatically classifies documents into different types, making it easier to understand commonalities among the many contracts contained within a large, diverse portfolio. Contracts need to be managed, updated, and compared regularly, and AI greatly speeds and simplifies that process.
Data Visualization Aids Business Decision Making
Contract analytics software unifies data taken from contracts into patterns and insights that can drive business strategy.
Users can search, find, and extract key contract terms from across your company’s portfolio in minutes, as opposed to hours, weeks, or months. With this ability, teams can transform vast amounts of unstructured data from documents into consumable outputs. Users can take structured and easily accessible contract information, and turn it into data visualizations deployed in different contexts, including dashboards, mashups, heat maps, or graphs.
Or perhaps they need to trigger an action, or a reminder, based on a termination date or time-bound obligation. Employees can keep their eye on expirations, terminations, and extensions easier than ever before.
They can integrate with other business systems to get a holistic picture of their ecosystem and reduce data silos based on almost any data parameter imaginable.
A Word on Reducing Contract Risk
Contract Analytics is essential for risk management. s Stakeholders can discover trends that may have enormous future impacts on revenue and business success. When contract review is exponentially faster due to the software, employees can spend their time and talents on comparative, composition, and distribution analyses, giving the organization a better approach to risk mitigation.
Contract Analytics Software Improves Business Outcomes
AI-based contract analytics software allows businesses to take large problems and make them extremely manageable. With the flexibility to answer important questions in minutes, teams can supercharge their contextual understanding of the business, and improve decision making at all levels. Decisions are made using a comprehensive picture of a company’s contract portfolio, rather than a subset of static information
Contract analysis and extraction solutions break down bottlenecks, unification in the drafting process across divisions, eliminates inconsistency, and promotes operational efficiency throughout the business. Teams are more productive when they can make use of automatically categorized information instead of pouring through documents searching for a particular clause or provision.
While the results are promising, many of the solutions available on the market take months to get up and running, and require extensive configuration and cost. ThoughtTrace provides a faster, trained solution that works on day one.
- Scaling operations – A customer was increasing horizontal development across an asset base, and found 6-7 figures worth of cost savings and asset preservation.
- Transactions – Countless ThoughtTrace customers have saved 25-50% in outsourcing costs and reduced due diligence time by 80%
- Document Management – By using ThoughtTrace as the system of record, there is generally a 40-50% increase in efficiency for daily activity.
We live in an information-rich environment, making it challenging to identify what information we do and do not need. AI-powered contract analytics software to organize, categorize, and extract information for you enables you to focus your energy on areas that will help grow your business. The ThoughtTrace Contract Analytics Platform gives your business a competitive edge by providing the tools to glean actionable insights from your documents in real-time.