Organizations are under constant pressure to reduce costs and mitigate risks in nearly every department. Looking at the holistic contract management lifecycle, the benefits of an artificial intelligence-driven contract lifecycle management (CLM) solution positively impact every aspect of the process.
Advances in artificial intelligence (AI)—including effective risk management, improvement of business resilience, and a higher level of efficiency to legal, procurement, and sales operations—are making it possible to derive maximum value from large volumes of data without drastic increases in headcount and bureaucracy.
Here are four ways any operations department could benefit from a robust AI-driven CLM solution over traditional CLM.
1. Data Analysis for Risk Management
A properly calibrated AI-powered CLM solution can reduce risk across every aspect of an organization’s processes. It can analyze the health of data by reviewing contract data and validating that contract records are trustworthy.
Along with improving contracting habits, an AI-powered CLM solution can identify and track KPIs quickly and accurately. It identifies contract terms, conditions, obligations, and commitments that impact the business performance.
An AI-powered CLM solution will flag high-risk contracts by identifying, tracking, and proactively managing contract terms and clauses. This will mitigate risks quickly and efficiently. Along with this, it also assesses the value of the organization’s current vendors, customers, and partner relationships. By turning this information into insights, understanding internal spending is easier than ever.
2. Automation of Lifecycle Through Machine Learning
Machine learning allows for a more efficient lifecycle, from standardizing templates and generating first drafts of agreements to managing the negotiation workflow. Standardizing data and automating compliance provide total visibility by significantly decreasing review times and improving accountability.
A single, centralized system provides visibility into the process from start to finish. This provides a clearer picture of the sales pipeline through procurement ops and contract creation. Along with this, workflow management becomes more efficient and easier to manage.
Notifications of important contractual obligations and deadlines will help prevent inefficiencies and the AI will review, redline, and conduct a first-pass contract review on all new contracts
Storing and retrieving information is also significantly more efficient. An AI-powered CLM solution provides faster access to a complete set of records, faster document assembly, and more comprehensive visibility into historical data.
3. Compliance Through Contract Lifecycle
An AI-powered CLM recognizes regulatory and contractual compliance terms, exponentially manages risk, and assures compliance. AI helps parse every new contract for terms and clauses that are not a part of the organization’s standard practices and identifies missing and incomplete contracts. This process’s consistency makes it easy to instantly identify any contracts with unresolved issues.
An AI-powered CLM solution also increases the timeliness and frequency of upcoming renewals and expiration dates while simultaneously identifying key dates and turning them into automated reminders. Analyzing existing contracts is improved by accelerating legal review without compromising quality. It helps business operations to assess payment terms and flag discrepancies between contract and invoice rates.
4. Improving the Human factor
Utilizing an AI-powered CLM solution can help with employee motivation. Requiring employees to focus their attention on the micromanagement of CLM risks employee burnout and turnover. Using a trusted, automated system allows employees to reap more benefits without participating in tedious tasks.
Much of the CLM process can be automated with a smooth transition of data and enhanced data accessibility and analytics. This AI-powered CLM solution frees knowledgeable, experienced staff to perform more intellectually stimulating and engaging tasks.
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