Are you tired of repeating the same contracting processes over and over again? Does contract management take a lot of your productive time and still lead to human errors? You can overcome these challenges by upgrading your CLM processes with artificial intelligence.
AI contract management helps make contractual processes fast, automated, and precise. According to a 2022 World Commerce & Contracting report, 50% of organizations are positive about AI’s contributions to improving contract efficiency in the coming 2-3 years.
This blog provides detailed information on using artificial intelligence for contract management. Learn how to use AI in everyday contracting tasks, the benefits of AI-based CLM processes, and factors to consider while transitioning to AI-based contracting. Let’s begin.
What is AI-based contract management?
AI contract management refers to using artificial intelligence technology to automate, streamline, and optimize contractual processes and contract management. This is possible through AI contract management software, which are digital platforms powered with AI tech for managing contract lifecycles.
AI contract management platforms have features to auto-pilot contracting stages, right from contract drafting to review, negotiation, approval, storage, tracking, and analysis. AI contracting software replaces conventional CLM tools for better automation and minimal contractual effort.Let’s understand AI-based contract management with the help of an example. This example is of LeadSquared, which used AI featured by HyperStart CLM.
LeadSquared has a monthly contract load of 180-250+ agreements which it used to manage manually, taking 30% of their legal time. Implementing HyperStart CLM helped LeadSquared automate tasks like contract drafting and review with AI. The result? 6+ hours saved in contract review and 60% slash-off in contract creation time.
The scope and potential of AI technology in contracting processes are clear. However, what are the benefits of using AI for managing contracts? Let’s find out.
What are the benefits of managing contracts using AI?
AI contract management systems help accelerate the efficiency of legal, sales, HR, finance, purchase, and all other departments dealing with business contracts. Here are 6 key benefits of using AI for contract management:
1. Improves contracting speed and efficiency
According to a report by the University of Texas at San Antonio, executing a non-standard agreement with high risk can take as much as 3 to 4 months. This duration encompasses the time it takes from contract request generation to final signing.
AI-based CLM tools help shrink the contract TAT from months to days. Strategic and automated workflows self-orchestrate contract journeys, ensuring that contracts move automatically across your organization without any bottlenecks or delays.
2. Automates repetitive tasks
Contract management involves many repetitive activities such as creation, review, approvals, redlining, and tracking. Legal teams spend time extensively on these processes, reducing their efficiency and productivity.
AI contract management solutions help automate monotonous tasks throughout the contract lifecycle. With AI, business teams can automatically generate contracts, track contract status, redline contract clauses, and get approvals. This gives legal staff more bandwidth for other, more important activities.
3. Helps save contract admin costs
According to Salary.com, the cost of hiring a contract administrator can range from USD 58,008 to USD 76,511. The contract administrator manages the contractual processes to ensure all contracts flow smoothly.
Using AI for contract management helps reduce contract admin costs by automating routine contract tasks. With AI-powered contract management software, all contractual processes can be automatically administered with minimal human intervention, saving contract admin time and costs.
4. Enhances contract compliance
Legal compliance and risk management are important for effective contract administration. Regarding contract management, compliance means adhering to the agreed terms and commitments such as payment dates, payout amounts, and milestones. Manual tracking often results in contract negligence and non-compliance.
Using AI for contract management helps streamline compliance by automating contract obligation tracking. AI algorithms ensure all contract obligations are tracked, reported, and visible to avoid non-compliance-related penalties.
5. Reduces human errors
Manual contract management is prone to human errors. Mismanaged contract requests, negligence in redlining, missed signatures, and unorganized contracts are a few instances where manual errors result in chaotic contract management.
Using an AI contract management system helps eliminate human errors in the contract lifecycle. Artificial intelligence models like HyperStart CLM work with 99% accuracy, balancing efficiency and precision.
6. Improves contract data tracking and visibility
Contract visibility is crucial for contracting professionals to understand and manage CLM performance. Visibility helps locate contracts, track agreements, streamline legal strategies, and nurture strong contract analytics for data-driven decisions.
AI-driven contract management processes help increase contract visibility by automatically processing large datasets into legal insights. Legal teams can leverage AI to track contracts throughout the organization and gain data-driven insights.
Manage Contracts 80% Faster With AI
Switch to HyperStart CLM and create, review, approve, store, track, and analyze contracts through AI.
These are the benefits of using artificial intelligence in contract lifecycle management. Claiming these benefits requires selecting the right CLM software with the right AI capabilities. The coming section talks about factors to consider when choosing a contract intelligence solution.
Key factors to consider while choosing an AI contract management software
When choosing a contract management platform, you must go beyond the tool’s AI capabilities and assess its overall suitability for your contracting processes. Here are 4 key factors to look for:
Output accuracy: Using untrained or less-trained natural language processing models may result in inaccurate output. Moreover, non-contract AI models often lack the contextual understanding of contracts and legal processes.
Data privacy and security: Using AI to manage contracts without proper cybersecurity mechanisms can compromise data security. The leakage of critical contract data increases business risk and is an important consideration.
Integration: AI contract management features work well when integrated with external systems like CRMs, HRMs, finance systems, etc. Consider your AI contract management solution’s configurability with other systems for holistic CLM efficiency.
Implementation: Implementing CLM software for managing complex contract workflows requires customizing the AI model. Standardized contracts, on the other hand, require less implementation effort.
These considerations help ensure the smooth implementation of AI technology in contract management processes. Apart from these factors, there are certain tips to help you get started with AI-based contracting and implement a CLM tool for contract management.
Auto-pilot Routine Contracting Tasks
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Book a Demo5 Tips for getting started with AI-led contract management
Integrating artificial intelligence technology into your existing contractual processes can be tricky. Here are a few tips to help you ease the process:
1. Start small with selected use cases
- Identify the most time-consuming tasks in your CLM, such as contract review or data entry, and choose one area to pilot AI.
- Set clear goals for the pilot project, like reducing contract processing time by a certain percentage.
- Use the pilot to gather metrics (e.g., time saved, error reduction) that can demonstrate AI’s impact before expanding to more areas.
2. Choose a scalable solution
- Evaluate AI-based CLM platforms that offer flexibility and support growth, so you can add more features as your needs expand.
- Check the integration capabilities of the solution with your current tech stack to avoid complex adjustments later.
- Ensure the vendor provides support for upgrades and scalability without significant disruptions or extra costs.
3. Focus on automating routine tasks
- List repetitive tasks (e.g., data extraction, contract generation) and identify which can be automated for time savings.
- Implement AI to handle these routine processes first, freeing up time for higher-value contract management tasks.
- Track the time saved and accuracy improvements from automation to assess its impact on overall efficiency.
4. Check generative AI’s output
- Establish a review process for AI-generated content, having team members validate accuracy and compliance with company standards.
- Set parameters for AI use, specifying where human oversight is required, especially in high-risk or sensitive contracts.
- Encourage feedback from users to refine AI prompts and instructions, improving the relevance and accuracy of outputs.
5. Train your team and seek routine feedback
- Schedule hands-on training sessions to familiarize your team with the AI features and address any questions or concerns.
- Create a feedback loop where team members can share their experiences and suggest adjustments based on day-to-day use.
- Regularly review feedback to adjust workflows, update training, and optimize AI settings to better meet team needs.
Follow these tips for the best results while automating contracts with AI. All you need now is reliable and efficient AI-based contract management software.
Get HyperStart CLM and auto-pilot routine contracting tasks with AI
Implementing AI in contract management requires choosing the right vendor with an advanced AI model. HyperStart CLM offers end-to-end solutions for automated, streamlined, and optimized contract management. Here’s how HyperStart CLM’s AI transforms contract management:
80% contract turnaround time
2-second retrieval for past contracts
2 minutes to create a new contract
75% reduction in contract negotiation time
10x faster contract reviews
$20 saved on each contract
With a 99% accurate AI model and a record of handling over 1 billion contracts, HyperStart CLM is the right AI solution for all your contract management requirements. Book a demo today to learn more about how HyperStart’s CLM can help you streamline contract management.
