Contract management can be simple. With artificial intelligence (AI) making its way into this realm, every stage of the contract lifecycle can be streamlined.

From creating the contract and conducting negotiations to performing analysis and getting approvals, AI-based solutions are transforming contract management. You may automate repetitive tasks, minimize human errors, and leverage the data gathered to gain deeper insights.

However, like every tech revolution, contract management has its own challenges. Let’s explore some of these and find out how AI may help solve them.  

Main Challenges in Contract Management

Slow Turnaround Time

This issue is more common than you think. Even if all parties involved want to finalize the contract terms, the process can feel unending. Over time, the terms become redundant. Constant contract redlining of outdated documents leads to confusion, the contract remains unsigned, and small losses add up.

Introducing AI in your contract management process can put things in perspective. Whether it is initiating new contracts or handling SaaS subscription management (if it is a part of the contract), you can monitor how the contract is progressing in the crucial pre-signing stage. Users may easily track a contract’s status from the first draft to the finalization. Workflows may be customized to make it easier for parties to understand where the process is stuck, what documents need attention, which approvals are necessary, and so on.

As a result, the entire process speeds up, and the right people address pending tasks or actions at the right time.

Budget Confusion

Nobody wants to exceed their budget, but sometimes, this becomes unavoidable. Contract managers are busy people who work with multiple documents at any given time. Complex renewals or sudden price rises may slip their attention, especially if the parties aren’t aligned. 

However, with an AI-driven solution, contract managers may gain a clear idea of the negotiated numbers and the total spend in real-time. They may also prevent costly overlooks and mistakes. Moreover, AI analytics may help identify patterns of overspending and the scope of cost-cutting.

Integrating tools like a balance sheet template or comprehensive FinTech software may help managers consolidate financial data more effectively. This may ensure no critical details are missed.

Managers feel empowered to identify anomalies and changes immediately. They can then take timely action to prevent costs from spiraling while keeping the budget in check.

Maintaining Compliance

Violating the contract by not sticking to the agreed-upon terms may land businesses in legal trouble. This may lead to fines, penalties, liabilities, and regulatory issues, especially for industries that must uphold stringent privacy standards. On the other hand, you may incur losses or be forced to pay for low-quality services if the other party falters.

AI-based solutions may help by including specific built-in clauses in the contract in the required regulatory language. Managers may conduct regular contract audits and generate detailed reports to manage compliance requirements quickly and simply. These systems also have search functionality so users may easily find all their important documents.

The best part? Even if you’re doing business with companies in different states or countries, your compliance team will always be on the right side of the law.   

Losing Track of Document Versions

Picture this: you’ve been working hard at finalizing a contract document only to realize it’s outdated. So, you’re forced to spend the next few days reaching out to all those who have already reviewed and signed the incorrect version to ask them to do it again. You also waste precious hours digging through old emails or shared drives to locate the correct version.

AI-backed contract management software may help you better organize all the different versions of your documents in one place. Users may use version controls to ensure all parties involved are on the same page. With everyone working on the most updated version, avoiding mix-ups and ensuring accuracy becomes easy.

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Permissions for Secure Access

Regarding contracts, it is super essential that only the right people have access to confidential documents. It is also crucial to restrict access to certain people to avoid misuse of data. Ensuring this may be trickier than it sounds.

A sophisticated AI-driven solution may simplify providing access and permissions to certain individuals handling specific roles. Your contract documents are securely stored in the cloud, and managers may ensure that only specific individuals have access to them. You and your business partners may rest assured that your sensitive data is protected and safe.

Data Silos

Running from one department to another and chasing people for the same contract-related information may be highly frustrating. How can you be sure that you’re getting the right information? What if different sources provide conflicting or wrong data? Things may take a risky turn, leading to multiple contract versions and prolonged revision cycles.

AI-powered contract management solutions may effectively break down data silos by linking contracts to essential documents such as invoices, purchase orders, and so on. Managers may communicate with multiple stakeholders from a single platform, eliminating the scope for misinterpretations. This may make it easier to refer to the latest data and make quick decisions that benefit your business.    

Delays in Signing Contracts

Without all the required signatures, a contract remains null and void. To keep contracts valid, all parties involved must provide their approvals and confirm the agreed-upon clauses. Contracts with missing signatures may lead to potential delays, postponements, and even legal issues. Further, manual processes or third-party tools may slow things down and cause avoidable human errors.

An AI solution that allows authorized parties to collaborate on the contract documents may help minimize the chances of errors and missed signatures. Integration with digital signing solutions (like DocuSign) may enable individuals to securely sign contracts from any place at any time. Further, these solutions keep track of all activities in any given document. So you’re always aware of who has signed the document and when.   

Conclusion

The integration of AI in contract management systems marks a massive shift while bringing benefits like cost savings, greater efficiency, and more accuracy. However, every new technology poses certain challenges.

The parties involved in the contract are responsible for harnessing intelligent technologies to speed up processes, ensure compliance, facilitate data security, and address other related issues. The above information will help your business make the most of AI-powered solutions and mitigate the challenges associated with contract management.     

Published by Jeremy S.