Become your company’s procurement superhero by leveraging the power of artificial intelligence (AI) to maximize revenue, cut costs and save time, says Â Jerry Ting, CEO and founder of Evisort.
World Commerce and Contracting found poor contract management can cost 9% of a company’s yearly revenue. At the same, 90% of business stakeholdersOpens a new window consider contracts â€œhard or impossibleâ€ to understand.Â
Decentralized operations and inconsistent processes hamper countless procurement teams. With contracts stored in different places and multiple people involved in the creation process, it can be impossible to locate the necessary document, let alone the clause you’re looking for.Â
How can someone be expected to find answers in chaos? Turn to AI to save the day â€” you can gain superpowers that save time, money and frustration.Â Â
The Six Superpowers Gained from AI-powered Contract Management
Let’s look at what we can gain from incorporating AI into contract management.
1. Search thousands of contacts in seconds
AI-powered contract management contains search features enabling you to find important clauses within thousands of documents, no matter how they are labeled or formatted. For example, a late payment provision may be phrased uniquely and hidden within a different clause. Using AI, you can surface that information within seconds, eliminating hours of searching and preventing critical details from being overlooked.Â
With all this data at your fingertips, you can swiftly answer questions and respond to issues. For example, when a new regulation arises, it’s simple and efficient to identify and update contracts with relevant clauses. If there’s a question about discounts or service terms, you can surface the terms quickly.Â
The technology enables more accurate tracking of exponentially larger volumes of obligation-level contract data compared to manual methods.Â
2. Save your bottom line
Implementing AI helps you save money in many ways.
With its search capabilities, you can highlight opportunities to reduce spend, such as unneeded services or redundant vendors. Centralizing your contracts provides a holistic view of operations, allowing you to see when you are no longer using a service but still paying for it. You may spot an instance of two departments using the same vendor with different contract terms or different vendors for the same service. Consolidating or eliminating those contracts reduces unnecessary spending by thousands of dollars.
You can uncover other contract optimization options, such as volume discounts or unapplied rebates. Contracts may also require a client or partner to pay a fine for late payment. Without visibility of these terms, your company cannot maximize the agreement’s value.Â Â
Fines cost companies thousands or even millions of dollars. Identify potential risks and violations in advance with the help of AI-powered contract management. Manual processes create liability due to the laborious and time-consuming effort involved and the possibility that an issue gets overlooked.Â
In a world where time is money, the time you save yourself and your colleagues will add up significantly. Legal professionals spend hours upon hours sorting through documents. Imagine the value they could bring by automating those tasks and using that time for more strategic and value-driving tasks.Â
Every penny matters in the economic uncertainty we are experiencing.Â
3. Track key data
Never miss a contract deadline again. You can train AI to identify renewal clauses and flag when a deadline is approaching. If you plan to discontinue a vendor relationship, you know the cancellation timeline and requirements, so you don’t get stuck with an unneeded service. In some cases, you may find opportunities to negotiate more favorable terms or scale back services.Â
By tracking clauses, company leaders can see the big picture of all contracts. With data dashboards, you can also protect your company from overextending and ensure it can meet deliverable requirements and adhere to budgets.
Contract AI makes auditing much simpler for you. All required information is easily accessible for reporting. The same is true for a merger and acquisition process.Â
4. Ease your compliance burden
New regulations are on the horizon, and existing ones are constantly changing. In fact, Gartner estimates 75% of the world’s populationOpens a new window will have its personal data covered by modern privacy regulations by 2024. With policies like the EU’s General Data Protection Regulation, a patchwork of state laws and a growing focus on environmental, social and governance reporting, manually tracking all the requirements will be impossible.Â
Compliance is an instance where AI will prove valuable to you. You can teach AI the terms to look for and set it to flag affected clauses. As generative AI improves, you will be able to use the capabilities to modify the contract automatically. This process addresses compliance issues quickly and protects your company from unnecessary liabilities.Â
5. Accelerate contract creation and negotiation
The potential of AI for contract creation and negotiation is very exciting. Natural language processing can already gather clauses from past contracts to inform you of the best language and terms for the current situation. By using this functionality, you maintain consistent language across the contract portfolio. You can also gather insight into past terms and existing obligations to inform future negotiations.
Generative AI will take this capability to the next level. When trained to know a company’s unique phrasing and preferences, you can use the technology to draft, redline and negotiate contracts. This will save considerable back-and-forth with the other party and allow lawyers to think more critically about the contract’s nuances.Â
6. Enable consistent contract processes
So many people are involved in the contract process. The workflow can often create confusion and bottlenecks. Instead of sending multiple emails and wondering if you are working on the latest version, you can improve version control and accessibility by digitally storing them in a central repository. AI removes tedious steps, allowing you to simplify the workflow and approve more deals faster.Â
Whether in procurement, sales, legal or any other business department, you can use AI to help your company by making processes simpler and more efficient, saving time and redirecting resources for better use. Your company no longer has to be overwhelmed by contract complexity â€” your contract management superpowers will make you a procurement superhero.
Image Source: Shutterstock
MORE ON PROCUREMENT:Â
- How Procurement Automation Can Tackle Supply Chain Uncertainty
- Procurement’s Digital Transformation Is a Marathon and Not a Race
- The Evolution of Procurement: Where It Was and Where It Is Going
- How Online Marketplaces are Shaping The Future of Procurement
- The Speed & Efficiency of E-Signature in ProcurementOpens a new window