Contract Intelligence: How To Revolutionize Your Business

Content

• What is contract intelligence?
• How does contract intelligence work?
• How to utilize contract intelligence for your business?
• What are the best practices for implementing contract intelligence?
• Conclusion

Contracts are more than a means to an end for businesses. They hold a wealth of knowledge that organizations can use to improve their processes and relationships. Given their length and complexity, manually going through them might be a bit much for any legal team. That’s why companies haven’t realized the true potential of contract intelligence.

But with AI and machine learning taking over every bit of business operation, contract management can’t be far behind. Most contract management solutions focus on providing artificial intelligence-centric services to streamline every step of the contract lifecycle. It allows companies to derive efficiency and insights without investing countless hours into contracts. Still on the fence? We’ll get you sorted out with our deep dive into contract intelligence, from tools to applications.

What is contract intelligence?

Contract intelligence uses artificial intelligence and machine learning to analyze and derive contract insights. It helps to automatically review and understand the content of contractual agreements, identify key terms and clauses, and extract relevant data. 

Contract intelligence makes it easier for businesses, legal departments, and legal professionals to handle scaling contracts. It allows organizations to quickly and effectively go through large volumes of contracts. This technology not only saves time and reduces human error but also improves the accuracy and efficiency of contract management. Contract intelligence enables organizations to make data-driven decisions, from drafting to negotiation to monitoring.

How does contract intelligence work?

Contract intelligence allows businesses to simplify contract management tasks that usually require time and effort. It utilizes machine learning (ML) and natural language processing (NLP) to extract datasets, recognize patterns, and make predictions or decisions. Here’s how:

Data extraction: The first step is to extract all the relevant data from the contract. It includes information such as parties involved, dates, clauses, obligations, and more. AI-powered technologies use natural language processing (NLP) algorithms to extract this information accurately.

Data classification: Once you extract the data, you can classify it into various categories for easy retrieval and analysis. For example, contracts can be classified based on contract type, industry, or specific clauses. Contract intelligence tools use ML algorithms to classify and categorize the extracted data.

Data analysis: After the classification, analyze the extracted data to identify patterns, trends, and potential risks. Contract intelligence tools can flag any clauses that may be unfavorable or non-compliant with regulations. It helps businesses make informed decisions and mitigate the risks associated with contracts.

Reporting: Finally, contract intelligence tools generate comprehensive reports that provide insights into contract performance, risks, and opportunities. Legal, procurement, and finance teams can use these reports to monitor contract compliance, identify areas for improvement, and optimize contract management processes.

How to utilize contract intelligence for your business?

Managing contracts can be time-consuming and complex for businesses dealing with a large volume of agreements. That is where contract intelligence comes into play. Rather than just going through contract lifecycle stages, organizations can utilize insights and data to streamline the entire process. 

1. Streamline contract review 

Contract review and analysis involves examining legal contracts to ensure compliance, identify risks, and extract relevant information. These processes are crucial for organizations to understand their contractual obligations, mitigate risks, and make informed decisions. Contract intelligence can greatly enhance contract review and analysis. First, it significantly reduces manual effort and time spent reading and understanding contracts. Instead of manually sifting through numerous documents, contract intelligence can quickly scan and extract relevant information, allowing legal professionals to focus on more strategic tasks. It automates the extraction of key contract terms, clauses, and metadata, saving time and reducing human errors.

2. Risk assessment and mitigation

Efficient contract management involves identifying and evaluating potential risks associated with a contract and implementing strategies to minimize or eliminate those risks. These risks can include legal and regulatory compliance issues, financial risks, performance and delivery risks, and reputational risks. Contract intelligence automates the review process by identifying potential risks or inconsistencies and providing actionable insights to mitigate those risks. It provides insights and recommendations for effective risk mitigation strategies based on historical data and industry best practices.  

3. Compliance monitoring

Contract compliance involves ensuring that all parties fulfill their obligations and responsibilities as agreed upon in the contractual agreement. Contract intelligence tools can quickly scan and analyze large volumes of contracts to extract relevant clauses, obligations, and deadlines. Thus, businesses can easily monitor contracts throughout their lifecycle to ensure compliance and performance. There’s no chance for them to miss out on renewal and payment dates. 

4. Contract negotiation

Contract intelligence automates the tedious task of reviewing and analyzing contracts, saving valuable time and resources. It allows negotiators to focus on the significant aspects of the negotiation process. Secondly, it can identify potential risks and inconsistencies in contracts, ensuring that businesses can make informed decisions. Lastly, contract intelligence can provide valuable insights and data analytics, allowing negotiators to benchmark and compare contract terms with industry standards. 

What are the best practices for implementing contract intelligence?

Businesses rely on contracts to establish relationships, outline terms, and mitigate risks. Legal professionals can streamline contract management processes by leveraging artificial intelligence and machine learning. While contract intelligence offers numerous benefits, businesses must approach its implementation with special care. 

• Contract repository

Implementing a centralized contract repository is essential for efficient contract intelligence. Centralizing and organizing contractual agreements in a single location helps to access and manage them easily. Thus, they can track contract lifecycles and ensure they do not slip between the cracks. 

Contract intelligence relies on consistent and standardized data formats. A contract repository facilitates this by enforcing data standardization across all contracts stored within it. This standardization simplifies the extraction and analysis of contract data, enabling more accurate and efficient contract intelligence processes.

• Ensure data quality and consistency

Contract intelligence is only as good as the data it receives. High-quality and consistent data enable accurate extraction of key terms, clauses, and obligations. It ensures that the extracted information truly reflects the intentions and commitments of the parties involved. Users can easily locate specific clauses, terms, or contracts, saving time and improving productivity. Thus, they can effectively analyze contract terms and conditions, risks, obligations, and opportunities. Analyzing clean and reliable data leads to more accurate risk assessments and informed decision-making.

• Contract reporting and dashboard

Contract intelligence improves decision-making processes in a major way through dashboards and custom reporting. With custom reporting, organizations can generate tailored reports on specific aspects of their contracts, such as financial performance, compliance, or risk analysis. These reports allow users to extract relevant information and track key metrics. Thus, they can make informed decisions and identify areas for improvement. 

Additionally, custom dashboards visually represent contract data, making it easier for users to understand complex information at a glance. It saves time and facilitates effective communication and collaboration among stakeholders. Consequently, organizations can better harness the power of contract intelligence and optimize their contract management processes.

• Integration with other systems

Integrating contract intelligence with other business applications can improve its effectiveness significantly. This is doubly true for contract management solutions. That is why Dock offers AI, ML, and NLP capabilities within their contract management software to streamline every stage of the contract lifecycle. It enables users to extract key information, establish compliance, and improve performance.

Dock also connected it with CRM and ERP systems to provide a holistic view of their vendor and customer contracts. This integration allows for better management of customer and vendor relationships and more efficient contract negotiations.

Conclusion

Contracts are the backbone of any business relationship, from employment agreements to partnership deals. However, their sheer volume and complexity can pose significant challenges for organizations, often resulting in missed opportunities and costly errors. Contract intelligence leverages AI, NLP, and machine learning to analyze and extract key data points from contracts. Thus, organizations can identify and categorize specific clauses, terms, and conditions within minutes. It enables legal and other teams to locate and assess critical information quickly.

Contract intelligence allows organizations to identify potential risks, non-compliance, or unfavorable terms. As a result, they can take a proactive approach to contract management and realize the maximum potential of their business relationships.