Efficient contract management is vital for maintaining strong business relationships and ensuring compliance. However, it can be time-consuming and complex, often stretching the limited resources of SMBs. But now, AI can help change that! In this article we will explore how AI can enhance contract management processes and provide some actionable tips on how SMBs can utilize AI in contract management to streamline operations.
5 examples: How AI transforms contract management
AI offers a range of capabilities that can address challenges faced by SMBs in contract management. For many small and medium-sized businesses, managing contracts manually can be a time-consuming and error-prone process because of limited resources and expertise.
AI can help overcome these challenges by increasing efficiency, accuracy and strategic insights to contract management, making it easier for SMBs to handle their contracts effectively. By automating routine tasks, enhancing data analysis and providing predictive insights, AI empowers SMBs to streamline their contract processes, reduce risks, and optimize their business operations. Here are some ways AI can transform contract management for SMBs:
1. Automated contract creation and review
Automating contract creation and review is one significant advantage of AI. Drafting and reviewing contracts manually is often time-consuming and prone to errors. AI-powered tools can automate this process by using templates and pre-defined clauses, ensuring consistency and reducing the time required. Additionally, AI can review contracts for errors, inconsistencies and compliance issues – and provide suggestions for improvements.
2. Smart contract analysis
AI also excels in smart contract analysis. Extracting relevant information from contracts and understanding their implications can be difficult and demand a lot of resources when done manually. AI algorithms can analyze contracts, extract key data points such as dates, obligations, and payment terms, and provide insights into potential risks and opportunities. This can help you make informed decisions and stay on top of your obligations.
3. Predictive analytics
Another area where AI really comes in handy is predictive analytics. Identifying potential issues and opportunities in contracts early can be challenging. Based on historical contract data, AI can make a predictive analysis and identify patterns, and thereby forecast potential risks, such as breaches or delays. Which will help you take proactive measures to mitigate risks and capitalize on opportunities.
4. Automated alerts and notifications
You’ve probably heard us say this many times before; automated alerts and notifications are crucial for effective contract management! We know that as a small or medium business it can be overwhelming keeping track of contract milestones, renewal dates and obligations, especially when there’s no centralized repository. Here, AI-driven contract management systems can automate alerts and notifications for important dates and milestones, ensuring that nothing falls through the cracks, helping you avoid costly oversights.
Did you know? In Trackado you always get automated reminders about important upcoming dates. See our Product Tour here
5. Natural language processing (NLP)
Understanding complex legal language and identifying critical clauses in contracts can be daunting. Natural Language Processing (NLP), a subset of AI, can interpret and analyze legal language, making it easier for to understand contract terms and identify critical clauses. This ensures that you fully comprehend their contractual obligations and rights.
Actionable tips for SMBs to leverage AI in contract management
So, should you go all in on AI? Even tough AI can provide huge benefits, there are several factors to consider before implementation:
- Expensive setup: Full AI contract management systems often come with a high initial setup and ongoing maintenance costs may be limiting for some organizations.
- Over-reliance on automation: While automation can be a time-saver, you should be careful not to overuse it by replacing human oversight and judgment in legal contracting.
- Data privacy and security: Using AI, you need proper cybersecurity as AI systems can be vulnerable to data breaches and misuse.
With that in mind, here are some tips on how to realize the benefits of AI in contract management:
1. Solutions specifically designed for SMBs
Look for software solutions specifically designed for SMBs that offer AI capabilities, such as automated contract creation, smart analysis, and predictive analytics.
2. Centralize contract storage
Use AI-powered contract management systems to centralize contract storage, ensuring easy access and retrieval. Centralized storage also facilitates better data analysis and reporting.
3. Train your team
Ensure that your team is trained on how to use AI-powered contract management tools effectively. Provide training on the specific features and capabilities of the software to maximize its benefits.
4. Integrate with existing systems
Integrate AI-powered contract management tools with your existing business systems (e.g., CRM, ERP) to streamline workflows and enhance data sharing.
5. Regularly review and update contracts
Use AI tools to conduct regular reviews of your contracts to identify areas for improvement and ensure ongoing compliance. AI can help identify outdated clauses and suggest updates based on current regulations and best practices.
6. Leverage data insights
Use the insights generated by AI to make data-driven decisions. Analyze trends, identify potential risks, and capitalize on opportunities to improve your contract management processes.
New AI feature in Trackado
We are very excited to bring AI Document Intelligence to Trackado. With this new feature, Trackado can automatically analyze and extract key information from your contracts, including titles, relevant dates, parties, and more. You can easily highlight and review these extracted attributes, streamlining the process of maintaining and storing contracts in our repository. This will not only save you time but also ensure greater accuracy and efficiency in your contract management.
Get more helpful tips on how to build a solid foundation for contract management with limited resources in our guide:
Step-by-step guide: Contract management for small companies
