Contracts hold a wealth of critical information for a business. Invested stakeholders should read, understand, and analyze agreements line by line to ensure they’re not missing out on risks, opportunities, or obligations. Earlier, reviewing legal agreements was manual, time-consuming, and ineffectual. The data became obsolete and unusable by the time we acquired insights into hundreds of agreements.
That is why businesses today rely on technology to evaluate contracts throughout their lifecycle. These quick and efficient solutions significantly reduce the workload of legal professionals. With NLP, AI, and so on, there’s a lot available to do the heavy lifting in contract management. One of these techniques is contract analytics. Keep reading to learn how it can transform the way you handle contracts.
Contract analytics involves using advanced technologies to extract valuable insights from large volumes of contracts. These insights can include key terms, obligations, risks, and opportunities hidden within the contracts. Instead of going through each document manually, contract analytics enables rapid and in-depth contract analysis.
Organizations usually leverage artificial intelligence and machine learning techniques to automate contract reviews, identify potential risks, and improve compliance. Thus, businesses can complete numerous hours of work within seconds and receive real-time results. For example, an organization can use analytics to swiftly determine whether the phrasing of a particular clause is consistent throughout the contract portfolio.
Managing and analyzing contracts can be daunting, especially when dealing with numerous documents. Contract analytics improves the accuracy and efficiency of reviewing and analyzing lengthy, complex legal agreements. It utilizes technology and data analysis techniques to extract valuable insights from contracts.
The first step in contract analytics is extracting data from contracts. Contract analysis software uses advanced optical character recognition (OCR) technology to convert contracts into machine-readable text. Thus, any data within the contract agreement, in any format, is easily accessible and analyzable. Once extracted, natural language processing (NLP) algorithms can identify and categorize different contract clauses, terms, and obligations. This classification process allows businesses to compare and analyze contracts more effectively.
Parties cannot obtain actionable insights from contracts by merely gathering and classifying data. Hence, contract analysis software uses machine learning and AI to identify patterns, trends, and anomalies within contractual agreements. This analysis helps businesses identify potential risks, such as non-compliance or unfavorable terms, and make data-driven decisions.
Contracts are often lengthy and complex documents, making it difficult for businesses to stay on top of them throughout their lifetime. However, these legal agreements contain valuable data and insights that can drive better business decisions. Therefore, businesses should opt for contract analysis software to make it easier to extract, compare, and manage contracts rather than putting in endless hours manually reviewing and analyzing contractual agreements.
Still doubtful? These ten factors demonstrate why any business should invest in contract analytics.
Contracts are the backbone of any business. They define the terms and conditions, outline rights and obligations, and serve as a legal framework for all parties involved. They’re essential in determining the productivity and performance of the contractual agreement. Contract analytics leverages the power of artificial intelligence (AI) and machine learning to automate the extraction and analysis of clauses within contracts.
As a result, companies can quickly recognize and classify various clauses, including confidentiality, indemnity, and termination clauses. They can create a summary or analysis of each clause, highlighting key terms, potential risks, and any deviations from standard language or industry norms. It allows parties to identify and remove suboptimal contract terms and conditions.
When handling large contract portfolios and data sets, organizations require specific tools and technology to ensure relevant information does not slip between the cracks. It is simpler to spot patterns and trends in contracts thanks to AI-powered contract management tools that analyze multiple contracts and identify similarities and differences. AI-driven contract management also means examining contract data before mapping them to existing contract templates, types, and parties. Organizations can search for contract metadata and locate crucial clauses in a contract by using innovative AI technology and custom filters. The legal team no longer must sift through countless documents for pertinent information.
Dates and milestones in contacts often involve crucial actions or deliverables. Hence, businesses regularly monitor essential deadlines to take the necessary actions and meet their obligations on time. Contract analytics software can automatically extract information, such as start dates, end dates, payment due dates, and renewal deadlines. It eliminates the need for manual review and reduces the risk of missing important dates.
It allows businesses to stay on top of their contractual obligations and avoid potential breaches. By being aware of contract expirations, companies can evaluate their options and potentially negotiate better terms or find more competitive offers. Thus, businesses can prevent project delays, financial losses, or reputational damage.
Contracts are full of potential risks, from non-compliance to missed deadlines and disputes. Contract analytics can help businesses identify and mitigate problematic clauses, terms, and conditions. Businesses can take proactive steps to address risks and prevent expensive consequences. Thus, companies can protect their bottom line and maintain a positive reputation.
Additionally, contract analytics can help businesses ensure compliance with legal and regulatory requirements, reducing the risk of non-compliance penalties. Furthermore, contract analytics can provide insights into contract performance and identify areas for improvement, ultimately reducing the risk of underperforming contracts.
Compliance is a top priority for businesses, especially in highly regulated industries. It involves fulfilling obligations, meeting deadlines, and performing all necessary actions stipulated in the agreement. It ensures that all parties are accountable for their responsibilities and helps to achieve the contract's objectives. Non-compliance can result in legal and financial consequences.
Contract analytics can assist companies in meeting their compliance requirements by monitoring significant terms and clauses. It can analyze numerous legal agreements and identify any clauses that may be non-compliant with regulations or company policies. Moreover, extracting key dates and milestones through analytics helps parties monitor them.
One of the challenges businesses face when dealing with contracts is the need for frequent language revisions and inconsistency. As new regulations come into play, market conditions change, or business strategies evolve, contractual agreements must reflect these changes. However, constant updating often leads to inconsistent language and terms across different versions of the same contract.
Contract analysis software can identify inconsistencies in language and ensure standardization across all contracts. It can flag terminology, phrasing, and term variations, alerting legal teams to potential issues. As a result, organizations don’t have to resort to frequent language revisions during the negotiation process and close deals faster.
In today’s competitive business landscape, gaining a competitive advantage is crucial for success. Contract analytics can help businesses gain a competitive advantage by providing insights into their contracts and relationships with customers, suppliers, and partners.
They can track patterns of rejections, changes, and approvals in previous contracts to make informed decisions in the future. By better understanding the terms and clauses of their contracts, businesses can negotiate better deals and improve their relationships with other parties. It can give them an edge over their competitors and help them stand out in the market.
Data is a powerful tool for making informed decisions. Contract analytics provides businesses with valuable data and insights to make better decisions. It can help businesses make data-driven decisions that lead to better outcomes by tracking contract performance and identifying risks and opportunities.
For instance, contract analysis software can help businesses better understand their customers’ needs and preferences, allowing them to tailor their contracts and services accordingly. Additionally, by identifying areas for cost savings and negotiating better terms and conditions, businesses can reduce their overall costs.
One of the main reasons to invest in contract analytics is to streamline the contract management process. With contract analytics, businesses can automate contract review, approval, and tracking. That is why Dock 365 offers contract analytics capabilities within its contract management platform. It helps businesses identify bottlenecks in the contract process and improve efficiency.
The digitalized contract repository ensures that all the active legal agreements are readily available for review and analysis. Everything under one platform means businesses don’t have to worry about contracts falling through the cracks. Moreover, Dock’s advanced tools break down contract analytics results into visual and comprehensive reports.
As more organizations recognize the importance of efficient contract management, the demand for contract analytics solutions has grown significantly. However, many people still have questions about this relatively new technology. Investing in contract analytics is crucial for businesses of all sizes and industries. It enables parties to identify key terms and clauses, improve compliance, and mitigate risk. Contract analytics can help businesses save time and resources they spend manually going through hundreds of contractual agreements.
With the right contract analytics solution, businesses can future-proof their operations and make data-driven decisions that lead to better outcomes. Better yet, opt for contract management software with advanced analytics capabilities. At Dock, we offer all that more with our advanced reporting, custom dashboard, and digitized repositories.
Don’t wait; schedule a live demo today to give your businesses the benefit of contract analytics.
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