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How does Intelligent Contract Analysis enhance business prospects

July 20, 2022 - Team EdgeVerve

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The pandemic has forced organizations to reconsider their business strategies and move towards a more streamlined approach to adaptability and survival. This existential ambiguity has pushed the legal and contractual bindings into the scrutiny zone from a client and vendor management point of view. Against this backdrop, the companies are gearing up for an overhaul of their traditional approach by unlocking information across their legal systems through Intelligent Contract Analysis.

Definition of Intelligent Contract Analysis

Intelligent Contract Analysis uses Artificial Intelligence (AI) and Machine Learning (ML) algorithms to change static contracts and bonds into valuable, actionable business resources. It provides the parties involved with unrestricted visibility into the contracts so that the parties can avert contract breaches, reduce costs, and increase productivity.

Difference between contract analysis vs. contract review

People assume contract analysis and contract review to be the same. However, both are entirely distinct processes. Contract analysis is separate from contract review as contract analysis happens post-signature while the contract review process takes place before the signing of the contract. Additionally, contract analysis is extracting and assessing large volumes of data from contracts. On the other hand, contract review includes the process of verification and approval of specific terms within a contract.

Why do you need Intelligent Contract Analysis?

AI-powered contract analysis has become even more significant as the traditional Contract Lifecycle Management (CLM) often falls short of sorting out the enormous volumes of contractual data. The antiquated contract management tools face a lot of challenges, some of which are mentioned below:

However, these challenges can be successfully tackled if one utilizes automated contract analysis effectively.

Benefits of Intelligent Contract Analysis

There are numerous advantages of AI-powered contract analysis. Let us consider some of them in brief:

Helps in making timely and better decisions: The application of contract analysis software enables companies to make on-time and better decisions in the future by evaluating the tactics that have worked in the past and failed. A contract analysis tool can assist in finding out the most efficient method for executing them in similar future contractual documents linked to the redlines and contract negotiation data. Intelligent contract management enables companies to process contracts at incredible speed and accuracy.

Increased visibility: The contract analysis platform guarantees that unstructured and fragmented legal agreements data is captured effectively, transformed into usable information, and finally shared with the relevant department on time.

Recognizing innovative opportunities: Intelligent contract analysis also makes it easier for legal and business teams to detect new prospects for capturing revenue. Without such changes to consider critically on already executed contracts, these latest opportunities will most likely slip from the hands of the involved parties.

Mitigating the risks: Besides identifying opportunities, AI contract analysis also enables organizations to recognize the risks.

Elucidating this, let us consider a scenario.

Suppose contracts with specific kinds of enterprises come across hurdles with some clauses, including these firms can lead to a fair number of risks. Hence, to nullify this, the terms can be modified marginally, and the companies can go ahead with the signing process, thus reducing the time consumed to sign. So, applying contract analysis enables tracking these danger zones very early.

Explore AI-powered XtractEdge Contract Analysis

XtractEdge Contract Analysis uses ML techniques to transform the practice of evaluating and assessing legal contracts.

Illuminating this, here is the automation use-case of the contract analysis process for one of its telecommunication clients. By leveraging XtractEdge’s Text Analytics and Computer Vision-based capabilities, the client, one of the largest telecommunications companies in the world, automated its contract review process resulting in $20 million in savings and a 60% enhancement in employees’ productivity rate.

Intelligent Contract Analysis is the future

Although the focus on legal binding contracts has become more prominent following the pandemic, the contract analysis process has long been under scrutiny. Unfortunately, it was far from being an efficient one. Nevertheless, the fast-emerging technologies of Artificial Intelligence, Natural Language Processing, and computer vision will streamline the labor-intensive contractual negotiation with insufficient information.

Hence, organizations can breathe a sigh of relief by understanding the requirement of getting acquainted with the risk clauses like survival agreements, liability limitations, and force majeure with their contract partners. Therefore, AI-powered contract analysis is undoubtedly the eye-candy for the future as it infuses efficiency into the contract management system by automating the evaluation of unstructured data with the assistance of computer vision and NLP techniques.

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