Top trends in Contract Management in 2022

For a company that needs to sign and manage many contracts, there are a higher likelihood for minor (or major) issues to creep in. For example, companies that work in manufacturing and construction must sign multiple contracts in the manufacturing industry. These include raw material contracts, vehicle contracts, labour contracts, technology contracts, and more. Working with these contracts opens up opportunities for challenges to interfere with and interrupt the process.

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Contract lifecycle management systems reduce erroneous payments by 75-90% and cut operating & processing expenses by 10-30%, as per Goldman Sachs.

Rising demand for agile contract management, rapid adoption of AI/ML technologies, and increasing need for contract compliance fuel the demand for AI-enabled contract management software.?

Continuing with the contract management trends of 2021, this year has paved the way for even more advanced tools. After relying on contract management technology for the past year and a half, businesses realise the advantages of using these solutions beyond the pandemic.

These are the top contract management trends to watch out for in 2022 and beyond.?

Trend #1 The increasing role of AI in contract analytics

As per World Commerce & Contracting, AI-based contract interpretation and summary for dissemination to affected personnel are 98% accurate compared to 92% for human-based analysis.

In most organisations, once contracts are signed, they sit in Gmail, Drive, or a dedicated contract repository until, in rare cases, someone needs to recheck the agreement terms. In such cases, key milestones are often missed, resulting in revenue leakage or strained vendor relationships. It calls for the dire need for intelligent contract analytics and visual dashboards which provide timely and actionable insights. According to Deloitte, using intelligent contract analytics, companies achieve a 60% reduction in contract management costs.

Trend #2 Automation of contract review and negotiations

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As per Gartner, AI-based contract analytics solutions will reduce the manual effort needed for contract review by 50%.

Currently, in most organisations, legal departments often rely on traditional contract review and negotiation processes that have not materially changed for centuries.?

Each contract review cycle requires countless emails back and forth to share and discuss concerns. Over and above, contract negotiation is a lengthy process.?

Using automated data entry and risk mapping, AI contract management technology is intended to streamline data analysis and risk management. More time is freed to focus on critical parts of a business's daily operations and growth while less time is spent on the minute details of contract signing...?

AI automation can speed up the contract review process by 5X or more and de-risk the negotiation process. Missed deadlines or constant delays are far less common, and all versions and edits of contracts are saved and retrievable at all times.?

Trend #3 Automated clause analysis

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As per Global Legal, 65% of Legal professionals lose time on administrative tasks.

Poorly drafted contractual clauses lead to problems in Post Contract management. It is a very important function with operational and financial implications, requiring close and effective monitoring.?

From requests to renewals, it is vital to standardise clauses across the company contracts for quick and easy contract management to avoid contract and compliance risks. Effective clause analysis must accelerate contract signature and ensure a smooth transition from the pre to post-contract stage while staying compliant.?

A technology is needed which can identify and extract key clauses and terms from your contracts. Usually, contract metadata extraction with AI includes extracting key dates, contract value, contract types, names of the parties, and associated departments. However, in 2022 and beyond, AI will surely expand its roots and wings and play a major role in extracting and automating clause analysis.?

Trend #4 Improved visibility to compliance management

As per World Commerce & Contracting, poor contract management practices and non-compliance cost businesses an average of 9% of their annual revenues.

Failures to comply with contractual obligations expose you to risk and miss out on possibilities. This happens mainly due to a lack of visibility into or inaccessibility of contractual data like terms, conditions, commitments, obligations, and entitlements.?

Contract managers are looking for ways to track contractual performance and drive predictability with AI. CLM solutions that can detect deviations from stipulated agreements and commitments will be highly sought after.?

AI-enabled contract compliance management is expected to result in improved ability to manage renewals and stronger and better collaboration amongst stakeholders.?

For more information on how you can manage your contracts efficiently, visit our website- www.leerahenterprises.co.in