Contract lifecycle management systems can go a long way in protecting companies against financial risks and reducing operational costs. These advantages encourage businesses to use technology to handle their contract management requirements. Law firms are adopting contract lifecycle management solutions for litigation and due diligence.
To move contracts forward traditionally, contract generation, negotiation, and approval rely on hands-on governance, which wastes time and creates a chance for human error to cause a problem. Organizations can set and control access more effectively and efficiently by doing away with paper documentation. But to keep up with today’s businesses requires ongoing effort to improve the contracting process. Fortunately, year by year, digital contracting solutions continue to advance to keep up with escalating demands of the current marketplace. Here are the key trends in contract management that you need to watch out for in 2023.
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Artificial Intelligence’s growing influence on Contract Management
Contract analytics involves the analysis of large volumes of contractual agreements to extract relevant information, identify risks, and ensure compliance. Artificial intelligence (AI) is increasingly playing a significant role in contract analytics. AI technologies, such as natural language processing (NLP), machine learning, and predictive analytics, are being used to automate and improve the accuracy and speed of contract lifecycle management.
Organizations can extract information from the contract portfolio, such as party names, dates, and terms. It enables contracts to be quickly analyzed for insights, reducing the time and resources required for manual contract review. Machine learning helps train models to identify and flag potential risks or issues within contracts, such as clauses violating regulatory requirements. Predictive analytics can identify patterns and trends within contract data, providing business intelligence that can inform contract negotiations and future decision-making.
AI contract management can quickly identify non-standard clauses or outliers in contract language, allowing legal teams to quickly assess potential risks and mitigate them before they become massive problems. Thus, AI offers improved compliance and risk management, increased efficiency and cost savings, and better decision-making.
Greater urgency for data privacy
The urgency for data privacy in contract management has increased significantly in recent years. It is due to several factors, including the growing amount of personal and sensitive data within the contracts, the rise of cyber threats and data breaches, and new data privacy regulations.
One of the main reasons for the increased urgency of data privacy in contract management is the amount of personal and sensitive data contained in contracts. Contracts often include personal information, such as names, addresses, and sensitive business information, such as financial data and trade secrets. The data might see malicious ends in the wrong hands.
Another reason for the increased urgency of data security in contract management is the rise of cyber threats and data breaches. Cyber-attacks are becoming increasingly sophisticated and can result in the theft or exposure of sensitive information. Cybercriminals frequently target contract databases and systems due to the valuable information they hold. New data privacy regulations have also increased the urgency for data privacy in contract management. These regulations impose strict requirements on companies that handle personal data and can result in significant fines and legal action if violated.
Hence, businesses must adopt a proactive approach to data privacy in contract management. That is why organizations prioritize contract management solutions with solid data security measures. They can utilize encryption and access controls to safeguard their data. Companies must also regularly review and update data privacy policies and procedures and provide regular training and awareness programs for employees who handle contract-related data.
Customizable contract management solutions
The requirements and priorities for contract management vary by industry. That is why just adopting an off-the-shelf contract management solution and hoping for the best is not the best approach to handling business agreements. Fortunately, these days most contract management software comes with the option for customization. Businesses can pick and choose functions according to their specific needs. There is no need to overwhelm users with an overload of features or information.
Customizable dashboards to sharpen the focus on contracts with clients, customers, or employees. So, the procurement or sales teams have easy access to contractual agreements relevant to their department. The advanced data analytics functions allow users to generate custom contract reports for vendor scorecards, clauses, deadlines, obligations, and expiration. Contract management solution takes it one step further by integrating with external apps. It prevents information silos and the need for users to switch between multiple systems to take care of business operations.
So, organizations can connect contract management software with the apps they need. For instance, the sales department requires prompt access to the sales contract lifecycle and CRM (Customer Relationship Management) platforms to manage customers efficiently. Integrating customer relationship management solutions like Microsoft Dynamics CRM or Salesforce with contract management software enables paves the way for a seamless sales process. The sales team can initiate and oversee the contract lifecycle from within the CRM platform. Similarly, there’s room for collaboration through integration with Business Central, electronic signature solutions, and Microsoft Office 365. Because of this, companies today are searching for contract management software with sophistication and adaptability to work easily with other apps.
Inclusive contracting process
Generally, all contract management tasks fall under the purview of the legal department. But to keep up with the growing demands, companies are encouraging individual departments to self-serve contracts. Empowering sales and procurement teams to generate competent agreements can significantly speed up the processing time and improve profitability. Consequently, contract management software with tools that allow the democratization of the contract management lifecycle is the top choice for businesses in the coming years.
Without the constant intervention of the legal department, businesses can quickly produce low-value, high-volume agreements like NDAs (Non-Disclosure Agreements), employment contracts, and rental agreements. Users can utilize contract templates and clauses available on the platform to establish the competency of legal agreements. Thus, companies can experience seamless business operations, and the legal team is free to focus on more valuable and strategic tasks. Inclusive contract management paves the way for small businesses without legal counsel to create lawyer-approved contracts using contract management solutions.
Add-on vendor portals for contract management
Vendor agreements typically make up a sizable portion of the contract portfolio for most businesses. Businesses need a collaborative system to manage their suppliers and contractual obligations efficiently. A centralized platform to collaborate with vendors enables the procurement team to oversee the contract lifecycle and reduce negotiation time. It allows real-time communication with suppliers so organizations can make the most out of the business deal.
Fortunately, most contract management software offers a vendor portal add-on. Suppliers can use it as a self-service portal to complete questionnaires, enter their basic information, and other tasks. It enables users to import vendor information to generate agreements without the need for manual data entry. It is essential for accelerating and streamlining the negotiation, review, and signing of contracts. In both the Source-to-Contract and Procure-to-Pay processes, vendor portals will be crucial.
The pandemic and remote workplaces have increased the use of contract management software, and this trend will continue into 2023. As the contracting process transitions from legal counsel to business users, advanced tools like AI, Machine Learning, and Automated Workflows will come into play to improve efficiency across the organization. These user-friendly and cost-effective solutions will encourage productive collaboration and make contracts accessible to all. It will empower small businesses without legal support to create competent legal agreements. Organizations can realize the true value of their business contracts through analysis and improve their bottom line. Whether it is sales or procurement contracts, the innovations in contract management make the job easy for every department.