Third-party contracts—contracts that are authored by a counterparty rather than in house—are an inevitable part of doing business: Even the largest enterprises will at times enter into contracts that were written outside their own legal department, and for some businesses, they represent a major part of all contracting.
Necessary though they may be, third-party contracts present serious challenges. While contracts created in-house use standard clauses and templates, third-party contracts can vary in verbiage and structure, making them difficult for legal, business, finance and compliance teams to assess and track.
At best, processing third-party contracts is a labor- and time-intensive process; at worst it exposes companies to serious risk as the room for human error is high.
A New AI App for That
We recently launched the ICM DiscoverAI App, a new application for the Icertis Contract Management (ICM) platform that applies the power of artificial intelligence to third-party contracts so enterprises can manage them the same way they manage their own.
DiscoverAI can import contracts in any electronic format—even PDFs and images—onto the ICM platform. Once there, the app utilizes machine learning algorithms that have been trained on one of the largest contract repositories on the planet to parse contracts into their building blocks: clauses and attributes.
When a user opens the imported contract in ICM, key attributes and clauses are highlighted and labeled according to a unique taxonomy distilled from hundreds of thousands of clauses, making it easy to discover components of the contract and saving an enormous amount of time and labor. And it does this within ICM, where the semantic meanings of the clauses and attributes are already defined as ICM contract types.
Third-party clauses can be quickly compared to your standard language from the enterprise clause library, or marked for deviation analysis, so the right people in the organization can automatically get involved in the review process. Attributes can be validated in context, and their semantic representation can drive approvals, governance and compliance automatically in the context of that transaction. And, even more importantly, they can be managed, analyzed and governed as part of your own body of contracts.
Because the contract is now part of the ICM platform, it can be treated as if it were created within ICM, with full capabilities including routing for approvals, versioning and redlining. And because ICM integrates seamlessly with Microsoft Word, legal teams can take advantage of the benefits of AI applied to contracts without leaving the productivity tool they use every day.
The Benefits Are Clear
Customers who have used the ICM DiscoverAI app are already seeing clear benefits, reducing the time to import contracts by up to 80 percent and improving post-execution contract compliance by 90 percent.
Other benefits companies can expect to see are:
- Improved cycle time by saving time and eliminating errors while reviewing contracts
- Increased velocity and better risk management in third-party contracts by gaining visibility
- Improved deviation tracking and approval process for third-party contracts with system orchestrated processes
- Redlining, versioning, intelligent approvals of third-party contracts at the same level as native ICM live contracts
A New Era for Contracts
For the first time in history, contracts are being digitized, allowing enterprises to reimagine contract management and place it at the center of their commercial processes. The advent of digitization has enabled businesses to increase contract velocity, improve compliance and optimize commercial relationships.
About the AuthorFollow on Linkedin Visit Website More Content by Monish Darda