Contracts govern nearly every type of relationship and collaboration in business. Without them, the relationship would be considered informal. As companies grow and expand, they collaborate with a variety of people and third-party companies. This includes employees, suppliers, contractors, affiliates, among others. To manage them, every company needs the assistance of adept contract analytics software.
This software helps companies in storing and managing contracts electronically. If you’ve ever felt overwhelmed with creating or managing contract documents, then it’s a sign that you should utilize such analytics software. In this article, learn how you can work smarter and not harder with it.
What is Contract Analytics?
There is a variety of analytics software, each intended to solve a specific purpose. For example, they allow businesses to analyze a particular category of things, which can be documents or material things.
In the case of contract analytics, it is analyzing all the contract-related documents that a company uses. By analyzing the contracts, they will better manage their relationship with other people and organizations.
There are tools and software that specialize in contract analysis. These are equipped with technologies that include the following:
- Optical Character Recognition(OCR)
- Natural Language Processing(NLP)
- Text Analytics
- Semantic Analytics
- Machine Learning
- Artificial Intelligence
OCR allows the conversion of images to editable Word documents by recognizing the words, letters, and characters. NLP and Text Analytics help in understanding the extracted text. Semantics help in understanding the relationship between the words. Finally, Machine Learning and AI enable the software to adapt and learn.
Benefits of Contract Analytics
The contract analysis tools come with several benefits for the companies that use them. Some of them are as follows:
- Helps in Risk Management
A study by McKinsey reports that vendors and suppliers are responsible for almost 90% of the annual revenue for specific industries. So the companies operating in these industries rely heavily on third parties.
If you have an inefficient or incomplete contract in place that doesn’t cover all the bases, then it could be troublesome. A contract analysis system will help you with reducing risk exposure and revenue leakage.
- Helps in Understanding Business Performance
Companies spend hours digging into emails and phone records, trying to uncover everything related to contracts. But with a proper analytics tool, you can automate this process.
The in-built dashboard helps you visualize the workflow you followed to create and maintain the contract. So you’ll be able to spot trends, vulnerabilities, and opportunities to make your agreements better. And this can have a positive impact on your business performance.
- Add Intelligence to Reports
Analytics software can go over the documents and contracts and prepare a more intelligent report detailing the most critical information.
So when the team sits down to make a high-level business negotiation, they’re only presented with the information they’d need.
How to Select a Contract Analytics System?
There are several analytics systems available to choose from. However, for best performance, it’s recommended that you select software with pre-trained ML models.
With this, you don’t have to start from scratch and train the model. Instead, the analytics will be operating at a high level of efficiency from the get-go.
With the adoption of digital contracts, contract analytics has become even more important. They can help you partner with the right people to work with.