AI in Contract Management: Mitigating Potential Risk


Whether you’re sourcing new suppliers, making purchases, or writing new contracts, managing risk is vital, especially in the current tumultuous markets. Artificial intelligence in contract creation can help minimize your potential exposure without sacrificing opportunity, simply by covering potential areas you may not have previously considered.

The biggest way that AI does this is by analyzing the language of your contracts and responding to it. This includes recommending new language or clauses based on the context of the rest of the document, as well as the history of similar contracts, performance against those contracts, and past supplier issues or delays by similar vendors in related categories. All of this information is analyzed and considered, and the system can make decisions about which clauses are necessary to protect your organization.

Importantly, an AI contracts tool that is part of a larger procure to pay suite can integrate deeply with Supplier Management to incorporate supplier history. That includes previous violations, late deliveries, failure to comply with discounts, or other complications. Integration is a clear best practice for contract management, not only because it reduces duplicate information but because it empowers AI systems with clear, reliable data.

This is where the value of better decision-making becomes a reality. The platform can digest more information about your suppliers and contracts than humans possibly could. It then provides your team with recommendations to minimize your risk more than you could on your own. This drives tangible bottom-line results, with an average of 3-18% risk reduction for those who adopt an AI-driven contract analysis tool.

By Amenallah Reghimi

Keywords: AI, Customer Experience, Procurement

Share this article