GenAI Agents for Contract Management: A Guide

Introduction: Identifying the Need for Automation

Contract management can feel like juggling too many balls at once—keeping track of deadlines, managing compliance, and ensuring all parties stay on the same page. For many companies, the process is time-consuming and prone to human error, especially as contract volumes grow. With each new agreement, the tasks multiply: reviewing documents for risks, drafting new terms, and staying on top of important dates like renewals.

As companies expand, the manual effort required to manage contracts effectively becomes a roadblock to growth. This is where automation, especially through GenAI agents, steps in. These AI-powered tools can help organizations streamline their contract management processes, reducing manual work and increasing accuracy. Rather than being stuck in the weeds of paperwork, companies can shift focus to more strategic, value-driven tasks. In this blog, we’ll explore how GenAI agents are streamlining contract management, transforming each step of the process into a faster, smarter, and more efficient system.

Modern-Day Contract Management Pain Points

Managing contracts today comes with its own set of challenges, especially when relying on manual processes. Here are some of the key pain points that many organizations face:

1. Manual Review Bottlenecks: Reviewing contracts for risks, non-standard clauses, and ensuring compliance is a time-consuming process. Legal teams often spend hours poring over lengthy documents, looking for potential red flags. This slows down the overall process and can delay important agreements.
2. Difficulties in Contract Drafting: Creating contracts from scratch or even from templates requires a lot of customization. Each contract might need different terms, clauses, and business details. Manually adapting templates for each new agreement takes time and risks human error, leading to inconsistencies.
3. Obligation Tracking: Once a contract is signed, tracking commitments like deadlines, renewal dates, and other key milestones is crucial. However, with manual methods, it’s easy to miss important dates or lose sight of obligations buried within contract text, potentially leading to compliance issues or missed opportunities.
4. Data Extraction and Summary of Contracts: Extracting key information from contracts, such as critical terms or payment conditions, is often a tedious manual process. This makes it difficult to quickly summarize the overall status of contract portfolios, identify trends, or make informed decisions based on contract data.
5. Negotiation and Repetitive Approval Workflows: Negotiating contract terms can involve back-and-forth exchanges between parties. This process often leads to repeated approval workflows, where each change needs to be reviewed and signed off by multiple stakeholders. This back-and-forth creates bottlenecks, slowing down the process and extending the time to finalize agreements.

These pain points can create delays, increase costs, and cause companies to miss out on business opportunities. The need for a faster, more accurate approach has never been greater, and this is where GenAI agents come in to transform the process.

How GenAI Agents Tackle These Pain Points

GenAI agents are revolutionizing contract management solution by automating repetitive tasks, increasing accuracy, and making processes more efficient. Here’s how GenAI addresses each of the major pain points that companies face in contract management:

1. Automated Contract Review:

Companies often manage hundreds of contracts across departments, such as procurement, sales, legal, and finance. Traditionally, extracting key information like product descriptions, quantities, prices, and terms required hours of manual review by legal or procurement teams.

With GenAI, this process is streamlined where AI-powered agents can scan through contracts, automatically extracting essential line items and key terms. This not only reduces the time spent on reviews from hours to minutes but also minimizes human error, ensuring consistency and accuracy in the extracted data.

The result? Legal teams can shift their focus from repetitive data extraction to more strategic tasks, speeding up the entire contract review process.

2. Contract Data Extraction and Summary:

Managing a large volume of contracts, from vendor agreements to client deals, can quickly become overwhelming. Reviewing these documents and extracting crucial insights is time-consuming but necessary for making informed decisions.

GenAI agents automate the extraction of executive summaries, highlighting important details such as contract dates, obligations, renewal clauses, and payment terms. By doing so, companies can get a quick overview of any contract’s critical points without diving into the fine print and ensures that decision-makers have access to the information they need immediately, improving operational efficiency and enabling faster responses to business needs.

Also Read: Contract Analytics: Revolutionizing Contract Management with AI-Driven Analytics

3. Obligation Management:

After a contract is signed, keeping track of obligations—like deadlines, renewal dates, and specific commitments—can be a logistical challenge. Missing a deadline could mean penalties or lost business opportunities.

GenAI agents simplify obligation management by monitoring all key commitments and deadlines automatically. They send reminders to contract owners about upcoming milestones or renewal dates, ensuring that nothing falls through the cracks allowing teams to manage their contracts more proactively, reducing the risk of missed obligations and maintaining contract compliance with ease.

4. Intelligent Contract Drafting:

Drafting contracts often requires starting from a template and then customizing it for each new scenario. This can be a time-consuming process, especially when every clause needs to be tailored to the situation.

GenAI agents transform this process by generating first drafts based on standardized templates and auto-populating them with relevant business details. Additionally, they suggest context-appropriate clauses by analyzing similar past contracts allowing the AI to select the most suitable terms automatically. This reduces drafting time significantly, ensuring that contracts are consistent and aligned with the company’s standards.

5. AI-Powered Negotiation Support:

Negotiating contracts often involves multiple rounds of discussions to reach mutually agreeable terms. This back-and-forth can slow down the process, requiring repeated approvals.

GenAI agents can streamline negotiations by interacting with suppliers, analyzing the terms, and suggesting alternatives based on historical data and best practices. The AI can simulate negotiation scenarios, offering fallback clauses or suggesting price adjustments to get the best possible deal speeding up the contract negotiation process while ensuring that they secure favorable terms, ultimately leading to faster approvals and finalized contracts.

By addressing these pain points (though not exhaustive), GenAI agents turn contract management into a faster, smarter process. They free up time for teams to focus on strategic activities, reduce the risk of errors, and provide valuable insights that were previously buried in manual processes.

Read more: How GenAI agents help optimize Contract Management?

Pain Point and Feature Mapping

Below is a table that is a snapshot of the GenAI capabilities and how it is matched with each modern-day pain point in contract management with the GenAI agent feature that addresses it, illustrating how the technology improves the process:

This table highlights how GenAI features align directly with the challenges that many companies face in managing contracts, turning time-consuming and error-prone tasks into streamlined and efficient processes.

Conclusion

GenAI agents are revolutionizing contract management, making it faster and more efficient by automating key tasks. From reviewing contracts and drafting new agreements to managing obligations and facilitating smoother negotiations, GenAI turns a cumbersome process into a streamlined workflow. By implementing these AI-powered tools, companies can significantly reduce manual effort, minimize errors, and improve overall contract handling efficiency.

If your team is facing similar challenges, it’s time to explore the future of contract management. Schedule a demo with Zycus today and see how AI can turn your contract chaos into clarity.

Related Reads:

1. Leveraging GenAI for Smarter Contract Negotiation and Risk Management
2. The Paradigm Shift in Contract Lifecycle Management: Why 2024 Demands a Rethink of Your CLM Strategy
3. Generative AI for Contract Management
4. 5 Steps to Manage Contracts Efficiently – Spokes in the Contract Life-cycle Management Wheel
5. Ultimate Guide to Contract Management: Benefits & Best Practices
6. White Paper: Astute Contract Risk Management- Best Practices to Mitigate Risks
7. White Paper: Driving collaboration through Contract Management
8. Analyst Report: Procurement Contracts – Real Value, Real Returns
9. White Paper: The Why, What & How of Contract Management