Top 3 Contract Compliance Issues Every Organization Faces — Can AI Help?
Compliance isn’t easy: it’s expensive, time-consuming, due to constantly changing regulations.
A study from Ponemon Institute revealed that non-compliance costs more than twice the cost of maintaining or meeting compliance requirements.
Manage contract disputes
Disputes are a fact of life, and breach of contract is an unavoidable element in contract management. When either contracting party fails to meet their obligations or breaches a contract, contract disputes happen. You can’t manage what you don’t track. So, it is necessary to track obligations and adhere compliance to them.
Tip: Maintain a contract obligation tracker that keeps track of the rights and obligations of both parties and ensures compliance.
Manage obligatory regulations
Despite the importance of regulatory compliance in the contracts, most enterprises still do not have complete control over the contract and legal compliance and obligations. As a result, businesses need to be more responsive to regulatory changes; an agile CLM approach that stresses automated obligation management can help.
Tip: Eliminate compliance issues and achieve maximum contract compliance with a centralized repository to store all your contracts. It will close the process gaps and ensure contractual and non-contractual spending visibility.
Identify profitability drain
Profit drains when a business fails to prevent revenue leakage. How an organization can stop revenue leaks does not have a one-size-fits-all answer. Concerning contract management, opportunities such as renewals, cross-sell, negotiations or billing timings are the time to revisit these contracts and improve their terms for a long-term relationship with clients or suppliers, adding value to your businesses in terms of revenue and reputation. However, when such opportunities are missed, it leads to revenue leakages.
Tip: To reduce revenue leakage, make sure your contracts have contract owners with insured visibility of deliverables to meet contractually agreed terms.
Role of AI in contract compliance and obligation management
Contract management is compliance management, and it is unimaginable to achieve it without AI-enabled automated solutions. A contract management system, powered by AI, provides contract managers with the tools they need to prevent revenue leakage and meet obligatory compliance while enhancing contract profitability over time.
To achieve 100% compliance and stay away from risks of non-compliance, organizations need solutions beyond CLM. They need a solution that automates obligations management, with the collection of contract performance data to identify and report non-compliance events, helping clients to reduce financial and reputational risk and to manage disputes before they escalate.
Would you like to learn more about how automated contract obligation management and reviews will help prevent contract disputes from spiraling out of control and result in a win-win outcome for all involved? Watch this webinar to explore more about bridging the contract performance gap with automated obligations management.
To learn more about Aavenir Obligationflow, an AI-enabled contract compliance and obligation management solution, click here:
