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    Blog Image

    Why Draft Contracts the Old Way? AI Contract Authoring Software Is Here

    • Drafting and authoring contracts has traditionally been a tedious, time-consuming process involving back and forth with multiple stakeholders. 
    • With AI-powered contract authoring software, you can use pre-built contract templates, work closely with stakeholders and expedite approvals. 
    • You can also reduce ambiguity and misunderstandings to protect the business from legal liabilities.

    April 24, 2025 | Contract Management

    Procurement teams invest a lot of time and effort in negotiating contracts with suppliers. They leverage their negotiation skills to ensure that suppliers agree to delivery timelines, payment terms and other relevant conditions. 

    But this is only half the job done. 

    Once both parties agree, they draft a formal contract that outlines all the agreements made during discussions. Procurement and legal teams create and author the contract listing the relevant terms and conditions. This isn’t an easy process, as teams need to accurately capture the discussions in the form of deliverables. 

    Let’s look at some common challenges in this process. 

    What is Contract Authoring? 

    Contract authoring involves drafting and creating contracts between the buyer (business) and seller (supplier). This involves the composition of terms, conditions and clauses to govern the legal agreement between the parties. 

    Seen as the initial phase of contract lifecycle management, contract authoring lays the foundation of how businesses engage with their suppliers throughout the duration of the contract. This phase provides an opportunity to transform the negotiated terms into more tangible and concrete forms. 

    Well-authored contracts lay the groundwork of a successful partnership by setting clear expectations and guidelines for both parties. They serve as a reference point for validating that both parties comply with agreed-upon terms. They also help procurement track deliverables, check any deviation and settle disputes. 

    Why You Need Contract Authoring Software 

    Traditional contract authoring is cumbersome, given the increasing volume and complexity of contracts. A large enterprise today may have active contracts with thousands of suppliers spread across multiple regions while a mid-enterprise may be dealing with more than a hundred vendors. Using a traditional, paper-based approach is therefore no longer feasible. 

    Procurement often has to juggle several templates and chase multiple stakeholders for their inputs. This can get more frustrating when there are changes required, and procurement has to manually track the revisions. It may also need to chase stakeholders again to validate the changes. This can be time-consuming and cause holdups in contract creation. Besides, the manual process is prone to human errors that can lead to compliance risks or delays. 

    What to Look for in Contract Authoring Software 

    Over the years, procurement teams may have worked with different types of contract authoring software. With technology evolving quickly, earlier versions of basic document processing have grown into sophisticated contract lifecycle management solutions that integrate AI and machine learning. Generative AI has added natural language processing capabilities to make the process even simpler. 

    Modern contract management solutions can streamline the end-to-end contract authoring process. Here are seven must-have features to look out for: 

    1. Automated contract templates: 

    Allow users to create first drafts quickly using pre-approved templates and clause libraries that include standardized language and predefined sections. This feature is well suited for authoring standardized contracts that often have the same terms. It offers a great starting point, reducing the time spent on repetitive drafting tasks. For simple agreements such as NDAs, enable the system to generate first drafts for zero-touch contracting. 

    2. Collaborative authoring: 

    No more of going back and forth between different teams. Get all stakeholders to work closely with collaborative editing, access control, redlining, version control, side-by-side comparison and approval routing. You can also invite your suppliers to review, edit and add their redlines. The ability to engage in collaborative redlining with stakeholders and suppliers accelerates the process of contract authoring. 

    Also Read: Collaborative Contract Management and Authoring Solution 

    3. Automated reviews: 

    Use pre-trained models to spot inconsistencies between contracts and preferred terms. Natural language explanations for deviations simplify initial reviews for business teams. 

    4. Risk mitigation: 

    Well-defined contract terms reduce ambiguity and lower the possibility of misunderstandings, protecting the business against legal liabilities. Contract authoring software can also scan the agreement to check any non-compliant clauses or missing terms. It can integrate compliance features such as clause libraries to adhere to legal regulations and internal policies. 

    5. Approval workflows: 

    Automated workflows approve agreements quickly to complete contract generation. They route the contract to relevant stakeholders for their approval. Digital signatures further expedite the approval process, eliminating the time required for manual approvals. 

    6. Version control and audit trails: 

    With a contract authoring software, you can easily track changes and approvals. This ensures transparency and helps maintain an accurate version history and audit trail. 

    7. Integration: 

    Contract authoring software can integrate with CRM, ERP and other systems. This helps to seamlessly migrate contracts from existing ERP or contract management system. It also enables seamless data transfer and provides valuable insights into contract performance. 

    How AI is Reshaping Contract Authoring 

    The rapid evolution of artificial intelligence has accelerated its incorporation into several business functions including contract management. 

    AI-powered contract lifecycle management solutions utilize advanced machine learning algorithms to analyze existing contracts and extract relevant clauses and terms. These clauses and terms help teams generate new customized contracts. This enhances accuracy and consistency in contract creation and reduces the time and effort required otherwise. 

    AI tools also flag potential risks or non-compliant terms. With the capability of natural language processing, these tools can conduct contract reviews to identify discrepancies and potential areas of improvement. 

    AI-powered contract management solutions offer centralized contract repositories and use intelligent tagging and categorization to organize contracts based on key attributes such as expiration dates, renewal terms and contract values. This makes it easy for businesses to track and manage their contractual obligations. 

    Read more about GEP Smart’s Contract Management solutions to learn how AI-powered contract authoring and management software can benefit your business.

     

    Tags: Contract Authoring

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