Contract extraction software does what it says on the tin: it extracts the key data from your contracts. But how should you use this information to streamline your business operations? Read on to find out.
What is contract extraction?
Contract extraction refers to the process of identifying, extracting, and analyzing data contained within agreements and contracts. This can be done in isolation by using contract extraction software to extract contract data or as part of a wider contract lifecycle management process.
Businesses that are processing large numbers of legal documents may find that contract extraction becomes a more necessary part of their legal process. Automating contract extraction could save your business time, energy, and money compared to manual contract extraction methods.
Automating contract data extraction requires software or an algorithm that can quickly analyze large amounts of textual data. In 2024, this is often powered by AI and machine learning as it can quickly extract both structured and unstructured data from contracts and other business documents.
.png)
When do you need contract extraction software?
Regardless of the size of your business, contracts are indispensable in your transactions. Contract extraction is important as it allows you to identify and extract essential data from contracts, such as key terms.
This extracted data can help you in numerous ways, especially when it comes to organization and analysis. This data can help with compliance reports, managing risk, tracking deadlines, and also facilitating negotiations.
The problem with the process is that it’s time-consuming to do manually and unlikely to be a priority. This is where software can be the solution, as often it's a less expensive alternative to hiring one individual to focus on extracting data from your contracts.
It’s also worth noting that contract data extraction can and should be considered as part of your wider contract management process. This may sound complicated, but it’ll save you work in the long run.
What are the benefits of contract extraction software?
1. Reduce risk
Though used to mitigate risk, contracts can present a reasonable level of risk to a company, particularly when they’re not visible. There are numerous types of contract risk, but most of them can be limited by paying more attention to your contract data.
For example, one of the most significant contract management mistakes that businesses can make is failing to secure contracts and the data within them. This risk can be limited by storing contracts safely within a robust contract repository or, by using contract extraction software to encrypt contract data.
2. Increase efficiency
Automation often leads to greater efficiency, and that’s certainly the case here. Looking for datapoints in contracts is highly manual and often prone to human error, this is why generative AI is well-placed to help.
AI contract extraction software can isolate certain contract clauses and extract the exact data you need. This saves the manual effort of extracting the data and leaves you to the simpler task of monitoring and reviewing the contract information that has been extracted.
.png)
3. Improve contract visibility
Contract extraction software can provide you with valuable insights into your contract data. This allows key stakeholders to gain insight into contractual obligations, risk exposure, and revenue opportunities.
These insights can also guide how you shape contractual relationships and aid in the contract negotiation process. Ultimately, these could offer your business a competitive advantage and drive more sustainable growth.
Use cases for contract extraction software
So, when should you use contract extraction? Well, the specific data points you’ll want to extract will differ based on your industry or specific organization. That said, there are certain areas of contract data that you should pay attention to.
- Renewal dates
- Indemnification terms
- Governing laws and jurisdictions
- Contract values
- Payment terms
- Termination clauses
- Service level agreements (SLAs)
Leveraging contract extraction software allows organizations to automatically identify key data points in these legal documents and make contracts a source of business intelligence, not just a legal necessity.
For example, SaaS platform Funnel benefits from the ability to see renewal dates on their contracts instantly in Juro. Because contract data is more accessible, the commercial team doesn’t even have to leave Slack to know the status of each contract.
{{yuliia-3commas-ai-negotiation}}
Best practice for contract extraction
Contracts are often full of sensitive information and data, so it’s important to make sure that you’re using a secure and compliant tool to perform contract data extraction. Here are some best practices to keep in mind when looking at contract extraction software:
- Data security. Ensure that the platform you’re using is security compliant and that you uphold robust security measures so that the extracted data you collect is secure. This can be achieved by doing regular contract audits.
- Data minimization. Don’t extract every single bit of data from every contract, only extract the necessary data. This will ensure that you’re not collecting excessive sensitive or personal data.
- Consent. Make sure that you have consent to extract the data in the first place, this usually means just being compliant with the relevant privacy regulations in place.
- Data retention. Only retain the data for as long as is needed for the extraction. Once the data is no longer needed, make sure to delete or anonymize it as necessary.
- Third-party considerations. When using a third-party service provider to collect data from a contract, ensure they have the correct data protection agreements in place. Check out this list of vendor management best practices to help you do this.
- Anonymity. For certain contracts, it is good practice to anonymize data. The most typical things to anonymize include names, contact details, and addresses. This protects an individual’s identity and also reduces risk of identification.
Juro is committed to safeguarding the confidentiality, integrity, and availability of your contract data. You can find out more about this in our trust center.
Optimizing your contract workflow using contract management
Contract extraction is just one element of the contract management process that enables your business to get the most out of your contracts.
Juro is an AI-enabled contract automation platform that empowers legal and other business teams to accelerate the creation, execution, and management of contracts. This means looking beyond just one section of the contract lifecycle and looking to accelerate the whole process.
To discover how your contract management could benefit from Juro, fill in the form below to book your personalized demo.
.svg){kind=logo}
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)