While accountants are often called ‘numbers people’, in today’s world, numbers are just one of the many datasets they are asked to account for.

Modern finance professionals hold oversight of a vast array of information types across various aspects of their function, from managing contracts and invoicing to generating the statements that are the foundation of business planning and reporting.

As result, many finance professionals have now taken on greater oversight of the document and contract management systems used for storing, analysing, and reporting on these data sets.

An age-old problem

According to Fortune Business Insights the global document management system market was valued at US$6.23 billion ($9.9 billion) in 2023 and was projected to grow to US$24.91 billion ($39.61 billion) by 2032.

Just how much of that spending was accounted for by finance functions was not tracked, but if the experiences of finance professionals such as Suresh Rajendra are anything to go by, contract and document management systems are becoming a much more important component of their responsibility.

As the CFO at the Perth-based not-for-profit retirement living, residential care and community service provider RAAFA, Rajendra operates a team of 29 who manage finance, procurement, and property. Core ERP is provided by Epicor, with Power BI used for reporting and Coupa used for procurement and contract management.

When it comes to contract and document management, Rajendra said no single tool was dominant within his industry, due to its specific needs. However, this didn’t mean that the tools available were always fit for purpose across an entire business.

“When you get to non-for-profit and aged care, we are quite specific in our needs, because of all the regulatory requirements” Rajendra said.

“We would love to have a system where we could do everything together.”

The need for better document and contract management within finance is widespread across industry, and its absence translates into a very real hit to business spending.

According to the World Commerce & Contracting (WorldCC) association’s Benchmark Report for 2023, more than 90 percent of executives understood the need for better contracts and more streamlined processes. However, the report also described a slow pace of change, which suggested that management was in some cases resistant to change or was failing to make a sufficiently convincing business case for investment.

The WorldCC found that despite advances in technology, the value delivered through contracts was difficult to capture fully. Whereas in 2014 the WorldCC found that average erosion in contract value (arising from factors such as penalty costs, missed deadlines or benchmarks, high renewal costs or fees for late payment) stood at 9.2 percent, after ten years of technological development and investment, by 2023 that average value erosion had declined by just 0.6 percentage point, to 8.6 percent.

This suggested there was still significant room for investment in technology to reduce fragmentation, improve responsibilities, and otherwise reduce inefficiencies in contract processes, with 91 percent of professionals describing the improvement of commercial and contracting capabilities as important.

Contracting with AI

One technology that WorldCC predicted would have an impact in contract management was the adoption of AI. In January 2024 WorldCC reported that AI was the subject of optimism for 76 percent of professionals – up from just 26 percent six months earlier.

WorldCC found that companies using AI had already seen a 35 percent improvement in contract review accuracy and a 39 percent reduction in contract lifecycle time, while 29 percent reported AI had enhanced their risk management and compliance efforts.

According to Louise Hulley, group CFO at the broad-based financial services organisation Balmain, AI had significant potential to ease the workload and improve oversight for finance professionals.

“I think it is going to be more and more relevant, and if you don’t get into the game you’ll be left behind,” Hulley said.

“I can see that auditors are really getting into it for things like contract analysis, where AI allows them to feed in hundreds of documents to see their consistency. That is really powerful.”

While the introduction of AI into contract management seems to be a certainty, another avenue for technological innovation is having a bumpier path to adoption. Smart contracts built on blockchain technology have been proposed as a mechanism for enabling secure, self-executing transactions, but according to the World Economic Forum, the concept has faced numerous challenges, including regulatory concerns and the potential for theft or other forms of criminal manipulation.

Despite these challenges, Grand View Research estimated that the global smart contracts market size would expand at a compound annual growth rate of 82.2 percent to reach US$73.77 billion ($117.27 billion) by 2030.

DIY solutions

While much of the investment in bringing AI into document management is happening amongst specialised providers, the need for CFOs to find affordable solutions is also driving them to examine lower cost methods for leveraging AI.

According to Tim Warren, an experienced CFO currently working with the identity verification business WINR, recent experiences with Google’s Notebook application were delivering interesting results.

“I dumped in all of these contracts and started asking questions, such as asking it to list all of the termination dates, and it did so,” Warren said.

“That is an AI tool that with refinement could be really effective. Would that replace an off the shelf contract or document management system? Possibly. And that is where AI could really offer some benefits in a safe environment.”

For RAAFA’s Rajendra, his focus now is on using whatever tools are available to automate processes and help his team perform at speed. But any investments or changes made would only come after significant due diligence that their implementation would not bring additional risk to the handling of highly sensitive information.

“We all know that AI is going to change us, but how soon is what we don’t know. and it has to be something everyone can trust,” Rajendra said.

“This is people’s very private information we are talking about. Everyone has to be comfortable about how it is managed.”