Category: contract management software
If you’re just joining in now, feel free to go back to part 1 of this blog series.
If not, here is a quick recap:
There isn’t much time left to come up with a plan for the new revenue recognition guidelines since they are coming into effect in 2018. There are a lot of factors and hard work that go into complying with these new standards, so we’ve simplified the process by taking a three-step approach to help you on your journey to increasing compliance.
Step 1: Assessment- By now you should have already performed an initial assessment of your systems, processes and internal controls. This is meant to help you understand exactly what information needs to be captured and reported on, and where that may require certain modifications to your current process, system, and/or controls. It will also help you better prepare for the impact it will have on your business.
Step 2: Identifying the Impact
Once you have completed your internal assessment and have a better idea of what information needs to be captured and reported on, you will now need to consider how the new standard will impact your entire organization. How will it affect your sales team? Your accounting department? Do you need to re-evaluate company expenses? Do you know exactly where all of your contracts are located with each customer and are they the correct, finalized and signed version?
In order to fully identify the impact, you will need to locate and organize each customer contract. The new standard calls for a review of each agreement to understand if any modifications need to be made. For example, the performance obligations changes include determining whether or not a good or service needs to be accounted for separately or be combined into one single performance obligation. You may find you have more, or fewer performance obligations than in the past, but either way you will need to double check all contracts to make sure you are in compliance.
If your contracts are not yet organized in one central and secure repository, then you could be putting your entire business at risk. Maybe you have thousands of contracts that are living with the sales or procurement departments. Maybe you don’t have the latest version of an executed agreement. Getting organized is going to be a huge undertaking and will require cross-departmental participation. Implementing enterprise contract management software can streamline the process, save valuable time, and increase compliance and best practices throughout your organization. By implementing a solution you could capture the data from your contracts right off the bat and see the implications on your revenue within minutes. This would save much needed time, resources and costs associated with failing to recognize revenue.
So, since you are already reviewing your process for the new standards consider deepening your insight into your contractual data. It’s the perfect time to incorporate enterprise contract management software into your revenue recognition process.
If you’re interested in learning how an enterprise contract management platform can help you increase compliance throughout your entire organization, contact us here.
Tune in next week for the third and final step of the process where we discuss actions for implementing the changes.
Whether you like it or not, Artificial Intelligence (AI) is here – and it’s not only here to stay, it’s here to thrive. In a recent Hubspot-led survey of more than 1,400 global consumers, it was found that 63% of people who use AI technology don’t even realize they are using it. AI is that ingrained into our daily lives, both at home and in the office. Now, imagine the doors you could open (quite literally, in fact) through the conscious and purpose-driven use of AI.
Where does AI exist now?
If you own a smartphone, shop online, or chat via messenger with a customer service rep – congratulations, you are a user of AI! Voice recognition and search assistants (like Siri or Alexa) are available on 3.9 billion Apple, Android and Windows devices being used worldwide. Over 4 billion people globally are using messaging apps.
The White House recently released a report on the current state of AI and its potential to help address major challenges society faces.The way we live, connect and search on a daily basis is completely transforming- and it’s just the beginning.
Into the Future
Changing the way we use technology on a personal basis also means enhancing the way we do business. Integrating artificial intelligence into the workplace holds untold potential to increasing efficiency, certainty and productivity in our work. But what does it mean for contracts professionals?
We are seeing it rise up in the contract management space, making data extraction painless for legacy contracts and providing faster and better insights into contractual data. It’s going to change the way contracts professionals work on a day to day basis, ultimately affecting both their business and their career.
What are you doing to get ready for AI? Join us for a webinar with IACCM on Tuesday, February 28th as we explore the history of AI, what it means for contracts professionals and how you can develop a plan to take advantage of this game-changing technology.
Historically, businesses have struggled with successful adoption of Contract Management systems across their entire enterprise. Often times, only a small department will use the system around their specific processes, leaving other areas of the business in the dark. While this may increase process efficiency for one group, it does not solve the issue of contract certainty across all disciplines and all contract types.
The problem is that in the past, Contract Management has always been an extension of another solution (ie ERP or CRM). The systems also relied heavily on customized workflows, as they focused more on contract processes instead of the contract itself. These systems have failed adoption for various reasons, such as:
- Lack of proper visibility across the entire enterprise
- High risk of duplicates due to multiple systems for each department
- Complex customization for each users requirements
- Fragmented process of managing and storing data
Exari has taken a completely different approach to Contract Management from the start. We think of contracts as golden sources of data for your business, not just a trigger for a workflow. We offer a stand-alone Enterprise Contract Lifecycle Management Platform, NOT a thrown together feature spun off of an ERP or CRM. The Exari solution allows all disciplines within an enterprise to leverage the system without forcing them into an unnatural process, or make them duplicate their efforts.
Legal can stay in Word, Sales can stay in their CRM, Finance can stay in their ERP-but while still continuing to leverage the system. Having a centralized platform that can seamlessly share data with other systems across the entire enterprise has proven to be CRITICAL for adoption.
Stop siloing your data and increasing maintenance costs for fragmented processes. Join the 21st century and achieve 100% contract certainty across every contract type in your business with Exari Contracts™ Enterprise.
This week, DerivSource interviewed Alexandre Bon, Senior Solution Architect at Murex, to discuss the growing needs of an Enterprise View of Data in Financial Service firms. He explains how it is essential in order to comply with both the FRTB and SA-CCR requirements, as firms need full visibility into client and trade data. By concluding Bon’s Q&A, here are the important steps you need to be aware of and follow in order to better comply with these regulations.
1. Improving communication between all departments will build a better enterprise view of risk and capital
By bringing departments together with full transparency into all information, regulation-related strategic decisions can be more efficiently built out. For example, by bringing together the credit, collateral management, treasury and trading departments, will link together how collateral management operates and how trading desks will price the effect collateralization of new transactions. In return, this will provide traders with the information they need to efficiently evaluate which entity they should execute a trade with.
Bon stresses the importance of full transparency into all data at an enterprise level view. Banks need to move to a real time view of their regulatory capital positions in order to properly comply with the FRTB.
2. The SA-CCR has an implementation deadline for many firms
The new standardized approach is scheduled to take effect January 1, 2017. This includes a comprehensive approach for measuring counterparty credit risk associated with OTC derivatives, exchange-traded derivatives and long settled transactions. For more information on what you need to consider in order to comply, you can find it here.
Since a deadline is quickly approaching, more and more firms are beginning to put budgets into place to either build their own system or evaluating enterprise solutions for adoption (take a read through our Build vs. Buy whitepaper for more information).
3. How to integrate departments and getting over that initial challenge “hump”
Integrating departments can be extremely difficult, as further discussed by Bon. It’s no surprise that he mentions the challenges that firms will face, such as how they all operate and run differently, their data sets are incompatible or out date or can be duplicated with inconsistencies. The worst of it- they have no central data repository. He mentions that some firms have built their own regulatory reporting systems on top of data warehouses, but they just don’t cut it.
Implementing a central data repository to allow for full visibility into all data and reporting for every department is essential. It will help establish clear data management processes for maintaining clear, consistent data across the entire enterprise. By moving toward an enterprise view, the information can be used to rationalize processes, understand which businesses are most profitable, and divest those that are not.
Firms will not only be in compliance, but looking further ahead they can develop enterprise-level risk tools for analyzing positions and capital data in a much more efficient way. Banks need to adopt a more innovative approach for dealing with the high cost of regulations, such as managing the total cost of trading. An Enterprise Contract Management System is just that approach.
To learn more about how an enterprise contract management system can help you reduce your firm’s risk, download our Contract Risk Playbook: Risks Hiding in Plain View, an advanced guide for corporate boards and senior executives today.
DerivSource is an independent information source and online community for OTC derivatives professionals globally, with a community of over 15,000 members globally.
*DerivSource, SA0CCR and FRTB: Compliance Drives Renewed Push for Enterprise Data Management. 2016. http://derivsource.com/articles/sa-ccr-and-frtb-compliance-drives-renewed-push-enterprise-data-management-0
Even after eight years since the financial crisis, we are still seeing firms continue to recover and take critical steps to put strategies in place for improvement. Firms are focusing on reducing their costs, while increasing their ability to respond to the changing regulations around ensuring financial health.
In particular, our largest global financial institutions are required to implement Living Wills with Recovery and Resolution Plans to ensure visibility under extreme financial or market pressures, and worst case, regulatory plans should the institution actually fail. While today we see how this only impacts the defined Global 20, it’s critical for these and other institutions to understand their contractual obligations and risks under all scenarios. The work to gain this understanding and visibility can be complex, time consuming, and costly.
Additionally, firms are having to respond to changes in the reporting of OTC derivatives going into effect this year. In fact, one of my global clients is looking at ways to unwind their current contract data to parse out the required details for measurement, reporting and re-papering of OTC derivatives alone. It’s a big job for many of our clients that is just getting started.
However, the well considered and industry-tested Universal Data Model delivered by Exari will significantly accelerate these institution’s view into their risks and minimize costs to analyze and respond. Assets Managers can easily reduce the time it takes to capture and analyze trading agreements, IMA’s, CSA’s and side letters from months to just hours. The Model is already enabling our customers, like the one mentioned earlier, to significantly save time and money by managing this in house, rather than relying on outside legal resources.
The Exari Universal Contract Data Model for Financial Services is a game changer and is already being adopted by the industry leaders who want to accelerate the compliance process, minimize risks, and keep costs under control.
For more information on how Exari’s Contract Data Model, please visit our products page
We all appreciate clever solutions to problems. For those of us old enough to remember, MacGyver was an action-adventure television series whose hero, secret agent MacGyver, solved complex problems via his inventive use of common items like his Swiss Army knife and good old duct tape. These solutions led to the saying “to MacGyver,” which, according to Urban Dictionary and many a dad, means “to use ingenuity to fix or remedy a problem using only the tools available at hand.”
MacGyverisms are alive and well in the software world where solutions are employed that serve a tactical purpose but are far from optimal. Sharepoint is often referred to as the Swiss Army knife of applications: it has many different features but does nothing very well. It can be used as a client portal, an intranet and a basic document management system. It can do some simple workflow and has social media features. Salesforce is another example – it is a very good enterprise CRMS and sales enablement tool plus it has its own application exchange that allows ‘related’ custom solutions to be bolted onto its core offering. You can duct tape any number of custom document and contract management applications onto systems like Salesforce and Sharepoint, but do you really want them to house and manage your contracts?
Your contracts are your business’s most precious documents. They represent what your company owes and is owed, what you have been promised, what you are obliged to do and what your expectations of suppliers are. Do you want your precious contracts in systems that have general access or are used by corporate functions that have the highest staff turnover rates? What would happen to your contracts during litigation? Is it clear what is covered by legal privilege? What state are your documents in for an M&A event? How certain are you about what they represent?
At Exari we believe that your contracts should be separated from all of your other documents because they are special. Contracts need be managed by secure software that is specifically designed not just to handle them, but to put them to work offering insight into your business. Access to contracts and contractual data should be strictly controlled and limited to people who understand and need to know their details. With contract visibility, you should be able to run targeted reports that show where your risks and obligations are and how these trend over time. Eventually you can use this data to improve and streamline your contracting and negotiation processes.
Exari’s Contract Hub is the starting point for getting organized and gaining visibility into your contracts. It’s not a MacGyver solution to a complex problem: it’s an easy-to-execute, easy-to-swallow tool precisely designed to set you off on the road to complete contract certainty.
I’d love to hear from you in the comments or @liptonj.
Justin Lipton is Co-Founder and Chief Technology Officer at Exari.
You know you need contract management software. As Gartner reported recently, “CLM Is Moving From ‘Nice to Have’ to ‘Need to Have.’” But how to convince your boss?
Many good contract management initiatives never get off the ground because the CEO isn’t on board. To convince them, you need to pitch your business case in terms of solving an urgent problem and delivering measurable results. Easier said than done, right?
We’ve been doing this a long time. Before you set about planning an internal project to determine ROI, you have to know how to convert your CEO. We’re teaming up with the ultimate contract experts at IACCM to offer a free webinar to explain the best way to argue your case for contract management ROI. Because you don’t want your CEO to simply be on board – you want an internal champion to see your contract management solutions through to completion.
To listen to the discussion, join us for the webinar on September 9th, 2015. Click here to register, to sign up to receive the recording, or to learn more.