Category: Contract Management
At Exari we’re always innovating. Coming up with new strategies for making our customers’ experience even better is an obsession! We get the chance to talk with hundreds of companies about the contract creation process and we are consistently asked for help in making it more streamlined. A primary benefit of a contract management solution is breaking up the many steps involved in contract drafting, negotiation and execution processes so they can be more easily automated- freeing up more time for you to get back to important tasks. In addition to helping you easily generate contracts and better manage them, we are also surveying the market to understand what tools will help provide our users to continue to ease the contracting process.
After integrating with DocuSign at many customers, we’ve decided to formalize our relationship and establish a formal technology partnership. We’ve digitized the contract creation process from the beginning to the very end, sealing the deal with DocuSign’s eSignature and Digital Transaction (DTM) Platform. Our users can now enjoy the ease of contracting with Exari while using DocuSign’s secure, cloud-based platform for signing agreements instantly.
We can already see the value that DocuSign is adding for our customers. Now, users can accelerate their sales cycle and revenue error free, by eliminating the manual efforts of signature by being able to sign anytime, anywhere and on any device. This will not only increase customer satisfaction, but also keep you worry-free about contracts getting lost in the mail or being buried under piles of other documents.
To hear more about all of the benefits both Exari and DocuSign’s eSignature can offer your business, contact us now to discuss further or see a preview!
The concept of contract management can get quite complex. There are many different contract-related challenges facing the modern enterprise, and they don’t affect all people the same way. The best way to get started is simple, yet highly effective – we call it the three O’s of contract management: Organize, Operationalize, and Optimize. You can move on to bigger challenges later, for example automation of contract drafting, approval workflows, and negotiation processes. But starting with the three O’s will give you a strong foundation on which to build:
1. Organize. Store all of your contracts in one place. Whether you keep them in a folder on your shared drive or somewhere in the cloud, the key is to identify major gaps and surprises (e.g. missing or expired contracts) and any major contractual risks that could expose you to unexpected losses or brand damage (e.g. uncapped liability, regulatory failures or rogue vendors).
2. Operationalize. Next, make sure the right people know about your contractual commitments and the commitments your suppliers have made to you. By extracting data about obligations and similar operational issues, you can share it, track it, and avoid the pain of poor compliance. This will mean fewer missed milestones, fewer pricing and payment errors, fewer disputes and fewer cost overruns.
3. Optimize. Finally, armed with better information about contractual risks, terms and process, you can make better decisions and streamline the way you do business. You’ll be able to find and eliminate bottlenecks in the contracting process, leverage past deals to drive better negotiation outcomes, and respond with confidence and speed during a crisis. Put simply, better contract insight will help you build a stronger, more valuable business.
Daunted by making changes in a large organization? Consider thinking globally, but acting locally. Your department or division is a great place to start your journey towards contract certainty and contracting excellence. It starts with better knowledge and insight. But as you grow and evolve, greater benefits emerge from automation and process improvement. It pays to think ahead and make a plan for where you want to go.
For more information about contract management, how it can benefit your organization, and additional resources please visit our contract management page to learn everything you need to know.
Business as usual is no longer an option for banks.
With the new margin requirements for uncleared derivatives, it’s time for banks to buckle down and revise existing, or re-paper their CSAs to be compliant. These regulations are meant to promote central clearing and reduce the risks associated with trading. In an attempt to avoid
a financial crisis another financial crisis the regulators are making sure there are more stringent rules around how much collateral has to be posted, who holds it, and how it is managed.. They’ve increased the threshold for uncleared swaps as well as the types of assets that are eligible as collateral for variation margin (VM). Furthermore, non-cash assets that qualify as initial margin (IM) can qualify as VM in trades depending on the counterparties.
Per regulation, all Credit Support Annexes have to be revised or re-papered by the deadline, March 2017. Banks now have to start re-papering all their complex agreements in order to continue trading- business as usual. This task will be time consuming and will probably involve heavy negotiations with counterparties, but can be greatly accelerated with technology to help with the re-papering process
Have you been putting this off? If you estimate that this is going to be a complicated and time consuming task, (you’re right), but delaying the process will reduce the time you have to negotiate and finalize your CSA’s. If you don’t have the manpower to handle this task, there are options:
- You could outsource this work
- You could hire a third party firm that will take it off your hands, or
- You could automate the process with a little help from a purpose-built solution
The good news is you still have options. If you’re interested in learning more about what would work best for your firm, here are a few resources for you to consider:
- A software solution that supports document automation, outreach, workflow and negotiation. Learn more about Contract Lifecycle Management
- More information on the regulation and best practices
- Third party organizations that can help: Deloitte, Accenture, and BNY Mellon
Have a look and think it through, but keep in mind the clock keeps ticking and before you know it, it will be March.
Click the link to learn more about our re-papering solution.
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
According to The National Contract Management Association, 81% of members reported that finding their contracts was a major concern. Think about your own experience – have you ever needed to look into the details of a contract and couldn’t find the right agreement? For a small number of contracts this could be considered sloppy, but for more it’s dangerous and frankly puts your firm at risk of being blindsided at the worst possible moment.
Contracts are one of the most effective tools for managing risk, because they have legal teeth. Chances are your company is pretty good at drafting and negotiating contracts to protect your interests while still moving business forward, but what happens once the ink has dried? Do you have an effective system for capturing and storing the information within the contract? If you’re like most companies there’s a good chance you fall short. The most progressive firms we see simply store contracts on a central file share and add a spreadsheet with basic metadata.
If your firm is serious about risk management then finding effective ways to manage and deeply understand your contracts is essential. It means taking a fresh approach to contracts and transforming them from documents into data. If you’re not managing your contracts properly you’re bound to face some unwanted surprises. Surprises that might cost your firm millions of dollars, or worse, your job! This is why you need a plan in place for when a crisis emerges.
If you think your firm can do a better job at risk and contract management, you’re right! The first step is to implement a universal data model for all your contracts and then consistently populate that database for every new contract. This uniform and data-centric approach will provide your firm with real-time information about the risks, obligations and exposures your company has to a counterparty. This is just the first step to managing your contract data successfully in order to reduce the risk in your firm.
Here’s an action checklist you can follow to get you started:
- Review the ways in which contracts are tracked on a company wide basis, and the policies and procedures in place to use that data to hedge against and mitigate risks.
- Review the status of contracts, including any risk concentrations and interrelationships, as well as the likelihood of occurrence and potential risk.
- Design contract risk management policies and procedures that are coordinated and function as directed.
- Implement these strategies in a timely manner.
- Send a message to management that comprehensive contract management is an integral component of the firm’s strategy and business operations.
To learn new approaches that will provide you with real-time visibility, such as assessing your current situation to track interrelated risks and identifying the steps you need to take for implementing an internal risk management campaign, check out the New Contract Risk Playbook. Its an advanced guide for Corporate Boards and Senior Executives on how they can take an enterprise view on managing their contractual risk, which will improve operational excellence while reducing risk.
Last week, Exari teamed up with IACCM for an insightful webinar to explore the meaning of “Contract Certainty” and how you and your business can work towards achieving it. Attendees also got a look into our Universal Contract Data Model™ and what’s in store for the future with the newly announced CMA Contiki and Exari combination.
Exari’s Founder and Chief Product Officer, Jamie Wodetzki, kicked off the webinar with how you can begin to eliminate contractual uncertainty, like contracts that have expired, risks buried deep into the fine print and gaps in the paper trail. He addressed Revenue, Supply Chain, Process and Title Uncertainty, and the risks associated with each.
With all of the potential risks that live within your contracts, it’s crucial to have an enterprise view. This will allow you to constantly keep track of your businesses relationships with vendors, customers and trading counterparties. By having complete insight into all of your contractual data, you also gain an enterprise view of your business’s risk, the contractual risk score and a breakdown of where it lives. For example, your customer risk score might be lower than your liability risk score, giving insight into which ones you need to dig deeper into and work on.
Mike Maziarz, Exari’s VP of Marketing and Product Management, closed out the webinar with how we’re allowing our customers to move towards 100% Contract Certainty™, with the help from our Universal Data Model™. Mike also commented on the exciting Exari and CMA Contiki merger and how we complement one another to strengthen 100% Contract Certainty™ even further. If you haven’t watched the webinar recording yet, I won’t ruin it for you!
Click here to receive your copy of the webinar recording today!
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 enable 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
I spent this week with our talented team in London and talking with leaders in both financial services and insurance. We’ve recently delivered a new Contract Model that enables companies to more effectively manage risk. Most of the leaders I spoke with expressed deep concerns about the risk embedded in their contracts- one top ten bank said “we have all the data, we just don’t know if it’s the right data”.
It’s a huge problem with contracts because so much of the data is interpreted. A limitations of liability clause might be 3 paragraphs in one contract and 1 in another and say the same thing. In order for the data to be used properly, it has to be interpreted and stored as data so it can be analyzed, correlated and used for decision making?
Why is this so hard? One customer outlined their contract management nightmare when they tried to use a document management, workflow, master data management and data warehouse to extract and report on contract data. Just keeping the systems in sync was a nightmare. After 3 years and $25m USD, they abandoned the project. What they have now is a very expensive electronic filing cabinet.
Contract “data” doesn’t really exist until it is interpreted and normalized; our Universal Contract Model (UCM) does that for companies and shows them a 360 degree view of their contracts. It’s real and it works. Now contract data can be valuable in managing risk across the enterprise.
Are you still drafting thousands of contracts manually? In Word? Or storing multiple versions of paper contracts in a filing cabinet? Well, you’re not alone.
Exari recently surveyed 92 Corporate Counsel and compliance professionals about their habits and challenges for contract creation, storage and legal technology. More than 75% reported that they were still creating contracts in Microsoft Word, using some form of “copy and paste” template, while only 1 out of 10 currently use a document generation software to streamline the process. Half of the participants (47%) said they were still using paper filing systems to house corporate contracts. Their top pain points included:
- Slow contract approval processes (59%)
- Little or non-existent insight into risk (39%)
- Missing key milestones (27%)
- Difficulty with internal collaboration (25%)
- Risk of error (23%)
With outdated practices for generating and storing contracts, you’ll lack complete visibility into all of your agreements, increasing your risks such as liability, being underpaid or overcharged and missing key milestones. By implementing an efficient contracting process, you won’t miss a step. Not to mention you’ll be able to pull information during a crisis in minutes, rather than taking hours to dig up and sift through multiple paper copies. Avoid missing renewal rates, reduce the length of sales cycles, streamline negotiations and increase internal collaboration.
Doesn’t that sound better than the ol’ “copy and paste”?
“You’re wanted upstairs. Now. As in, immediately.”
There’s nothing quite like these words to kick off a relaxing day at the office. You head up to the executive suite wondering what fire-drill, or firing offense, awaits.
As you walk in, the Wall Street Journal flies across the room and lands at your feet.
“Our biggest back office vendor has been hacked. It’s a disaster. Apparently it happened a week ago. So why am I finding out about this in the Journal? What’s our legal position?”
You pause. You think. Where is the contract? Did I negotiate that one? Was there an obligation on them to report incidents like this as soon as they occurred? What’s our obligation to notify affected customers? How much time have we got? What if the vendor goes under? Can we terminate and switch vendors? Or was this exclusive? Can they hide behind capped liability?
So many questions. So little time. So many angry executives.
What happens next depends in large part on how well you stress-tested your contracts before an event like this. If you planned ahead and created a trusted source of operational contract data, you can probably answer many of these questions quickly and with confidence. If you did nothing to prepare, you will likely spend the day (or the week) running around like a headless chicken, looking for contracts, scrambling through paperwork, and wondering how to say “I don’t know” without sounding like an idiot.
And this is just one stressful event.
There can and will be many others: corruption scandal, currency crisis, regulatory investigation, product recall, patent litigation, credit crunch, and more.
But don’t stress out. Stress test. Get ahead of the problem. If you stress test ahead of time, you can fix the weak links. If you wait for a crisis, it’s too late.
Join us for a free webinar on Thursday, October 29th at 11am EDT to find out how to best prepare for a crisis and protect your company and your job. Click here to register or to learn more.
Jamie Wodetzki is Exari’s Co- Founder & Chief Product Officer. Reach out in the comments or @wodetzki