Category: Contract Visibility

Enterprise Contract Management Can Save You from Poor Contract Visibility

Here in Boston, we’re used to getting hit with major winter snow storms. It’s a New England ritual to head out to your car before work and start scraping layers of ice and snow from the windshield. If you’ve ever found yourself in this situation you know you’ll take any shortcut to keep your fingers from freezing. The ice will melt once your heater kicks in, right? Poor visibility, I hate to admit, is a risk most of us are willing to take.

Fast forward to your workday. Regardless of your job, there’s a good chance that the work you’re doing is underpinned by terms and conditions that define the work you do or what you’re owed. It’s safe to assume that these agreements were carefully drafted and negotiated by lawyers, but is that enough? Do you need to know what’s contained in every contract? How about all revenue-generating contracts? Can they be terminated by customers and in what situations? What happens if we’re faced with a regulatory or tax change? Do we have any leverage over our suppliers to ensure we’re able to meet the obligations we have to our customers and if we don’t what happens?

These are just a few of the questions that Exari’s enterprise contract management customers say they want easy and accurate answers to – and there are so many more. Until now most companies have simply filed their contracts in locked drawers and secure file systems with very little visibility into what they actually mean.

So, is poor contract visibility irresponsible, dangerous, or irrelevant? I suppose the answer is, “it depends,” right? Not every contract is mission critical and not all relationships are at risk. However, if you’re like most of Exari’s customers you do have a core set of contracts that do matter and the fact is that Executives and Boards of Directors care very much about the risks, obligations, and protections that are contained in those contracts. Until now it simply hasn’t been possible to treat contracts like data, but what if there is a better way?

At Exari, our enterprise contract management platform has an elegant and powerful solution to this problem and we call it the Universal Contract Model™ (UCM™). The UCM, for the first time in history, takes away the pain of understanding contracts and puts the right data into the right employee’s hands quickly and easily. Only with Exari can companies leverage the power of their contractual relationships to increase revenue, reduce risk and increase efficiencies.

The data that lives within your contracts is your true golden source, either helping you track your risk to properly manage and make better-informed decisions in a crisis, or infect you with risk, such as fines or cause for termination. A true enterprise contract management platform is able to transform your contracts underlying text into actionable and reportable data. Data that you can track, analyze and constantly monitor instantly, whenever you so please.

Last week, we announced the latest release of our platform, version 7.1. I’m confident that this is a game-changer for our enterprise contract management customers that expect 100% certainty about their contract terms. If you’re interested in learning more, you can read about the release here. If you have any questions, please feel free to send us an email to info@exari.com and we’ll be sure to get right back to you.

So, next time you’re faced with an icy windshield, take the time to clean it off. Until then, consider what you would gain if you could transform your corporate contracts into data used to better manage risk and make you more efficient – it’s easier than you may think.

9.thumbnailMike Maziarz is Exari’s Chief Marketing Officer. Reach out in the comments or @mikemaziarz.
Understand the entire Contract Management ProcessView Contract Management 101 Now

Calling all Contracts Professionals: Getting Ready to Embrace Artificial Intelligence

Last Tuesday we held a joint webinar with IACCM’s CEO Tim Cummins alongside our Co-Founder Jamie Wodetzki, in which they discussed the topic of Artificial Intelligence (A.I.) for contracts professionals, what it means and how it will impact their business and career in the near future.

If you missed the webinar you can view it on-demand now by clicking here. 

A.I. is creeping into nearly every aspect of our lives – whether we realize it or not.  We’ve been hearing promises that A.I. will change how we work and live for decades, yet over the last few years, there has been an explosion of progress fueled by leaps in computing power, natural language processing, and neural network design.

So, we all have a choice…  A.I. is something we can learn more about and begin to embrace or we can choose to turn the other way and hope it won’t upend our work and personal lives.  With any luck, we may be pleasantly surprised that A.I will, in fact, offer up new tools and insights we can use to our advantage in our professional daily lives.

Exploring A.I.

In order to understand any topic, you must do your initial research. A participant from the webinar asked for recommendations on where they could look to learn more about A.I. and how they should get started. So, we put together an A.I. reading list below to help you get started on your exploration phase. Don’t limit yourself to just this reading list – there are numerous podcasts, articles, and videos out there. If you find anything particularly interesting, please don’t be greedy and share in the comments section with the rest of us!

Evaluating A.I.

You did your Google research, re-watched the webinar, read the provided reading list below and watched the movie Arrival and now know who Louise Banks is- you’re basically an A.I. expert. So the question now is, what A.I. tools are out there that can complement the work you are doing as a contracts professional?

Now that you understand the benefits A.I. can bring to your business and career, you can start to evaluate your current processes, systems, and controls. Think deeper about how A.I. can automate document creation, connect enterprise systems to share data, or generate deeper analytics for reporting. Thinking about improvements in your current daily tasks will help you identify what requirements are needed when evaluating different platforms. Data capture of legacy agreements, advanced reporting capabilities, contract automation and enterprise integrations should be a few of the top capabilities you look for when evaluating a contract management platform.

Embracing A.I.

Once you have evaluated and chosen a platform, embrace it! Adopt it company-wide, take action to learn the ins and outs and everything it can help you accomplish, and teach your colleagues about it. The more you learn about how A.I. can complement your daily tasks in your career, the less fearful you will be of a complete takeover. You’ll be seen as a Contracts A.I. Master and everyone will thank you for making their jobs just a little easier, and a lot less manual.

If you are in the exploration or evaluation phase, don’t hesitate to contact us now to discuss how our enterprise contract management platform can help meet your business challenges and prepare you for A.I. 

An A.I. Reading List for Contracts Professionals

Artificial Intelligence is entering the contracts world. In order to best prepare, it is necessary to take steps to understand how it will impact contracts professionals and their careers and businesses. Our co-founder Jamie Wodetzki has put together a comprehensive reading resource guide below to help you get started on your initial research.

Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence, Yale University Press, 2015, Jerry Kaplan, http://jerrykaplan.com/books/

The Great AI Awakening, The New York Times Magazine, December 14, 2016, Gideon Lewis-Kraus, https://www.nytimes.com/2016/12/14/magazine/the-great-ai-awakening.html

The Future of the Professions, Oxford University Press, 2015, Richard Susskind and Daniel Susskind, http://www.susskind.com

An executive’s guide to machine learning, McKinsey Quarterly, June 2015, Dorian Pyle and Cristina San Jose, http://www.mckinsey.com/industries/high-tech/our-insights/an-executives-guide-to-machine-learning

Where machines could replace humans—and where they can’t (yet), McKinsey Quarterly, July 2016, Michael Chui, James Manyika, and Mehdi Miremadi, http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet

The Master Algorithm: How the Quest for the Ultimate Learning Machine Will Remake Our World, Basic Books, 2015, Pedro Domingos, http://www.basicbooks.com/full-details?isbn=9780465065707

Superintelligence: Paths, Dangers, Strategies, Oxford University Press, 2014, Nick Bostrom, https://global.oup.com/academic/product/superintelligence-9780198739838

Computational Legal Studies, https://www.computationallegalstudies.com/

 

 

 

 

9.thumbnailAngelica Perrone is Exari’s Marketing Manager. Reach out in the comments below or on Twitter @ExariAngelica.

What Executives Need to Know About the New Revenue Recognition Standards, Part 1

Is your team ready for the new international revenue recognition standards? Chances are you’ve got a small army working on this problem, but how will your business be affected? Are you on track or behind? Is there risk that your policies, procedures, and systems are not going to be ready in time for compliance? Even the most forward thinking businesses acknowledge that they’re on a journey to find the best methods and systems for institutionalizing best practice into their accounting departments.

We’re sprinting towards compliance, yet recognizing your company’s revenue is a crucial and complex, and the spotlight is on your team to get it right. If you’re interested in a refresher on the standards and a high-level survey of what your team needs to be working on, we’ve prepared an e-Book on what every Executive needs to know about these standards.

The current requirements for recognizing revenue in the United States are the Generally Accepted Accounting Principles (GAAP) and are viewed as overly complex and fragmented. The International Financial Reporting Standards (IFRS) have also been criticized for not providing enough guidance. For these reasons, the new International Revenue Recognition Standards were created to standardize the way revenue is recognized across all organizations globally.

With a 2018 effective date, the clock is ticking for companies to begin to wrap their head around what it means for them, and what they need to do to begin preparing. Although it will take time to evaluate the most efficient way to transition to these new standards, in the long-run it will make it much easier for companies and industries to compare financial statements- if widespread adoption unfolds. This new standard will actually help companies gain deeper insight into their contract data. Some data, in fact, that is buried within complex contractual agreements that could cause major risk unless you uncover them with a contract management platform.

What is contract Management? Go to our Contract Management 101 page to learn more.

Companies must understand how these standards will impact them, what needs to be done to prepare for a new process, and finally, how to evaluate, implement and adopt an enterprise-wide solution.

In this three-part blog series, we will walk through what Executives need to do in order to prepare as soon as possible. There are three steps to success for this process.

Step 1: Assessment
When first understanding the new guidelines and how they will specifically apply to your transactions, you’re likely going to run into some challenges along the way. Having an initial assessment of your business will 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.

What to consider during your initial assessment:

  • Look at how the new standards will affect your operational and performance metrics
  • Perform a technical assessment of revenue transactions
  • Determine the impact on miscellaneous aspects of your business
  • Form a team from different departments to identify any ripple effects
  • Analyze how existing contracts would be recorded under the new standard

2018 is less than a year away, and this isn’t something that can be transitioned overnight, or even over a month. Start the process today by downloading your free e-book now to help you get started.

9.thumbnailDahna Ori is Exari’s Digital Marketing Specialist. Reach out in the comments or on twitter @ExariDahna

 

Are you ready for the new revenue recognition standards?Download your free e-Book Now!

Beyond Compliance: Moving towards an Enterprise Level View of Risk

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.

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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

An Industry Game Changer: Exari’s Universal Contract Data Model for the Win

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

9.thumbnailAllison Cusano is Exari’s VP of Financial Services. Reach out in the comments or @allicusano.

Out With The Old

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”?

Contract Certainty: It’s What We Do

Ask most 7-year-olds what they want to be when they grow up and you’ll get the usual mix of astronauts, firemen, doctors, policemen and nurses. You won’t get too many that proclaim a desire to work with contracts, let alone in the Contract Lifecycle Management space.
At Exari we’re obsessed with contract certainty. While that often means our initial spiel in response to the dinner party classic, “What do you do?” may not be the most exciting,* it does mean that we live, breath and think about contracts. We know what the traps and risks are, we understand the quirks, exceptions and opportunities for improvement. Sound exciting? Maybe not, but we love solving large, ugly contract problems.
The sorts of problems we often see and tackle are:
  • Deep conditionality and complex business flows. Many of our clients think their contracts are in good shape and straightforward until they dig deeper and get better insight into how their documents are actually drafted, negotiated and approved.
  • General document quirks. When automating documents everything becomes a lot more dynamic. What was a simple list, cross-reference or numbering scheme now needs to handle a variety of different conditional possibilities.
  • Handling counter party paper. Even when you have your creation and management processes under control, eventually you’ll hit agreements that were not drafted your way or using your terms.

With the right tools these very tough problems disappear. And when they disappear, contracting and business processes improve and require less money and time making lawyers, business-people and clients alike very happy. Exari Hub gets you organised and on the road to understanding your contracts and negotiating processes. Exari Contracts takes the next step and allows you to control everything from creation right through to signature and archive. Come learn what we mean by contract certainty and why we’re pretty happy with what we became when we grew up.

*Editor’s note: This statement has some notable exceptions; automating contracts ultimately lowers the costs of legal work for clients making it more accessible. In a world where the average consumer or small business may struggle to afford necessary legal work, we believe that any measure that reduces the cost of access to the law is a noble pursuit. How’s that for a dinner party spiel?

I’d love to hear from you at @liptonj or leave a note in the comments.

Justin Lipton is CTO and Co-Founder at Exari.

Why You Should Care About The Hub

Today we announced Exari Contracts Hub™, the newest offering to advance the practice of Contract Lifecycle Management.

Who cares, you ask?

Well, you should.

Every business runs on contracts. And every business knows their customers (CRM) their accounts (financials) their suppliers (procurement) and their employees (HCM). What do all of these have in common? They are ruled and governed by contracts.

It’s a fact: most companies don’t know what’s in their contracts. Revenue. Risk. Obligations. Miss a commitment and you could lose a customer, an important relationship, your reputation, your job.

Enter Exari Contracts Hub.

With the Hub, you can store and analyze your contracts in a user-friendly and completely secure hosted environment. Using Exari’s patented technology, you can quickly and easily enter your contract data through our unique interview process or use one of our partners to do it for you.

Why the Hub?

We’ve heard over and over again that most contract lifecycle management solutions enforce burdensome workflow, proprietary data stores and cumbersome user interfaces. What do most companies want? One place to go to store, search and analyze their contracts.

Exari Contracts Hub is that place. Easy to store and search contracts. Easy to report on the data buried within. Easy to use for any business user and at a price point sure to make the CFO smile.

Want to learn more? You should. Check it out here at www.exari.com/Hub/ or register for our live webinar. You’ll be glad you did.

How Financial Services Maintain Customer Loyalty Through Compliance

All companies – from retailers to hedge funds – know that customers are their number one priority. Client obligations are always the first concern as customer satisfaction is the only reliable road to growth. The 2013 Lloyd’s Risk Index cited “loss of customer” or “abandoned transaction” as the second-most-critical business risk (ahead of cyber risk and behind taxation). First of all, we all know that it is far more expensive (according to some studies up to 10 times more) to acquire new customers than it is to retain existing ones. So businesses spend enormous amounts of time and resources developing initiatives to keep customers coming back.

While companies prioritize customers by striving to drive loyalty, Forrester believes they fail to take into account those associated risks that end up driving customers away. As cited on CFO.com, a Forrester report says that the “discrepancy” between concern for loss of customer and the priority given to the mitigation of related risks “illustrates the growing gap between strategic business priorities and antiquated risk assessments. Companies with high-value brands may explain in detail their customer satisfaction and brand-loyalty strategies in annual reports, but rarely do they consider the risks that might crush these priorities.”

Where should you start in the battle to reduce the risks associated with customer attrition? The first place is to look at why customers leave. Clients will pull their money out of banks and funds when they do not have complete trust in the institution, and trust depends on maintaining promises and a good reputation.

It should come as no surprise, then, that your contractual obligations to clients are of the utmost importance in earning and preserving trust. A disappointed client is a disloyal client. But more than client attrition, failure to adhere to client obligations can trigger severe penalties such as expensive and distracting legal action, regulatory fines, and crippling brand damage.

Reputation remains a critical element of maintaining client loyalty. Indeed, insurers now offer policies that indemnify against profits lost due to brand damage. Financial services firms and banks risk reputational damage through poor performance, fraud, and, most importantly, compliance failures. In this post-GFC era, as government and industry regulatory bodies impose more and ever-changing regulatory and reporting burdens on firms, the media and regulatory bodies scrutinize compliance more than ever. Failure to comply with regulation send unequivocal messages to clients that the firm may be unreliable or, worse, unable to handle responsibilities.

How can you be in complete control of your regulatory and client obligations? Easy – it’s all in your contracts. Having complete control over and visibility into your contract portfolio means you’ll never miss a commitment. The only way to have a truly uninterrupted view of all of your contractual obligations (and rights) is to utilize a Contract Lifecycle Management (CLM) tool that analyzes contract data, tracks milestones, and sets up triggers so you never miss a commitment.

For more on how CLM helps asset managers and investment managers reduce risk, click here.

To download an illustrative case study on how one asset manager uses Exari CLM for obligation and regulation management, click here.

Three Reasons Hedge Funds Can’t Risk Being Unprepared For A Cyber Attack

Hedge funds deal in risk: it’s how they make money for their clients, it’s how they build and prosper. But while hedge funds and asset managers may be experts in managing financial risk, they must come to grasps with the new and evolving risk that threatens their entire business model: the risk of a hack.

Our fearless founder, Jamie, was recently interviewed by online magazine ThinkAdvisor, a self-described “thought leadership destination for financial advisors,” about what hedge funds must do to prepare for cybersecurity threats. Cybersecurity is a topic we at Exari are quite familiar with: our products are designed to provide the contract visibility financial firms need to prepare for and recover from hacks and breaches. We’ve written about it before and we’ll write about it again, as long as threats continue to jeopardize the information and wealth of companies and their clients.

As cyberattacks continue to evolve (see: the recent hack of up to 100 banks), it is increasingly difficult to remain ahead of the threat. The best way for financial firms to prepare is to know as much as they can before an attack occurs, both so that they know where their weaknesses are so they can be remediated, and so that recovery is a reality, not merely a plan. Indeed, FINRA’s executive vice president and chief information officer, Steve Randich, said at a cybersecurity conference held recently in New York by the Financial Industry Regulatory Authority (FINRA) and the Securities Industry and Financial Markets Association (SIFMA) that firms must accept “that breaches will happen,” and that they should focus “not just on prevention but the response” to cyberattacks.

Hedge funds and other financial institutions require complete contract visibility to combat cyberattack for three key reasons:

Responding to Threats

Firms must know where risk lives in their client contracts so that they know where to look to satisfy customer and regulator obligations in case of breach. After all, the firm’s response to a threat will depend on their contractual obligations to clients. In order not to expose themselves to the further risk, firms must be aware ahead of time of the level and timeframe necessary for disclosure in the case of breach. Firms must also be able to instantaneously assess the reach and consequences of a threat so they can avoid unnecessary – and potentially devastating – disclosures to clients and the public where they are confident the threat was benign.

Managing Third Party Vendor Risk

Firms must have full visibility into their supplier contracts, because no matter how well they may attempt to defend against hackers, the third parties they engage may not have such stalwart measures in place. Firms must be able to identify which of these vendors lack adequate data security, and fix the issue before it becomes as disaster. “You assured the investor you would meet all these levels of security,” says Jamie, “but if you now have a network of dozens of suppliers and they’re not under the same obligations, then you’re automatically in a precarious situation because you haven’t properly understood the weakest link.”

Regulatory Compliance

Regulators will come after un- or under-prepared firms. “Understanding the contracts with the investors tells the hedge fund what it has agreed to do,” according to Jamie. “Understanding the contracts with the suppliers tells it what it has passed down the line, and allows it to plug any gaps quickly before something bad happens.” This ability to quickly assess client obligations across hundreds or thousands of individual, negotiated contracts, can only come from having a Contract Lifecycle Management (CLM) system in place that collates all contracts and contract data in one central, searchable online repository so that the information firms need is just a few clicks away.

To learn more about Exari Contracts™ for hedge funds and asset managers, click here or contact us today.