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.
Have you ever experienced a failed deployment of contract management software? At Exari we have talked to hundreds of people about what has worked and what has not worked for them. The most common topic that comes up in these discussions is centered around data. Until now it has been cost-prohibitive and time-consuming to represent contracts as data. After all, contracts are intentionally designed to be wordy, dense, and in many cases confusing. Instead, most firms have settled with treating their contracts as valuable documents that can be referred to if trouble ever cropped up. It’s true that contracts are some of the most meticulously crafted documents written, yet over and over contract management software deployments have failed.
The number one reason that enterprise contract management software fails is due to a lack of data. The hallmark of every enterprise-class platform is accurate, complete & accessible data. It’s data that’s used to provide analytical insight into trends and problems, it’s data that’s used to make operational decisions, and it’s data that is used to inform upstream and downstream systems with critical information. Governance, risk and compliance all require access to high quality data and until now this was not available for contracts that underpin a business.
Larger companies and organizations are realizing that in order to properly operate their business, they need an enterprise level view, involving nearly every department. This is driven by increased regulatory requirements, changes in how revenue is recognized, and the constant improvement and developments of technology that can meet all departmental needs. If you are looking to implement a system, three things enterprise contract management platforms must have that you should look for are:
- One platform that is designed for everyone who cares or works with contracts including procurement, sales operations, legal, risk & compliance, finance, HR, the executive team and the board.
- One platform designed for modular implementation, that delivers a fast path to success and enterprise-wide adoption and complete visibility
- One platform designed as the golden source for contract data and documents, with seamless integration to other enterprise systems
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 system should be 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.
Today, Exari announced the latest release of its product, version 7.1. It not only provides everything discussed above that an enterprise-class platform should consist of, but it is also the first (and currently only) CLM platform with an enterprise-class Universal Contract Model™.
The Universal Contract Model™ is the most robust data model, allowing complete representation of any type of contract. This delivers prevailing terms for every contract, rolling up terms with their amendments and changes over time. Our Universal Contract Model™ allows companies to have complete, unprecedented visibility into every contract throughout the entire enterprise. This is the secret weapon to a true, enterprise contract management platform, and the number one reason why Exari customers succeed.
If you are interested in learning more about Exari’s version 7.1 you can read through the press release here. To discuss how our enterprise-class contract management platform can help you succeed, please contact us here now.
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.
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.
Do DNS attacks mean you should have a backup plan?
Last week, DNS attacks leveled key gateways leading to dozens of outages amongst business applications. For so many companies who have become dependent on SaaS applications or cloud-based services it was a scary event that at a minimum led to a loss of productivity.
Do DNS attacks qualify as a disaster?
They can. There is no guarantee that a provider can get back up quickly. Many of our competitors tout they are “cloud only” and bragging that on-premise software is dead and buried.
We offer a web-based solution, but allow customers to deploy in their private cloud, the public cloud or on-premise. In the event of a disaster, our customers can re-deploy their applications and recover their data to a protected, in-house offering. Sure, it’s not immediate but it beats never knowing if you can get back up and running.
Make sure you protect your contracts. The Cloud is great, but without a backup option you won’t end up with sunny skies.
To find out more about how you can protect your contracts with Exari, click here.
We recently discussed the new uncleared margin regulations (UMR) and best practices for successfully re-papering your Credit Support Annexes (CSA’s.) Now that you’re up to speed on what it means for your organization and the steps for re-papering, there is a bit more you should consider when evaluating each agreement. To get you the best advice we teamed-up with experts in this subject in order to bring you all the information you will need to successfully comply.
While adapting to these new regulations, complexity is going to be your greatest obstacle. You will have an increase in the amount of documents and data you need to manage, which means it will also be much more complex than previously creating or editing agreements. You will have to find a better way to manage the additional work required to support this intricate and time-bound project.
Depending upon which strategy you decide to adopt (or are forced to adopt by your counterparties) you may have to amend existing CSAs, create a duplicate to comply with the new regulations, or create a new CSA for the Counterparties (CPs) that want to renegotiate terms. Whichever strategy you end up with, managing the increasing number of agreements, and managing the legal and collateral terms is going to be a much greater burden for legal and operational departments.
In our upcoming webinar alongside Derivatives Risk Solutions (DRS), we will help you better understand the pros and cons of the strategies available to you, and how technology can help to ease the inevitable burden.
When: Tuesday, September 13th 10:00AM EDT / 3:00PM BST
*Can’t make it? That’s okay! Register now and receive a link to a recording once it’s completed.
From Body Parts to Nuclear Reactors – How Document Generation is Helping Lloyd’s Reshape Risk Management
For over 300 years the Lloyd’s market has been one of the most innovative sources for risk management solutions. From body parts to nuclear reactors, Lloyd’s is a one stop shop for the world’s specialty insurance and reinsurance needs. It’s an ecosystem where close personal relationships, proximity of brokers and underwriters and actual paper policies still matter – and for those willing to work within the square mile of the City of London, it’s incredibly efficient.
There is, however, a very clear and challenging problem that is facing the London insurance market. In the race to expand business and diversify revenue streams there’s an increasing need to tap into technology to connect producers to brokers and ultimately the underwriters of risk.
Although the high touch of the Lloyd’s market works well for underwriting vast amounts of risk for large companies, it isn’t as practical for higher volume, lower value business. With the growing need to tap into these markets, but lacking resources, it is clear that a more automated document generation approach will help to drive productivity, resulting in innovation and growth.
Steve Jobs once told Wired Magazine that, “Creativity is just connecting things.” If that’s the case, then Lloyd’s brokers and, indeed underwriters, are getting creative. If the world is getting smaller it’s technology that’s driving us forward.
This is why we at Exari have created our Submit, Quote, Bind solution, for agents, brokers and underwriters.
Using DocGen™ , Exari’s document generation software, agents are now able to quickly and accurately capture risk information to help generate quote and policy documents. We removed the operational barriers and increased efficiency to make the job easier, reducing time, cost and risk.
This solution is as easy as 1, 2, 3 – with the help of the most advanced document generation software on the market.
- Submit: Using a web based interview the broker can gather all risk information and with the push of a button, create the submission document
- Quote: Carrier can create a quote or decline to quote using the automated system
- Bind: Once the quote is accepted it is set to bind! The underwriter can automatically create the documentation and the invoice.
Exari’s SQB solution is empowering Lloyd’s Syndicates with a source of new business, enabling Agents to quote and bind business locally, with compliant and pre-approved documents from the Insurer, who ultimately accepts the risk. Now, reporting and audit is fully transparent with unprecedented visibility into all data.
SQB is already being adopted by the US, Asia-Pacific and Nordic regions as all insurers are seeking more business in the most efficient way they can. To learn more check out Exari’s Submit, Quote, Bind webpage.
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.
The guessing game is over. Brexit is official.
Pretty soon, the United Kingdom will no longer be a member of the European Union. Which means that lawyers around the world are scratching their heads about what it means for their clients, their firm or their company. Is it cause for panic, or a storm in a tea-cup?
One way to answer this question is to focus on what Brexit means for your existing contractual relationships. Which contract terms just became a whole lot fuzzier, and does it really matter? Some have suggested that ambiguity around “English” governing law will complicate dispute resolution. Others think that force majeure provisions may trigger a wave of unexpected contract termination. But a more immediate concern may be the impact of Brexit on territorial rights and restraints in commercial agreements.
If a distribution agreement gives your company exclusive rights in the “European Union”, you may soon be losing a big chunk of your market. If you have “European Union” non-compete language with a vendor, they might soon be free to set up shop in London. And if you’ve agreed not to move data or assets outside of the EU, your British operations may no longer qualify. In all scenarios, the first step is to find these potential problems and assess how painful they are. From there you can devise a strategy of renegotiating, repapering or restructuring before Brexit officially kicks in.
Of course, those of you with Exari Contracts have already done all this analysis and can enjoy a few days off at the beach. Perhaps a nice beach somewhere in Europe, while you still have the chance.
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
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!