As humans grapple to adapt to the new normal of masks, sanitizers, lockdown, and work from home, businesses across the world too are undergoing a lot of changes and adapting to the new normal. Since contracts are the bedrock of any enterprise that governs the revenues, expenses, obligations, and other operational aspects of the enterprise, it is inevitable that how contracts are going to be drafted and managed is never going to be the same.
Some of the changes that are expected in the near future with regards to Contract Management are:
In the post-COVID world, there is a strong possibility of modifying the contract clauses and inclusion of new clauses adapting to the new normal. One such scenario could be the inclusion of the word pandemic or disease to the Force Majeure clauses. Another clause that is going to get included in the contracts especially in the IT outsourcing is the Work From Home clause.
According to IACCM, a typical fortune 1000 company handles about 20,000-40,000 active contracts at any given point of time. Changing the clauses in thousands of contracts manually could be time-consuming as well as error-prone. Companies with sophisticated tools and techniques like Advanced Contract Analytics are in a better position to handle these clause changes. By using advanced contract analytics all the contracts that need to be modified are identified at a single shot and changes to clauses can be done in hours.
Increase in Digitalization:
The companies with digitized contracts are in a better position to search for necessary clauses/information at a faster rate and handle the disruption with minimal impact to their businesses. The Covid-19 situation exposed the companies with paper-based contracts in handling the uncertainties, So the companies with paper-based contracts will try to get their contracts digitized and get stored in a digital repository with a search facility. This will help them to fasten the search and identification of contracts and necessary clauses that need to be referred to before making a decision.
Consolidation of Sell-side & Buy-Side and Integrations:
Currently, many of the companies have different repositories for handling the sell-side and buy-side contracts. As a result, there are revenue leakages and in-efficiency in the whole contract process impacting the bottom line of the companies. The consolidation of buy-side and sell-side contracts will bring about great visibility into contract performance and profitability. With greater visibility into the contracts, the executives can make a smarter decision in a short amount of time. Also. managing two different systems increases overhead which can be reduced with a single contract repository for both sell-side and buy-side contracts. Integration of Contract Analytics solution with Enterprise Systems such as ERP, CRM can help the work-force to bring about better vendor management and increased customer satisfaction as it provides greater visibility into the contract status and deviations.
Importance of the Post-Award Review:
Post-award contract management is a critical stage of contracting for managing operational and strategic tasks such as compliance of terms and conditions, contract payments and obligation, expirations and renewals, vendor performance analysis and risk assessments, stakeholder communication, and contract closeout. Compared to other stages in the contracting life cycle, the importance given to post-award review is very low. But the Covid-19 has changed this trend with companies increasingly looking at the contract to look at clauses such as indemnity, uncapped liability, and Force Majeure clauses to manage risks efficiently. Advanced Contract Analytics tools can ensure obligations and compliance are effectively managed.
COVID-19 has exposed a lot of poorly designed processes within the organization into the limelight. For companies to stay ahead and maintain a competitive advantage, they need to make necessary changes to the process and invest in new tools and technologies. As per IACCM, technologies supporting Contract Management is increasingly viewed as business-critical, in the coming months advance Contract Analytics could be one of the areas where companies will invest in to convert static contracts into strategic assets and become resilient to adverse events.
LatentView offers a customized Contract Analytics solution built using cutting-edge deep learning algorithms. The solution helps in managing your risk and obligations effectively. To know more about LatentView’s contract analytics solutions, please write to email@example.com