Tim Cummins President of the International Association for Contract & Commercial Management (IACCM), Professor and Chair, International Commercial & Contract Management in the School of Law at the University of Leeds, and the 2019 Financial Times ‘Market Shaper’ Award, recently wrote a blog with the above title citing some work by law.com in which they said the lack of robust contract systems was “an unmitigated disaster” he asked the readers to see how they scored on a brief test:
- When the pandemic hit, was it easy to find all your contracts?
- Could you be confident it was the current version?
- Could you quickly search across each contract for key terms – for example, rights of termination or delay, force majeure, payment obligations?
- Were you able to rapidly produce consolidated management reports on risks?
- Could you easily assess the impact of supplier default on the performance of customer contracts?
- Did you have rapid insight to opportunities for renegotiation or term offsets?
Why is this still an issue?
The law.com article called on General Counsels to step up and fix the problem. Tim argues they will not as it is not a legal issue it’s a business issue.
Contracts are key assets of the organisation yet too many organisations just negotiate them and stick them in a filing cabinet until next time.
Contract Toolkit’s philosophy is different:
- we see contracts as describing a relationship between two parties
- like any relationship to work you need to understand each other and the greater the understanding the better the relationship functions
- to aid this we place everything in the cloud so everyone can share one truth
- we take the contract and break it down into individual obligations (8-10 secs for a 120-page contract)
- each obligation is assigned to an individual in your or your suppliers organisation who is best able to comment on the performance of that obligation
- the system chases those individuals to check the obligation on a predetermined frequency
- the system monitors compliance and highlights if obligations are not checked or the obligation owner highlights an issue
- we also seek to record goodwill, disputes and claims, change controls
- we provide management with a prediction of the workload across the group that the system can identify as coming up
Contract Toolkit seeks to crowd-source the obligations and then turn all that knowledge into meaningful data.
- The Board wishes to see in real time that the organisation and its suppliers are fulfilling their obligations.
- The Board wants early warning of disputes and claims and their possible effect on the balance sheet and that they are being actively managed.
- CFO’s do not like having Commercial Managers come to them and say did you know we gave 30% of the revenue of that contract away as goodwill. Goodwill needs to be managed especially in the outsourcing arena.
- Commercial Directors want to know at a glance what is coming up for their team over the course of the next six months/a year so they can plan support and workloads.
- The ability to move responsibilities of an individual by just typing in their replacements name and for all matters now to be rerouted saves huge time and effort.
So, let us help you answer the questions of Tim’s quiz with a resounding YES.