CFOs in companies play a critical role in fulfilling financial and contractual obligations. They are typically responsible for establishing a broad vision for the company. They are not always a primary party to the enterprise’s contracting process, but they have an apparent interest in contracting outcomes and value. CFOs need to partake in their companies’ contracting process to actively –

  • Conduct primary analysis of the potential financial outcome and reduce the likelihood of a future financial setback or at least minimize its overall cost
  • Provide input related to structuring the contract to the legal teams so that the economic value of the contract isn’t lost
  • Show that the top leadership is involved and remains abreast of the developments of the company’s contract management system

CFOs make important financial and risk management decisions based on the contracts drafted using manual processes in many enterprises. This often results in inaccurate data and reports. A mature Contract Management process allows detailed contracts that outline every aspect of thousands of projects from concept to completion. Skipping any of the benchmarks or review periods within these contracts could lead to significant oversight while scrutinizing contracts resulting in poor performance.

As per a Harvard Business Review Analytic Services paper, the CFO’s changing role beyond traditional finance requires technical support. The right digital tools – from analytics to AI – will allow a CFO to make data-driven decisions and set the best economic practices.

If we were to build a business case for contract management systems, the focus would be on revenue optimization. Contracts are directly linked to profitability, and contract management systems add value to bottom lines in 3 ways.

  • Accelerate Commerce
  • Protect against risk
  • Optimize Business

How CFOs gain value by switching to advanced analytics supported CLM enabled by technologies like Artificial Intelligence, Machine Learning, Natural Language Processing, and Robotic Process Automation (RPA). An AI-Powered Contract Lifecycle Management Software accelerates the above focus areas by –

1. Tracking milestones – Important milestones of delivery, payments, obligations, and many more may easily get overlooked Without a contract management system in place. It is pertinent for CFOs to easily track these milestones and obligations across contracts in case of an unannounced audit and avoid penalties.

2. Managing Risk – A contract can encounter a range of risks during its operational life. Data breaches, compliance issues, and IT failures are risks that contracts have been exposed to, causing a threat to a company’s financial strength. The CFOs can ensure effective contract risk management by incorporating a mature CLM that identifies compliance gaps, modifies existing contracts, and streamlines clause-level tracking for various regulations. Proactive monitoring helps avoid compliance issues that affect the bottom line. The contract management system provides real-time rule updates to stay ahead of changing market and regulatory conditions. 

3. Effective Negotiations – CFOs need to spot trends in negotiation terms and identify key contract clauses that can win deals more quickly advantage in a challenging environment. Having historical negotiations, data handy has proven to be of great help while negotiating terms, clauses, and pricing. With an efficient contract management software, CFOs can make the best use of past data to identify contract terms that hinder organizational growth and ensure the elimination of those terms from the contracts.

4. Contract Analysis – A contract management solution with a centralized contract repository allows full visibility to the CFO and other stakeholders responsible for financial and operational performance. With a central repository and emerging technologies as an aide, stakeholders can easily extract data and report that can be exported to visualization tools and shared with fellow executives and the board on risks and opportunities. This information enables the enterprise to act more confidently as it reacts to the changing market.

5. Increase in business growth – CLM enables CFOs to optimize their company’s top-line and bottom-line performance. Enterprise data and advanced contract analytics help to optimize decision-making. The AI-driven CLM solution gathers insight into identifying the immediate challenges to revenue streams, commercial outlays with third parties, and assess their impact on the bottom-line to deliver the best outcomes. For CFOs, this means faster time-to-value in business transactions. 

Ultria Contract Lifecycle Management has helped CFOs identify and manage risks by providing 360-degree visibility into contracts. It has enabled them to keep track of compliance clauses in real-time. It can negotiate and author contracts, gauge risks, and adhere to compliances critical for CFOs. Ultria’s Orbit AI personas, namely Guide, Explorer, and Protector, streamline the contract management process. It offers timely suggestions, diagnosis, and predictions to help produce error-free and dynamic contracts. 

  • Ultria Orbit Guide – A self-service contracting guide that allows for risk-free, self-serviced contract authoring. It provides real-time negotiation monitoring by enabling CFOs to track and intervene in negotiations at any time. In a high-priority contract, they can step into author or negotiate personally. This is possible as the system collates all contract knowledge at one, easy-to-access place.
  • Ultria Orbit Explorer – A blazing fast advanced search engine that extracts the critical metadata and classifies them for further analysis. When integrated with the Contract Lifecycle Management platform, it can help in identifying contract types and navigate through thousands of contracts to analyze critical areas like renewals, expiries, payment terms, and essential clauses. The insights and statistics in real-time will assist the enterprise in making informed decisions on managing revenue resiliency.
  • Orbit Protector – A Gatekeeper of risk management that helps analyze the extracted data. This analysis could be related to any area of the contract lifecycle, be it risk related or payment-related obligations, and provides an insightful picture to CFOs on the contract process. When integrated with the Contract Lifecycle Management platform, it identifies hidden risks and opportunities in contract clauses reducing the need to sift through multiple contracts manually. Its smart analytics trigger remediation mitigates risk, suggests alternatives to potentially dangerous words/clauses, and suggests an alternate path.

Organizations face a clear choice today: either stay digitally agile or become obsolete. To streamline finance functions, it is imperative to create agile financial planning and analysis (FP&A) capabilities. The right digital tools – from analytics to AI – will allow a CFO to make data-driven decisions and set the best economic practices. Companies need to actively keep in touch with the commercial terms written in their contracts to drive insightful decision-making. CFOs need to get in front of digital finance; otherwise, they will get left behind.

Download our latest whitepaper, which talks about the technologies being adopted by CFOs, that show the most promise to facilitate organizational efficiency and supercharge finance function. 

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