By Christina Wojcik
Risk is a topic of pervasive and growing concern in supply and sourcing management.
Procurement itself is no longer just about acquiring products and services for the best price and controlling expenses.
Instead, purchasing and supply professionals are under tremendous pressure to drive out costs and ensure that procurement strategy is in line with wider business objectives, including how personally identifiable information is handled.
That scrutiny means that the procurement function is often the external face of an organization, especially today’s competitive enterprise, acting as an early-detection system for spotting anything that might represent a financial legal, or reputational risk. As a result, they are not only tasked with, but also relied upon, to give executives the analytics and guidance they need to make better business decisions. It means also that they are a crucial player in understanding and revealing legal and regulatory exposure, while providing stakeholders with useful intelligence for achieving broader strategic goals.
The fact is, access to more and better information changes how we think about and act upon that reconnaissance. While a procurement team’s performance, alongside their suppliers, can have a major impact on the revenue and profitability of any business, effective procurement and with it, better risk management, requires the right technology.
The enterprise can positively change how it manages exposure throughout the procurement lifecycle based on contract analysis, and by managing and optimizing the supply base through the aggregation of suppliers and their contracts into a single system, 360-degree view into supplier information, capabilities, risk and performance can be created.
Contract analysis as opportunity
Generally, when we think about risk management in the enterprise, the accepted school of thought would be how to control it.
But what if we instead looked to properly identify risk as a tactic for finding more revenue? The most powerful thing is to see how risk translates into lost revenue, or perhaps more importantly, new-found revenue opportunities.
There is a lot of talk about the seismic changes that AI will bring, and the prospects for self-driving cars, home robots, and all manner of time and labor-saving applications are truly staggering. However, it is the more prosaic application of AI through text analytics (enabled by the marriage of machine learning and natural language processing) that is driving the most successful applications of AI in business right now.
Contract management and analysis has emerged as, perhaps, the most important shift in the work undertaken by commercial and procurement teams in a modern business. Historically, manual contract review took months or even years to complete, if it was done at all. The new demands placed on procurement and supply management teams requires that they look to technology to automate the process.
Contract analytics, which is most effectively being driven by the application of machine learning-based decision-science and AI, has become central to efficient contract servicing and risk management. In short, data sophistication is now essential to competitive excellence, but more importantly should be central to how risk is identified as a strategy towards profitability.
A better view of the heat map
Imagine a heat map of your organization that points out where different liabilities exist and indicates the risk level of each of these liabilities. This is analogous to the application of advanced analytics to contracts within the enterprise, where the identification of non-standard language or clauses, and how far they deviate from the standard, are a primary objective. This requires far more than a static database with reporting capabilities–it demands accurate, dynamic, real-time intelligence that can only be derived from AI-driven methodologies.
A clear view of your contracts will not only provide you with the analytics and guidance needed to make better business decisions, but also better manage management. Contract analytics and discovery systems can uncover hidden opportunities to rationalize suppliers, negotiate better deals, and take advantage of incentives.
Every organization has their own appetite for risk. Assessing a company’s risk profile is the first step toward applying right-fit contract analytics that give a view of contracts at scale and provide a ‘heat map’ of potential risk exposure. Without this assessment, it is hard to take a holistic view of the entire contract corpus, and with it a comprehensive understanding of, for example, service-level agreements and uptimes, non-standard conditions and terms, and whether or not liabilities are covered by insurance.
Considering that IACCM figures indicate that businesses typically waste between 4 percent and 9 percent of total spend, the result of applying contract analysis to the procurement and supply management process is sobering. A company with an annual spend of $1 billion, based on the lower end of IACCM’s estimates, is losing $40 million. Should the procurement team successfully identify half of that loss, and just 50 percent of that figure is actually recoverable, it translates into a potential savings of $10 million.
In particular, contract analysis has been used by the enterprise in a powerful way for non-standard clause detection. Non-standard contracts constrain organizations under the best of circumstances. Vague or complex contract language, on which an organization can base many key business decisions, is a central factor in choosing between alternative courses of action. This ‘what if’ evaluation of risk, is always viewed by supply and procurement professionals as an aspect of business operations that must be properly managed within a tolerable range. This contribution to the resilience of the overall procurement process also ensures smooth and more predictable financial performance.
On the M&A side, for instance, the challenges and opportunities can be enormous. When an enterprise subsumes a smaller player, it may sample and review a set of contracts during the due diligence phase to assess obligations and risk exposure. Manual reviews or analysis using insufficient technologies, such as archaic contract lifecycle management systems that were never meant for this task, typically sample just a fraction of the overall contract portfolio–and thereby just a fraction of the overall risk–the organization could inherit through the deal.
Monitoring and managing risk is costly
Real and powerful insight can only be extrapolated from data at scale. But still, the point is not simply to mechanically extract as much data as possible from the contract corpus, but to apply it in the context of the business so that heat maps of risk are tailored to the risk assessment itself.
Better risk management of buy-side and sell-side contracts, and other legal agreements such as NDAs and leases, requires that the analysis tools are able to learn an organization’s specific languages and clauses, and can be trained to search for specific elements, regulatory issues, and, yes, even non-standard clauses. This can only be achieved through machine learning techniques in AI.
When that risk consumes mission-critical resources, the cost is even higher yet too many organizations remain unaware of the value that contract analysis can bring to the procurement process. That’s why risk management must be well-understood by procurement teams, in particular, including a clear view of the technologies that can be implemented with minimum cost and high impact. With the application of AI to contract analysis, exposure to risk can be minimized and the impact of a potentially catastrophic event can often be avoided altogether.
It can be said that risk assessment by supply and sourcing management professionals requires that they first recognize and understand not the actual exposure itself, but the methods that can be used to avoid problems. Systematically anticipating what might occur in the future and thwarting fires before they start is possible when the approach to risk management makes contract analytics, drawing on artificial intelligence, a part of everyday business and as integral to procurement as any other process.
About the author
Christina Wojcik is Seal Software’s Vice President Legal Services
Christina leads the technical and legal solution consultant organization, globally, at Seal Software. As VP of Solution Consulting, she focuses on ensuring that her team provides prospective clients robust solutions to meet their complex contract discovery and analytics needs. Prior to joining Seal, Christina was the Practice Executive, Contract Management at IBM. She was responsible for Contract Management Strategy & Best Practices. She worked closely with Fortune 500 companies to replace high-risk, manually-intensive contract management processes with proven, scalable technology that delivers complete risk oversight and obligation management to legal organizations, while streamlining the end-to-end process, thereby increasing revenue and reducing costs. Christina also worked with alliance partners to create innovative solutions that provide a robust legal technology offering.
Lufthansa adds more summer holiday destinations in bet on recovery
BERLIN (Reuters) – Lufthansa is adding more holiday destinations to its summer flight schedule from Germany in anticipation of a strong rebound in bookings, it said on Thursday, betting COVID-19 vaccines and testing will soon make vacation travel possible.
Germany’s largest airline said it was planning to add around 20 new destinations from Frankfurt and 13 from Munich to locations such as the Caribbean, the Canary Islands and Greece.
COVID-19 vaccines and testing, along with strict hygiene rules at airports and on planes, will be prerequisites for travel this summer, it said.
“We expect many countries to relax travel restrictions towards the summer as more and more people have been vaccinated,” Lufthansa board member Harry Hohmeister said in a statement.
Hohmeister said the airline, which secured a 9 billion euro ($11 billion) state bailout last year, expects a sharp increase in demand once restrictions are lifted.
Concerned about more transmissible coronavirus mutations, many European Union countries have reinstated border controls in what is normally a passport-free travel zone.
“There is a great yearning for travel and we believe that the summer months will reflect this,” Hohmeister added.
In Britain, holiday bookings soared this week after the government laid out plans to gradually relax coronavirus restrictions, giving battered airlines and tour operators hope that a bumper summer could come to their rescue.
Plans for relaxing coronavirus travel restrictions have not been announced yet in Germany. Chancellor Angela Merkel is due to discuss lockdown options with the head of the regional governments next Wednesday.
Lufthansa, which said in January it was losing a million euros every two hours, is due to publish its fourth quarter results on March 4.
($1 = 0.8187 euros)
(Reporting by Riham Alkousaa and Ilona Wissenbach. Editing by Mark Potter)
TRUiC Evaluates The Latest Additions to Registered Agents in the US
The US is still the top choice for new businesses that have a global focus. That is not to say that they are all physically located there. Despite the pandemic creating challenges for startups seeking investment, many are still steaming ahead. More and more, companies from Europe and Asia dominate Amazon and other distribution chains in the US via a US registered entity that relies on a registered agent. What should you know about registered agents?
When forming an LLC, there are a few additions to registered agent services in 2021 that could be extremely helpful to ensure that you always maintain your privacy, never miss important mail, and make you aware of legal obligations that may occur without being too costly or complicated. When you are launching a startup as an entrepreneur, it is vital to decide which registered agent service as they act as a point of contact between a business and a state and will greatly benefit your small business in the long-term.
In short, a registered agent will primarily act as your business’s main channel of communication with your states’ government. A non-profit, corporation or LLC can appoint a registered agent service to receive government correspondence, compliance documents on behalf of the business, and service of process – which is arguably the most important role of a registered agent as this informs an entity or individual of an impending lawsuit against him/her or the company.
Suggested video – What is a Registered Agent by TRUiC:
Next will be a review and comparison between the features of the best online business services of 2021 to see which is the top registered agent service when forming an LLC:
Assisting in the formation of over 800,000 businesses, partnerships with experienced legal professionals like Rocket Lawyer makes for a great option to serve as your registered agent service, all thanks to their 100% satisfaction guarantee. Although their services cost slightly more, they can still provide a full year for free if you subscribe to their Accelerate legal service plan for $49.95/month. Additional benefits include:
- The company is supported by Google Ventures
- Norton Web Security Protection & Information website
- Legal Services Pan which includes consultations with business attorneys
Classified as high-quality registered agent services and boasting over 150,000 customers served since 200, Incfile offers lower prices and a free subscription for one year with any incorporation filing purchase. They also provide their clients with a user -friendly website, that is protected by Norton Web Security, and free information available in their Learning Centre.
Northwest Registered Agent
If industry experience and premium customer support are important to you then the following might be the best service for you. Established in 1998, Northwest Registered Agent has made a name for themselves and is one of TRUiCs’ top picks as they are known to being the most friendly LLC service available. Not only do they provide the best email/phone support, but they also locally scan every document you receive, ensuring that you will never miss paperwork and eradicating surprises.
Whilst getting great customer support and a unique dashboard, Harbor Compliance’s registered agent services will also offer discounts to their customers who pay up-front for multiple years and service to those in multiple states. Plus:
- Website protection by Norton and Trustwave
- Free compliance guides and whitepapers
- Document delivery and scanning on the same day
After careful consideration of many other registered agent services, ZenBusiness has been rated best. This small business formation service was founded in 2015 by a team of entrepreneurs who cracked the code to the barriers that others continue to face today and help their respective clients launch their businesses successfully.
Not only will the start of your enterprise go smoothly, but they will also help you stay compliant with government laws, accept service of process and other tax and legal documents, and provide you with an overall peace-of-mind so you can focus all your time and energy on running your business.
Although LegalZoom is the costliest of these options, they had to be mentioned as this registered agent service has extensive experience and capabilities with an informative and North Secure Website and a broad range of business services. Boasting with a large platform of nearly 4 million customers, LegalZoom may be more convenient for you if you have other legal services operating through them as well.
Why should you designate a registered agent service for your business?
By appointing a suitable registered agent service you will be able to maintain your privacy, be alerted to legal obligations that may crop up without breaking the bank or complicating things, and these registered agent services will ensure that you never miss a beat when it comes to crucial paperwork and delivery of important documents. There really aren’t many downsides to working with an online registered agent service provider, and the penalties for not having a registered agent heavily outweigh the cost.
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Transatlantic startups 2021: How To Choose a US Incorporation Specialist
- Start-ups created over 3 million jobs in the U.S. alone in the past 12 months.
- The highest five-year survival rate for new businesses is mining, at 51.3%.
With the high rates of US startups and the pandemic-imposed inability to travel abroad to take care of business in person, company formation services have seen peak demand. Below we discuss the latest about this trend and how the market responded.
An Incorporation Specialist (which can often be referred to as a registered or statutory agent depending on your state), is a corporate entity or professional individual that voluntarily and overtly accepts to undertake personal responsibility over a plethora of legal documents and formalities on behalf of your business.
This is commonly carried out during the official filing of your business’s Articles of Organization and- as further analysed below, can provide a plethora of benefits for you and your business. Such benefits include ensuring that a sufficient level of corporate and legal compliance is always being carried out by your business’s practices, and can save you a significant amount of both time and effort. Consequently, choosing the right incorporation specialist is extremely important.
Suggested video – LLC Formation in the US:
US Start-ups: A Quick Overview
Most commonly, persons erroneously associate the word ‘start-up’ with businesses of a relatively small business size- operating with a team of maybe just 5 different employees and often involving a prolific amount of chaos and disorganisation. In fact, however, a corporation can go on to operate for several years before evolving into a larger-scale business type- a matter further analysed below.
The ‘definition’ of a start-up can encapsulate a surprisingly large number of corporation types, and businesses tend to predominantly ‘evolve’ into large-scale business modules by either: a) opening more than just one office, b) becoming acquired via an acquisition or a takeover, or c) encompassing a total revenue of over $20 million.
Despite the rather ‘loose’ definition of a start-up, the fact is that over 90% of such aforementioned companies end up going bankrupt within their first five years of operation. This is one of the key reasons that make choosing an effective incorporation specialist for your business a crucial task. A prolific, eminent incorporation specialist can provide a plethora of commercial and structural benefits, and undeniably bring in the best llc services for your business start-up.
Choosing the Right Incorporation Specialist
As briefly touched on above, choosing the right incorporation specialist can go a long way in securing both: a) peace of mind, and b) a sufficient level of legal compliance for you and your business.
In ensuring you pick the right incorporation agent for you and your business, always ensure you:
- a) Choose an eminent, nation-wide provider– this is particularly essential if your business operates in several states as working with a variety of different specialists can commonly yield inefficient results- due to an abundance of unnecessary paperwork and a significantly increased risk of a legal document or a potential annual renewal falling ‘through the cracks’ and being missed.
- b) Choose a professional service- this can go a long way in ensuring you do not have to constantly worry about having to file an update with a relevant government agency every time your contact information or office location changes- saving you a prolific amount of irreplaceable time. Additionally, by picking a professional service to represent your company, you are much more likely to see a consistent level of document filing and legal compliance and avert any legal crisis where your legal documents are not made available to you in time.
- c) Evaluate the service’s software– your incorporation specialist needs to offer a reliable operating software that can consistently ensure a timely and efficient transmission of your relevant legal documents is available in the format of your preference. This way, you are likely to see a holistic reduction in your business’s paperwork and significantly improve your company’s overall internal communication.
As touched on above, your incorporation specialist can serve as a crucial part of your business. Picking the wrong service provider can lead to disastrous results- especially in relation to missed subpoenas or late annual renewals. Multiple US states should be considered and their respective benefits ought to be compared. Given the potential risks, it is absolutely essential to ensure you accord an adequate amount of time and effort into choosing the best incorporation specialist for you and your business and consequently save a prolific amount of time and effort in the long run.
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