These questions range from “What’s the total value of my business’s contracts?” to “Have all our suppliers signed our latest terms?”.
While it’s true that you will be able to answer all 44 of these questions, there is an important caveat:
At least half can only be answered if you’re capturing relevant contract metadata in your solution.
Without metadata, your solution is limited, for the most part, to being a simple repository for your contracts.
So what is metadata exactly and why is it so important?
What is contract metadata?
Echoing the description given by the IACCM, put simply, metadata is structured information about a contract, which is stored against the contract record.
It is often information that is extracted directly from within the contract but doesn’t necessarily have to be.
Different businesses will have different structures for their contract metadata based on what they deem to be important.
Typical contract metadata might include:
- Counterparty Name
- Contract Value
- Contract Type, eg NDA, MSA etc
- Expiry/Renewal Date
- Contract Category
- Contract Owner
Why is it important to capture metadata?
Any well-written individual contract should provide comprehensive information about that specific agreement. If you read through it in detail, you’ll be able to understand exactly who’s involved in the contract, what it’s for and the expectations for delivery.
This is important but is of limited value in the context of a business with thousands of agreements. No single person will have the time to read through every one of the agreements, fully understand how they inter-relate and stay on top of them throughout their duration.
Capturing metadata serves several purposes:
Metadata makes a large contract database searchable by any number of data points such as counterparty, value, renewal date etc. Without this data being captured in a contract tracker, you would have very limited options for retrieving specific contracts.
Accurate reporting becomes possible across the contract dataset, split by metadata, and can be tracked over time to demonstrate the changing composition and performance of it.
Reporting dashboards can make the information accessible to a variety of stakeholders, from senior management who may require high level oversight to procurement or finance who may be looking to optimise spend and need to drill into the detail.
Unlocking the aggregate value of the contract database
The logical extension of reporting, here we are able to focus on what the data means and can then make strategic decisions based on the aggregate as well as the detailed view.
A simple example would be examining contracts grouped by “vendor category”. In any one category it will be possible to gain an understanding of which parties are in there, what their respective costs are, when they’re up for renewal and whether consolidation is possible.
Without the metadata, decision-makers would be required to interrogate individual agreements and manually work out the comparison between them.
This will never be a workable solution for businesses with thousands of contracts. Individual agreements will need to be reviewed, but first you need to identify which are worth looking at, and when.
By highlighting trends as well as outliers, you’re then able to focus time and effort on the specific contracts that need attention.
Prompting timely action
By extracting and capturing metadata from contracts, it can then be used to trigger action as required.
Assuming you’re using a dedicated contract management system, you should have the facility to generate automated reminders from your contract metadata.
The obvious one here is for renewals. As long as you’ve captured renewal date and notice period as metadata, you should then be able to trigger reminders to relevant parties at the appropriate time to review whether the contract is worth continuing.
We’ve written separately about how to make the most of renewals but, in essence, being prepared in good time allows for not only cancellation if appropriate, but also creates a stronger negotiating position if you intend to continue.
Capturing Compliance Status
Depending on your industry, capturing the compliance status of your contracted parties can be mandatory. Tracking whether certifications have been provided and signed off would be another typical use for metadata.
At a glance you have a view of all your relevant vendors and whether they have provided the required documentation. Our Financial Services customers in the UK have found Gatekeeper particularly useful for this, as they seek to meet their FCA obligations.
Taking it further, if that compliance status requires periodic review then, as above, workflows can be used to trigger reminders to the relevant internal and external parties to make sure it is reviewed and re-supplied.
This helps protect your business and provides an auditable record of compliance history should it be required.
How to Capture Metadata
We work with customers with different levels of maturity when it comes to contract management. This means we encounter various states of metadata from the non-existent to the well formed, which we cater for within onboarding and implementation.
As far as metadata is concerned, there are generally three stages to the process that need to be considered:
- Deciding what metadata needs to be captured against your contract records.
- How to apply chosen metadata to pre-existing contract records, which are being imported to your new solution.
- How to capture metadata on an ongoing basis for new contracts once the solution is in place.
Choosing which data points you want to capture will be down to you and your stakeholders to decide.
Consider the reasons we’ve outlined above and decide what you want to be able to report on, how you want to group and categorise and what trigger-points will be useful over the lifetime of a contract.
Once you’ve decided on the metadata fields you require for your business, capturing it against contract records needs to be treated as a mandatory part of the contract management process.
It’s highly likely that this will involve some manual work at some point. Even the most advanced AI solutions in this area aren’t 100% capable when it comes to extracting data from contract documents.
And, as we’ve said, not all potential metadata is actually available to extract from a contract in the first place so there will be a need for additional intervention.
So you should be prepared to commit resource to creating reliable metadata for all of your contract records.
This resource can be deployed to work on the following:
- Bulk Excel/CSV upload files which create the contract records along with all the agreed metadata.
- Manual upload of individual contracts, where entering metadata is a mandated part of the process.
- AI/manual work hybrid, where some data extraction is carried out automatically and then records a subject to manual checking afterwards.
Once you’ve moved pre-existing contracts into your contract management solution, you then need to consider your process and approach for future contracts. Ideally, the creation of metadata should be built into the process so a new contract can’t be added without it.
It’s vital that the data is captured consistently and reliably for every contract record.
Incomplete information is the enemy of good contract management as it creates blind-spots (potentially around compliance) and prevents stakeholders from being able to make fully-informed decisions.
You should be able to use the full capabilities of your contract management solution to facilitate the process at every stage. Whether that’s through using contract repository software to create a centralised view, mandating fields and upload templates or through the controlled use of AI, the investment of time and effort up front pays dividends down the line.
How Gatekeeper can help you to unlock the power of contract metadata
Although there are many options for extracting metadata, manual methods can lead to inaccuracies caused by human error. It can also be time-consuming and create additional work for already over-stretched teams.
Automating the task allows teams to upload a PDF or scanned contract for languages and clauses to be extracted accurately, and without duplication, before they are stored in a central repository.
Teams no longer have to make manual decisions about contracts that may be hard to read. Even if contracts are hard to read, include complex tables or include handwritten notes that are difficult to decipher, AI Extract can extract and upload the key information.
By investing in contract management software that can automate this process, you save time, reduce manual work and boosting compliance.
Automatically extract contract metadata
As you’ve seen here, metadata is what elevates contract management from simple document storage to a strategic function. It allows contract information to be aggregated, interrogated and to be made actionable.
This is why it’s vital that the right information is captured up front into your solution.
However, as we’ve written about before, a technological solution is generally only as good as the people working on it and their willingness to follow an agreed process. This means that you need buy-in from your teams and clear instructions for them.
With that in place you are then able to drive significantly more value from your business’s contracts.
If you’d like to understand how Gatekeeper can help you gain a strategic view of your contracts, drive down costs and minimise your business risks, then get in touch with us today.