What are Enterprise Resource Planning (ERP) Systems?
Enterprise Resource Planning (ERP) systems give finance, management, operations, and other teams a window into and the ability to control what is happening in their business. ERPs can include tracking of financial activities (accounting), as well as procurement, risk management and compliance, project management, supply chain tracking, and potentially much more. A major part of their value involves stitching together data from disparate parts of a business, enabling a central shared view.
How Contracts AI can help when embedded in Enterprise Resource Planning (ERP) Systems
Sometimes, contract details are an important element in understanding a company’s financial situation. This makes sense: for many companies, contracts set the rules under which they pay and get paid. Some examples of finance-team-relevant contract information are:
- Revenue recognition, which can hinge on details of contracts.
- New accounting standards implicated language (e.g., many significant contract reviews were triggered in recent years by IFRS 16’s new accounting treatment of leases).
- Renewal dates and termination for convenience language, which can be important for forecasting (especially in a wobbly economy).
- Payment terms.
- Who pays sales tax, especially if sales tax was not charged at the moment customers were initially invoiced.
- Price increase and inflation-adjustment language.
Contract data can be super valuable for finance teams, but getting at this information can be real work. Contracts AI can enable finance teams to get at contract information much quicker. While a finance team could use a dedicated contract tool (like a Contract Lifecycle Management or Contract Analysis software system), it may make more sense for them to access their contract data in the system they already use most (other than Excel ), their ERP. ERP vendors (and software providers building systems on top of ERPs) can gain by meeting this need and embedding Contracts AI in their offerings.