Enhancing Trading Agreement Performance with AI-Powered Contract Management

Contracts are fundamental to commodity and energy trading, outlining the terms, responsibilities, and conditions between buyers and sellers. However, effectively managing these contracts to enhance revenue assurance, proactively manage risk and compliance, and increase efficiencies can be challenging. Commodity trading agreements are high volume, require quick turnaround, and involve a diverse set of stakeholders from across the enterprise.

That’s why more and more energy, resources, and industrial companies are investing in advanced contract management capabilities, leveraging technologies like AI and systems integrations to manage the entire contract lifecycle of a trading agreement and its associated contracts from origination through trading, settlement, and auditing/stress testing. 

In a recent webinar, my colleague Bryan Baum and I demonstrated how commodity traders can leverage the Icertis Contract Intelligence platform to optimize trading agreements and confirmations for energy, resources, and industrial companies using AI.

You can view the full demonstration here. Below are a few of the main takeaways from the presentation.

How AI delivers contract performance

Use Case: Take an international supplier and marketer of fuel and petroleum products in North America. The lack of a CLM tool, siloed storage of contracts, and strict requirements for compliance and risk made it difficult to move quickly, enforce the company’s approval and review process, and manage contractual commitments. With Icertis, its legal, sales & marketing, and new energies departments were able to automate workflow for contract requests and generation of NDAs, carrier, sales, and carbon trading agreements. Furthermore, its worldwide business entities were aligned on the same global CLM platform – all contributing to improved productivity, better management of contractual commitments and milestones, and the ability to capitalize on every negotiation for growth. 

As the provider of contract intelligence solutions for some of the largest commodity trading organizations in the world, Icertis has extensive experience in helping companies to find value in existing contracts, optimize the creation of new contracts, and maximize contract performance post-signature.

Here are just a few of the ways that the Icertis platform has delivered value for trading organizations.

Contract Efficiency & Savings

Agreements often originate from a trading partner, requiring close review as the language is not standard to the business. Icertis AI assists in third-party paper review to save time and reduce risk. The Icertis Discover Copilot extracts critical attributes like jurisdiction, governing law, and termination notices. It can also identify obligations within the agreement and assign ownership KPIs and other impact metrics to each, ensuring their fulfillment. This AI-driven review process expedites contract turnaround times and alleviates the workload of specialized teams such as Legal and Compliance. The Icertis Risk Copilot looks through all the language in the contract to identify the risk elements configured for that contract type before or during the negotiation.

Revenue Assurance & Spend Optimization

Deals have to be commercially viable for both parties, and yet historically, less attention has been paid to making sure those contracts are fulfilled after execution. For example, a master agreement might dictate the monthly delivery of 12,000 barrels of sweet crude oil, but the confirmation agreements may frequently state expected delivery of lesser amounts. With the Icertis platform, organizations can automatically link confirmations with their master agreements to uncover discrepancies and determine if there are any gaps in capacity, penalties due or if payment adjustments are necessary via integration with their ERP. Moreover, the Icertis platform enables companies to quickly find existing contracted suppliers to address shortages.

Risk & Compliance Exposure

Contracts exist in the context of larger business processes, and Icertis makes it easy to understand these contexts. For instance, the platform manages and reports out on associated documents like credit memos, confirmation agreements, and insurance certificates. The most common requests of repositories are when contracts are about to expire. In the case of insurance certificates, Icertis surfaces and analyzes the metadata tied to them like insurance amount, insurance company, and expiration date. On a proactive basis, the platform can query them to show which ones are coming up for renewal in the next 90 days so that organizations can take appropriate action.

Conclusion

The Icertis platform provides a comprehensive solution to manage your commodity trading agreements. Its AI-driven capabilities simplify the contract creation and review process, coupled with a robust repository that provides a centralized source for all contract essentials. From handling master agreements to confirmations, supporting letters of credit and insurance certificates, Icertis equips companies with the necessary tools to efficiently and effectively manage its contracts.

The integration of Icertis contract data with the CRM, ERP, energy/commodity/suite trading platforms, and pricing data systems enables you to automatically initiate contract creation, eliminate manual errors, and generate insights – all which contribute to getting companies trading faster and achieving higher levels of profitability.