Contract Metadata Meaning and Why Does It Matter
Contract metadata is the information that helps parties in an agreement sort, review, and track agreements. While metadata might not be seen as necessary, it is crucial to the success of your business. Contracts are at the core of every business’s operation; therefore, the metadata should be present to make it easy to access, aggregate, and link your contracts.
Contract metadata is retrieved from within the contract and takes the shape of a summary if your contract was a book. Having readily accessible and well-organized metadata will save you a lot of time reviewing contracts. Contract metadata provides a quick review of each agreement by extracting it such as; contract value, date, and the different clauses in the agreement. Listing these examples is insufficient; describing them is essential so each aspect can be adequately understood:
- Total Contract Value (TCV) is your business’s revenue from each contract.
- Key Dates are specific milestones that need to be achieved during the contract period. One party can be required to fulfill specific stipulations by a particular date.
- Named Parties, as the name suggests, are the people or businesses that come into a binding agreement facilitated by the documentation of the contract.
- Contract Types are substantial contract metadata extracts. Understanding the type of contract you or your business will sign is vital as each contract has different requirements. A Master Service Agreement (MSA) is a contract between parties that stipulates the rules of future transactions. A Non Disclosure Agreement (NDA) is an agreement between two businesses or people that prevent them from sharing certain information. A Statement of Work (SoW) contract is an agreement between two or more parties that stipulates project goals or deliverables.
Importance of Capturing or Extracting Contract Metadata
Contracts are complicated and complex, and contract metadata simplifies them. There are a lot of benefits to extracting, and this realization has made businesses integrate AI, blockchain, and other technology to have smart contracts.
Technology integration in contracting has simplified the process of metadata abstraction from contracts. Despite the various tools or approaches that you choose to apply in your business, the following are the importance of metadata extraction.
1. Improving contract searchability
There are thousands of agreements and contracts in an established business. Most businesses seek the help of law firms to manage their contracts, but some enterprises manage by themselves. A quick find will be instrumental for a company with many activities when a contract needs to be renewed or amended.
Having contract metadata such as the date, the value of the contract or the parties involved in the contract will make it easy to locate a contract from your company archives.
2. Reporting with greater accuracy
Running a business requires accountability, which can only be possible through proper reporting. Contracts are part of almost every business process and help companies accurately report to the taxman or other institutions.
For instance, if your business gets into a contract to provide services or supply goods to another business, the proceeds from this business transaction can be backed by the contract. Therefore, contracts can be used even if other records such as invoices are lost or destroyed.
3. Setting alerts for required actions
In some contracts, such as the Statement of Work (SoW) contract, project deliverables must be achieved by certain dates. In this case, the project deliverables are contract metadata, and they help your business set reminders for required actions. Some deliverables could have been missed if the agreement had been by word of mouth.
4. Capturing agreement compliance status
This point is closely related to the previous topic. Setting alerts for the required actions in a contract helps your business comply. It is important to be compliant because a breach of contract can lead to litigation and cost your business. Therefore, it will help you be compliant and avoid any negative outcomes.
5. Unlocking the aggregate value of the contract database
Contract metadata can be categorized as an important aspect of reporting, whereby the data is the focus of this argument. Data is very important in any business as it helps to make the right decisions.
An aggregate form of metadata can help strategy your business year. For instance, if your business has an agreement with different suppliers, you can categorize each supplier based on their costs, service delivery, and whether you will renew the contracts of each supplier.
What Powers Does Contract Metadata Give Your Business?
Contract metadata will streamline communication between internal departments. Each business has various teams, each responsible for certain business processes. When a business enters a contract, all the departments must coordinate so that the firm does not breach the contract.
Apart from streamlining communication within your business, it simplifies the process of searching contract archives to create new contracts, especially if you want to renew contracts with previous business associates.
Contract metadata will allow your business to monitor its activities consistently and effectively, and important updates will also be present. In this situation, your business can make fast strategic decisions based on agreements from previous contracts.
Metadata will provide your business with accurate summaries of contracts accessible to every employee. Therefore, you can get prepared for contract renewals, get early updates for deadlines, and become compliant with ant business regulations.
In summary, contract metadata plays an important role in every business. It helps to save resources and time, making sure that no contract is breached. In this case, it means that your business no longer needs some administrative activities, and more members of your business will be free to build workplace relationships or innovate ideas that will be crucial for business development.
If you have reached this far, then effective capture of metadata of contract is something you would like to master. Metadata can be done manually and automatically, and the manual process is labour-intensive and expensive. Automatic metadata extraction is accurate and affordable and can be achieved through the following:
- Excel Sheets and CSV files help to automatically capture contract metadata because they have a filter system that can capture the required information on command.
- Optical Character Recognition (OCR) technology is a filter stipulated keywords on digital contracts. Google Keyword TOOL is a free tool present on various smartphones and tablets.
- An AI software tool customized for your company’s needs is a more expensive approach. Parley Pro is an online management platform that can customize an AI for your contracting needs.