Last Fall when I was working on 2020 planning, we did not account for a pandemic that would shut down entire cities . Events and conferences canceled, offices, restaurants, retail stores, and bars closed, and schools shut down for months.
I’m guessing many of you are similarly situated and are rethinking your 2020 plans and forecasts. If you accounted for a pandemic, you should buy a Lotto ticket immediately (sorry, Las Vegas casinos are closed the next 30 days).
Here at Lexion, located in Washington, we are in the thick of it. Washington is the first in the U.S. to feel the social and economic impact of the coronavirus outbreak. But don’t cry for Lexion. We know that we are fortunate to be capable of doing our work from home and collaborating with online tools. We are incredibly thankful to the healthcare professionals, grocery store employees, and other service workers who can’t work from home and continue to work and put their personal health at risk.
At a recent team meeting, we brainstormed the below sample reports Lexion’s AI-powered contract analytics system can quickly generate to help you reduce costs, more accurately predict your revenue stream, and manage your cash flow during these uncertain times. Reports can be filtered by relationship (e.g., customer or vendor), department (e.g., Sales, Marketing, IT, etc.), by a contract value range you set (e.g, $5,000-$50,000), and more.
1. Force Majeure
Agreements that include a force majeure clause to assess whether (a) you may suspend payment or terminate a vendor agreement, or (b) you may delay or suspend performance of a service or delivery of a product due to the pandemic and your customer may not terminate their agreement with you. Common force majeure clauses do not list pandemic, diseases, or quarantines, but this pandemic will likely fall under the catch-all of “other events beyond the control of the affected party.” For an excellent analysis on this issue, check out this article from Bloomberg Law.
2. Termination for Convenience
Agreements that include a termination for convenience clause to determine (a) which vendors are not needed at this time and to terminate your agreement with such vendors, and (b) which customers are at risk of terminating their agreement with you.
3. Other Termination Rights
Agreements that include termination rights to assess (a) your options to terminate a vendor agreement, and (b) customers’ options to terminate their agreement with you.
4. Payment Terms
Agreements with a specific payment term (e.g., 30 days) to allow you to proactively reach out to (a) vendors to ask for a payment extension given the current economic climate, or (b) customers with longer payment terms (e.g., 60 or more days) to seek earlier payment in exchange for a discount or other consideration.
5. Fees or Penalties for Late Payment
Agreements that have a clause relating to fees or other penalties for late payment to allow you to reach out to your vendors to seek extended payment terms and waiver of such late fees or penalties.
6. Insurance Requirements
Agreements that require specific insurance coverage amounts to allow you to compare the highest amounts you agreed to in your agreements and your actual coverage. If your actual coverage is more than what you contractually committed to with your customers or landlords, you may be able to cut costs by lowering the amounts of your insurance coverage.
Finally, regardless of what the contract states, there is no shame in simply asking for help from your vendors, landlords, and customers. We are seeing a lot of companies show kindness and compassion to others. We are in this together.
See how Lexion's state-of-the-art AI and natural language processing can provide you the reports you need to make informed decisions as you pivot your plans and make adjustments. For new customers, Lexion’s implementation process is quick and painless.