Contracts lose much of their value and become burdensome to manage when data in a contract about parties, prices, and obligations is inaccurate — and the problem is widespread. Contracts that should have never been signed due to manual data entry mistakes cost companies tens of millions of dollars. In a recent survey by the International Association for Contract and Commercial Management, 43% of respondents admitted that verification of invoice accuracy is ad hoc and lacks systems support.
To tackle the common and costly problem of manually checking contract data and building systems support, the Clause Verify solution builds that functionality directly into contracts. Verify removes the need to build custom integrations or manage contract data outside of a document. Verify can be configured to check the contract data at the point of signature and subsequent events thereafter.
Verify before you sign
Clause Verify reduces contract errors by checking contract data as it is entered. If the contract data is input inaccurately, Clause will not permit the contract to be signed. Blocking signature cuts off contract errors at the root by preventing flawed agreements from entering into a company’s systems.
Verify also prevents noncompliant contracts from being executed. For example, Clause can prevent an agreement from being signed if:
- a party or signatory to a contract has not yet been approved or licensed
- a price is not consistent with a list or formula
- a credential such as a bank account or drivers licence is inaccurate
- a service is out of scope of what is currently being provided, or
- required regulatory documents have not been filed.
Clause enables contracts to be verified and checked for compliance in real time by automatically comparing contracts to internal and external systems of record. These systems can contain information about parties and payment details, company and product information, and approved parties and terms. Clause users are notified if contract data does not match another system.
As a result of DocuSign integrating Clause into its platform, a workflow can be created to only permit signature if contract data is accurate. As shown in the screenshot below and video here, Verify can prevent a loan application from being submitted unless bank account details are validated against official banking records. Clause is also able to check bank address records to prevent faulty location data from being incorporated into an agreement (video here).
Enabling companies to validate contract data and approvals prior to signature reduces the large administrative costs that come from manually checking and correcting errors. As noted by DocuSign chief operating officer Scott Olrich, “human errors are just a few of the ways that businesses are hampering the contract lifecycle.”
Clause Verify also prevents costly errors that result from conducting business with erroneous contracts. Agreements that contain inaccurate information, unauthorized parties, or that contain unapproved terms that undermine commercial goals, may have significant costs. These include having to manually administer checks to contract data and reconciling data in external systems.
In addition to validating contract data at the point of signature, Verify also enables parties to continuously monitor long-term contracts after they are signed to ensure that data remains accurate and that authorizations and related representations do not lapse. For example, buyers can remain assured that invoices accurately price goods and that service providers remain duly licensed because Clause can check applicable data and records on an ongoing basis. As shown at the 2019 DocuSign Momentum conference, these checks can consist of real-time updates on the eligibility of drivers to provide transportation services. If a validation check fails in real time, a contract may be flagged or a workflow process initiated.
Likewise, investors and lenders seeking to ensure compliance with loan covenants, budgets, and other requirements can be notified on a recurring basis whether portfolio companies are meeting their obligations.