Contracts in Business
Contracting is part and parcel of the business community. It is expected that each enterprise or company carries out contracting effectively. Inefficient contracting costs companies between 5 and 40 percent on deals (Harvard Business Review, 2018). Research by PricewaterhouseCoopers (PWC) showed that the average company possesses between 20 000 and 40 000 contracts. It was also established that it takes an average of 3.4 weeks to create and approve a contract. Business contracts have evolved to deal with these inefficiencies. This transformation has significantly been influenced by technological changes, which have transformed the preparation, negotiation, and management of contracts. Technology has influenced better business judgment, behavioral economics, and innovation (SAP Innovation, 2018).
Technological advancements in business have brought various tools such as e-commerce, Artificial Intelligence (AI), and Radio Frequency Identification (RFID). The Internet has resulted in new forms of contracts. Ecommerce has resulted in online contracts that bind companies with an online presence to their clients. The companies now publish contracts in the form of terms and conditions on their websites. Customers must abide by these terms of service in order to make transactions with the companies. Artificial Intelligence helps in the identification and analysis of data. It can handle extensive scale contract data, assisting in contract negotiation (Harvard Business Review, 2018). This helps in saving the time spent between contract creation and implementation. The RFID technology is also used in tracking the contract data and enables the storage of large amounts of data in a database (AB&R, 2019). These technologies help in promoting efficient and effective contracting.
Small businesses are critical to the economic growth of a country. The government’s procurement policy gives subcontracting chances to small scale businesses, which spur economic growth (Small Business Administration, 2012). Contract compliance is challenging for small businesses. These businesses may not have resources dedicated to contract compliance. The government offers advisory services to small businesses on the ever-changing rules that govern contracting. Contract compliance is promoted by the government’s guidelines requiring prime contractors to subcontract opportunities to small businesses.
Conclusion
The evolution of contracts has presented better ways of building the interactions between businesses and consumers. The implementation of technology has not diminished the role of lawyers in the contracting process. Instead, technology has diversified their roles. For instance, lawyers now spend more time giving counsel rather than reviewing documents. The government’s opportunities have boosted the participation of small businesses in the economy.
References
AB&R (2019, March 25). What is RFID and how does RFID work? . https://www.abr.com/what-is-rfid-how-does-rfid-work/
Harvard Business Review. (2018, February 12). How AI is changing contracts. https://hbr.org/2018/02/how-ai-is-changing-contracts
SAP Innovation (2018, Jan 16). The critical and evolving role of contract management in digital transformations. https://www.digitalistmag.com/finance/2018/01/16/critical-evolving-role-of-contract-management-in-digital-transformations-05754529/
Small Business Administration (2012). Government Contracting 101 PART 1 – Small Business Contracting Programs. https://www.sba.gov/sites/default/files/files/Work%20book%20gc%20101%20part%201.pdf