Pactum has launched as an artificial-intelligence-based system that helps global companies autonomously offer personalized, commercial negotiations on a massive scale. The California-based company, with engineering and operations in Estonia, has raised an initial $1.15 million in preseed funding to augment negotiation and AI capabilities as well as scale operations. Pactum also has filed the patent related to its technology IP.
“According to our calculations, all the Fortune Global 500 companies together have 12 million supplier contracts that are unmanaged, also known as ‘tail spend,’ amounting to around $100 million to $500 million per enterprise,” Pactum CEO Martin Rand said in a statement. “Our system helps companies enable growth and bring in initially lost income through stronger agreements while minimizing waste by conducting thousands of parallel automated negotiations at a time. We’ve converted a process that used to take days, involving back and forth communication and preparation, contracts drafts, updates, approvals and signatures, etc. to now take an average of 15 minutes.”
Inefficient contracting has been estimated to cause firms to lose between 17 percent to 40 percent of the value on a given deal, depending on circumstances, according to research by KPMG. Pactum’s AI helps companies improve their bottom line by implementing bespoke negotiation services for large volumes of incremental partners in every market that might have previously been unmanaged.
Augmented artificial intelligence evaluates agreement terms and offers an unbiased resolution that can result in either business development or renewed agreements where both parties have been equally evaluated to support a fair deal. Based off historical data, terms are suggested and discussed through an auto generated chat-like interface to generate a contract that is then ready for review and sign-off.
“Organizations that have massive numbers of supplier contracts forgo value for their suppliers and themselves when they impose the same contract terms regardless of local conditions or the different services a supplier can provide,” said Jeanne Brett, Professor Emeritus, Kellogg School of Management, Northwestern University. “Solutions like Pactum’s that leverage AI to implement negotiation strategy have the potential to facilitate agreements that are unique to individual relationships and that capture value for both parties.”
The system is designed to align the values of both the Pactum client and their vendor by initially appraising each possible trade-off in the partnership. Thereafter it uses best-practice strategies to instigate a negotiation with the vendor in an easy-to-use chat interface. Through the system, win-win trade-offs are determined, with terms including payment time, cancellation terms, pricing, etc. The web-based tool’s applications range from supplier negotiations for online marketplaces to enterprise and retail procurement negotiations.