Contract Renewals
A contract renewal is a periodical process where the contract manager chooses to prolong or cancel a contract.
The contract renewal process
Schematic representation of the activities within the contract renewal process
Based on the scheduled script “Demo; Start contract review or renewal if needed” it is checked if there is an active contract with a signal date up till today, the end date is not passed and which does not have a contract renewal transaction yet. If needed, the contract renewal transaction will be created.
Contract renewals are presented to the contract manager of the contract in the dashboard tile “Contract Review” in the activity “Review” with the description: “Renewal for; *contract description* ”.
Please be aware that in case you also use contract reviews, the same dashboard tile is used for presenting contracts to be reviewed.
Fields in the Renewal Task
Description: For contract renewals the description will be: ‘renewal for;’ + the description of the linked contract.
Contract: A direct link to the archive of the contract to which this contract renewal is linked.
Supplier: The supplier linked to the linked contract.
Reviewer: The contract manager of the linked contract.
Renewal task: In case checked, it is a renewal task, if not checked it is a ‘review’ task. (See “contract reviews”)
Ultimate cancellation date: The ultimate cancellation date copied from the Contract Dates section in the contract.
Renewal date: The date per which the contract would end without prolonging or per which it is prolonged.
Prolonged: Check the box in case the contract should be prolonged. If you don’t check it, that means it should be terminated and a reason for termination is required.
Renewal period in months: (only visible if ‘prolonged’ box is checked) Quantity of months for which the contract is prolonged. Copied from the linked contract.
Next renewal date: (only visible if ‘prolonged’ box is checked) Renewal date + the renewal period.
Indexing percentage: (only visible if ‘prolonged’ box is checked) Enter the indexation percentage of the (new) contract.
Reason termination: (only visible if ‘prolonged’ box is not checked) Choose a reason for termination when a contract is not prolonged.
End date: The end date of the contract if it would be terminated now.
Wait for confirmation; In case checked, the transaction will go to the activity “Receive Confirmation”.
Remark: Notes can be added here.
In order to approve this contract renewal task you will have to indicate if a contract is prolonged or if it is terminated. In case the checkbox ‘wait for confirmation’ is NOT checked, approving this contract renewal will lead to a fully processed contract renewal transaction. If the checkbox ‘wait for confirmation’ is checked, the contract renewal will go to the activity ‘Receive Confirmation’.
Please note that the checkbox for prolong or the reason for termination will decide whether a contract is prolonged or terminated. Rejecting the renewal process will not terminate the contract!
Review of renewal
In the section general, a link will be present to the related contract. From the contract also a link is present (in the section of contract data) to the most recent contract renewal transaction.
Receive Confirmation
In case the checkbox ‘wait for confirmation’ was checked, the contract renewal will go to this activity. It will be placed in the worklist of the contract manager linked to the contract.
By uploading a document with document type ‘Contract renewal/ cancellation confirmation’ the confirmation is saved and the contract renewal process can be fully approved.
Please note that the checkbox for prolong or the reason for termination will decide where a contract is prolonged or terminated. Approving the contract renewal process does not apply to it being ‘prolonged’ nor does rejecting the process apply to ‘termination of a contract’.
Termination of a contract
To terminate the contract you need to provide a reason for termination in the contract renewal process.
After fully approving the contract renewal process with a reason for termination, fields in the contract are updated. Field ‘date terminated’ is filled with the date on which the contract renewal process is fully approved. The reason for termination is also copied to the contract. The end date is updated based on the information from the contract renewal process.
When running the scheduled script “Demo; Start contract review or renewal if needed”, contracts with an end date of ‘today’ or earlier which are fully invoiced already, will be deactivated automatically. This means you do not need to manually deactivate terminated contracts.
Prolonging a contract
To prolong the contract, check the box for ‘prolong’ in the contract renewal process. After fully approving the contract renewal process, fields in the contract are updated. The fields ‘next renewal date’, ‘ultimate cancellation date’ and ‘signal date’ are updated with the information from the contract renewal process.
Indexation of a contract
Only apply indexation to a contract when in the contract type used, the checkbox for field “Copy contract lines upon renewal” is checked! This will ensure that a new contract line is added to an existing contract with the correct (new) price.
There are two options to apply contract indexation.
Indexation via contract renewal process
In the contract renewal process an option is presented to enter an indexation. This should be filled in whole percents.
When the contract renewal process is fully approved, the contract is indexed. New contract lines are created for the prolongation period with the new price.
Indexation via contract archive
Users with the role ‘contract administrator’ have the option to index contracts via the archive. From the contract in the archive, the contract can be edited. In the section ‘supplier information’ the field ‘indexing percentage’ is available. This can be changed to something else than ‘0’ and should be filled in whole percents. Also check the box ‘indexing active’ in order to be able to index the contract. After saving the invoice, the button “indexing” can be pressed. First a pop-up will appear asking for conformation of the index action.
If invoice lines are linked to the contract, a new contract line is created for the remaining period. The used contract lines are deactivated. The indexation will take place immediately for all remaining periods, so it’s not possible to only raise the amount after a certain date.