MOST COMMON MISTAKES made by finance, legal, and contract management departments …
Automatic Renewal Clauses (“ARCs”) or AUTORENEWALS can be golden for business. But for all their perks, ARCs are notoriously problematic. They may irritate customers who’ve missed the termination window, trap businesses in undesirable ongoing agreements, and undermine the validity of entire contracts. They act to perpetually renew a contract when no notice has been given to terminate it. So how can a business ensure they manage their autorenewal contracts to avoid termination penalties, increased fees, and being locked into an unwanted contract.
Keys to Managing Auto Renewals, Todd Larsen, CEO
3 Keys to Managing Autorenewal Clauses
When you sign a contract set a recurring alert as a reminder to review the agreement. Organizations especially those with multiple locations have numerous contracts and agreements. Managing them ALL can become overwhelming. In most cases after the contract is signed, it is FILED and FORGOTTEN! Therefore, managing every contract and agreement is a must or the organization can easily miss autorenewals costing them thousands.
Review the contract portfolio completely periodically. While it is certainly important to negotiate the best bargain for the organization, contract risk management increases IMMEDIATELY AFTER contract execution. Collecting autorenewal contracts with an unspecified duration for analysis can be TRULY illuminating! Questions to ASK …
- What percentage of all contracts are autorenewals or unspecified?
- How long ago was the oldest review?
- What types of contracts are auto-renewed? What departments, divisions, or subsidiaries are producing the most autorenewal contracts?
If you chose auto-renewal contracts TAG them appropriately. One of the MOST COMMON MISTAKES made by finance, legal, and contract management departments is to open the spreadsheet of contracts and leave the “expiration date” blank. With a blank entry, it is not clear whether it was forgotten or if an expiration does not exist.
Most organizations have autorenewal contracts in their portfolio. Chances are that no one knows how many, how much money is at stake, and what the consequences are. With the three simple steps above you can help your organization master these challenging agreements.
The LIMITLESS Vendor Management Solution (VMS) Software is: fully managed software, enterprise-based, and generates high-level spend and vendor management metrics. VMS provides a SINGLE SOURCE tool providing transparency and visibility into all vendor management processes, documentation, invoicing, and costs.
Imagine all of your vendors at your fingertips in one FULLY MANAGED software solution. Tracking and managing contract auto-renewals is only one of the features of LIMITLESS VMS.
With a Vendor Management Solution, contract experts can negotiate a fixed rate for a particular service. The contract terms must be met ensuring that both parties are aware of what is expected and any variances will be flagged and the vendor will be held accountable for any charges and changes outside of the agreed terms.
Limitless Technology, LLC has been managing complex indirect spend and vendor documentation since 2006 for some of the largest companies in the USA saving them millions in costs.
Through our Billing Optimization and Vendor Management Solutions proprietary platforms, we utilize technology, processes, expertise, time, and resources to improve our client’s bottom line.
Limitless Technology manages your vendors, so you can manage and grow your business.
For Additional Information Contact us at 407.330.4466