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When it comes to automatic renewal clauses in contracts, complacency can be the quickest route to financial loss. Often, a significant amount of diligence is required to ensure no deadlines are missed in the contract review process. However, without a contract lifecycle management (CLM) solution in place, it can be all too easy to lose sight of important details such as renewal and expiration dates.
One manufacturer learned this lesson the hard way when it discovered it was still paying for its old two-way-radio cellphones two years after it had replaced them all with smart phones. It wasn’t until the network supporting the older phones shut down that the accounting department was alerted. By that time, it was already too late. The error cost the company more than $100,000.
What happened to the manufacturer could happen to any organization that isn’t vigilant about its CLM apparatus. Self-renewal clauses are common ways for companies to manage long-term contracts, like cell phone service agreements, but they are notorious for causing grief if they are left forgotten until it’s time to terminate the contract. If the renewal deadline is missed, the organization attempting to extricate itself from the contract may become locked in an unsatisfactory service arrangement that could last years.
In the manufacturer’s case, the accounting team wasn’t even aware it was wasting tens of thousands of dollars on obsolete phone service contracts until the phone company shut down operations, forcing the accounts to close. This was a major wake-up call for the manufacturer, which had been coasting by without an appropriate CLM system in place.
To prevent this oversight in the future, the manufacturer set out to find contract management software that would offer:
The manufacturer learned an important and expensive lesson, but your organization doesn’t have to suffer the same fate. Always be mindful of self-renewal clauses present in existing and new contracts. It isn’t always possible to avoid or remove these clauses entirely, so implementing software that will help you manage the entire lifecycle of your contracts could save your organization a considerable amount of money and hassles down the road.
ConvergePoint offers comprehensive Contract Management software that integrates seamlessly with Microsoft SharePoint and Office 365. Schedule a free demo today.
Having difficulty managing your contracts and important documents? Download the free white paper: Achieving Efficient Contract Management
After investing time and resources creating these policies, make sure employees read, understand and apply them to their daily job responsibilities! How? Read the Guide on How to Ensure Employee Accountability & Compliance through Effective Policy Management.
Manage employee and teacher contracts, sponsorship deals, city and state regulations, and partnerships.
Manage supplier and vendor contracts, employee and staff contracts, distribution contracts, and facility leasing and ownership contracts.
Comply with HIPAA, HITECH, ICD 9, ICD 10, and FDR CFR regulations for contract management, and handle active directory contracts for your organization.
Comply with SEC, FDIC, FINRA, OCC, CFTC, and Federal Reserve regulations on contracts, handle employee contracts, and partnership deals
Create and manage employee contracts, improve organizational transparency, reduce risk factors, and mitigate lawsuits..
Abide by local, regional, state and federal regulations, manage contractor information, develop third-party outsourced contracts, and handle facility agreements
Comply with FAA, DOT, FMCSA, FRA and FTA regulations for contracts, outline contracts for drivers and vendors, and reduce potential risks.
Visit our resource library for industry best practice tips and for case studies on how our software has helped clients in your industry.