Renewal options - example 1
Case: contract with an end date (specified duration). The duration of the contract is five years, with two renewal options for five years. After that, a repeated renewal of one year.
The following settings are used:
Contract
Field | Field value |
|---|---|
Start date contract | 1/1/2011 |
Duration | 5 years |
Notice term | 3 months |
Proposed expiration date | 31/12/2015 |
Renewal option 1
Field | Field value |
|---|---|
Description | Renewal 5 years |
Priority | 1 |
Renewal term | 5 years |
Repeat renewal | No |
Status | Active |
Renewal option 2
Field | Field value |
|---|---|
Description | Renewal 5 years |
Priority | 2 |
Renewal term | 5 years |
Repeat renewal | No |
Status | Active |
Renewal option 3
Field | Field value |
|---|---|
Description | Yearly renewal |
Priority | 3 |
Renewal term | 1 year |
Repeat renewal | Yes |
Status | Active |
Applying the option
The renewal option can be applied:
• manually by choosing the Automatic renew option from the action menu at the Contracts selection level
• or automatically by executing the action defined in Alerts .
The red arrow is the current system date. The option will be applied if the proposed expiration date – term of notice is before the current system date.
1. Proposed expiration date – term of notice is before the current system date. Option 1 will be applied.
2. Proposed expiration date – term of notice is after the current system date. Option 3 will not be applied.
3. Proposed expiration date – term of notice is before the current system date. Option 4 will be applied and a new option will be active (because of repeated renewal)
After the renewal is applied the following fields will be changed:
Field | New value |
|---|---|
Status | Renewed |
Duration | + duration renewal term |
Proposed expiration date | + duration renewal term |
Option counter | 1 |
The contract lines (=amounts) will also be renewed if the Renew together with contract field is set to Yes.