Most businesses depend on a multitude of externally provided products and services to function effectively. The relationships with the providers are usually guided by some kind of legal agreement, which will eventually expire. Expiration dates can be anywhere from a few months to many years later.
Why track agreements?
The majority of the agreements a business enters into will have some impact when they expire. These are some reasons it is advantageous to be aware of upcoming expiration dates:
- Inform strategic plans
- Big or long-term agreements may affect high-level strategies, e.g. the building lease agreement may affect plans to scale the work force.
- Improve budgeting
- Some contracts automatically extend unless they are re-negotiated or canceled. The extension of payments need to be included in the budgeted.
- Manage risk
- Expired contracts can cause service disruptions to business infrastructure which may result in revenue loss.
- Plan for vendor migrations
- Migrating providers for deeply embedded systems like email is heavily dependent on agreement details and expiration dates.
- Provide negotiation time
- Large contracts are usually individually negotiated rather than one-size-fits-all style. Renewal time is also the time when better terms can be negotiated, however, that process must be started long before the expiration date.
- Assist business continuity
- If the signatory has left employment attempts by the vendor to make contact may go unnoticed.
- Avoid unnecessary costs
- Tracking all contracts together makes it easier to identify duplicated and abandoned services, e.g. when the only product user leaves employment.
- Strengthen brand protection
- Trademarks and patents must be renewed to prevent expiry. While your lawyer will probably remind you in time, it is not their duty. It is also possible that they are no longer in business when renewal time arrives.
What should be tracked?
Any product or service that is significant enough to require an agreement or legal document should probably be tracked. Some specific examples are:
- Property leases,
- Vehicle leases,
- Service contracts such as office cleaning and physical security,
- Business infrastructure such as domain names, server infrastructure and ISPs,
- Service level agreements (SLAs) for example IT support and call center agencies,
- Vendor contracts like licenses and maintenance agreements for hardware and software,
- Registration renewals for trademarks and patents, and
- Regulatory items like vehicle licenses and professional certifications.
Conclusion
Businesses that have legal agreements which will have negative consequences if their expiration goes unnoticed should track those agreements. There are various ways to do that. If you are looking for an online solution then Cue Contract may be a good choice.