Contract renewal is the process through which the initial term of a contract expires, and the parties agree – either actively, or passively, through automatic renewal – to ‘renew’ the term of the contract so that the arrangement continues, and the contract remains enforceable for the new period.
With Contract Renewals, when you create an initial sales order for a customer, the information from that order is used to generate a contract. The overall start and end dates of the sales order define the contract term, and items on the sales order generate contract items on the resulting contract.
The contract and contract items make up the install base of the customer. Contracts are listed on the Contracts subtab on customer records. You can also click the contract ID link on the original sales order to view a specific contract.
Prior to the end of the contract term, a renewal transaction is generated based on your setting for the Transaction Type to Create preference at Contract Renewals > Setup > Contract Renewals Preferences. When saved and billed, this order generates a new contract that includes the items from the customer’s install base that are configured as renewable.
If you are using the channel management fields on customer records to track indirect sales relationships (including resellers and distributors), a single renewal transaction is generated for each combination of End User and Bill To Customer.
Contract Billing Flow
Contract Renewal Process
On the scheduled run of the script that creates renewal transactions, a renewal sales order is generated for contracts that are within 90 days of its end date. The renewal sales order includes any renewal contract items from the expiring contract that extend to the contract end date.
If contract items on the expiring contract are the same, they are combined on the renewal contract. This occurs when additional items are added to a contract some time during its contract term.
If you need to remove an item from a renewal transaction, change the quantity for the line item to 0 (zero) rather than removing the line item. This ensures that downsell is tracked properly and that any invoices created do not include 0 quantity line items.
If you are provisioning based on fulfillment transactions, transaction line items with zero quantity can be a signal to de-provision those items. If you are provisioning based on contract items, you can signal items to de-provision with negative-quantity contract items.
If there are return authorizations associated with a contract that are not approved before the active contract renewal, those return authorizations are not reflected in the renewal.