2Creating a Customer Contract

This chapter contains the following:

Oracle Enterprise Contracts provides the most complete solution for managing sales, procurement, and other contracts. It is a comprehensive offering for standardizing corporate contract policies, improving internal controls, and complying with all contractual obligations and regulatory requirements.

Summary of Features

The key features of Enterprise Contracts include the following:

  • Standardize the contract process

  • Accelerate contract renewal cycles

  • Improve visibility and drive contract compliance

Standardize the Contract Process

With Enterprise Contracts, companies can implement contract best practices with standard templates, clauses, and contract policy rules that can be enforced enterprise-wide. Global organizations can establish company-wide standards that can be adopted and tailored by regional administrators to comply with local or country-specific regulations.

Contract administrators and legal personnel may author and negotiate many complex contracts each year. Oracle Enterprise Contracts simplifies the process by allowing contract administrators to maintain a central library of standard clauses, contract templates, and policy rules across the enterprise. Contract templates enable rapid assembly and creation of contracts by providing standard contract boilerplate language for each type of sale or procurement. Policy rules specify which clauses are mandatory for a contract or protected against updates during negotiation.

Accelerate Contract and Renewal Cycles

The Contract Expert feature guides users through a questionnaire. Based on the user's responses and other negotiated business terms, such as products, prices, and contract amount, Contract Expert adds any required clauses. Standards-based contracts can be generated, reviewed, and approved with little or no legal supervision. Users can print the contract as a PDF document for signature. The application also enforces contract policy controls to prevent unauthorized modifications. Contract collaboration and negotiation is streamlined using the two-way integration with Microsoft Word. The change tracking in Microsoft Word enables the contract administrator, legal department, or the external party to make changes offline. The document is synchronized with the structured contract terms stored in the application.

Improve Visibility and Drive Contract Compliance

A single view of all enterprise contracts is essential for effective management of contract activities and for reporting and analysis of outstanding supplier, customer, and partner commitments. Contracts enables contract professionals to search and view all contracts from a single location. The text-based search engine can combine keyword searches with structured information like contract dates or amounts. Therefore, the text-based search engine provides unprecedented access to contracts for all key stakeholders. The Contracts Dashboard provides a snapshot of all contract-related activities, including deliverables progress, approvals, and contracts that need attention.

You can smoothly execute and reuse well-prepared customer contracts. When creating a contract for the first time, you can create it manually or use the Contract Wizard. To reuse a contract, simply duplicate the contract and make your edits, or save the contract as a contract template and use this template to create new contracts.

General Feature Summary

Here are the key actions you can perform using general features:

  • Manage contract types.

  • Create customer contracts using either the duplicate feature, a contract template, or a wizard. You also can create contracts manually.

  • Import contracts.

  • Manage contracts using web services.

  • Create a contract template and activate it to create contracts from it.

  • Enter basic customer information. The contract type determines other details that you can enter, such as:

    • Product type or project information for contract lines

    • Contract terms and conditions

    • Renewal notification recipient and number of days before contract end date, when it must be sent

    • Contacts designated as signers

    • Contract relationships, if Enable Related Documents option is set

    • Layouts for printing the contract, contract terms, and contract deviations

  • Validate a contract. A valid contract must have at least one contract owner and valid contract type, dates, parties, accounts, sites, and lines.

  • Understand the contract lifecycle statuses from draft to final approval and acceptance, when the contract becomes active and ready to be executed.

  • Amend a contract to make edits to the contract after you have started executing the active contract.

  • Record sales credits for each salesperson.

  • Specify details of contract risk.

Project Contracts Feature Summary

Here are the key actions you can perform using project contracts:

  • Create bill plans and revenue plans and associate them to one or more contract lines.

  • Select the appropriate invoice and revenue method.

    • Optionally, specify whether the billing extension must calculate an event for the associated project or for the contract line, that is, all projects associated with the contract line.

    • When you select a rate-based invoice or revenue method, select labor and nonlabor bill rate schedules and enter any applicable overrides or multipliers.

  • Enable the hold option to prevent contract line billing transactions being included in invoice or revenue generation.

  • Configure cross-charge options on bill plans and revenue plans for interproject and intercompany billing.

Service Contracts Feature Summary

Here are the key actions you can perform using service contracts:

  • Specify coverage lines and subscription lines for downstream integration with Oracle Configure, Price, and Quote (CPQ) Cloud.

  • Automatically track included warranties of covered assets upon the sale of goods and services.

  • Specify one-time, recurring, usage, or multiple charges.

  • Optionally, price at the time of billing, with the option to drill down to price breakdown of each item from the total amount.

  • Enter billing attributes and review the billing schedule for both one-time and recurring charges.

  • Retrieve invoice details from Financial Cloud.

  • Set default coverage at a global or customer-specific level.

  • Track coverage entitlements on intangible or tangible goods. For example, software or hardware.

  • Process service renewals based on pre-defined renewal rules.

Note: Service Contracts integration with an external OM (Order Management) and CPQ (Configure, Price, and Quote) Cloud allow customers to easily amend contracts at various points during contract lifecycle.

Here's how you can author a customer contract in the Contracts work area:

  1. In the Create Contract window, you enter the basic information required to create the customer contract.

    Selecting the contract type determines what additional information you can enter. This creates the contract which you can then edit.

  2. Enter additional contract details.

  3. Depending on the contract type, you can:

    • Add contract lines.

      If the contract lines are related to projects, enter project information.

      If the contract lines are related to products, enter the product type information.

      If the contract lines are related to services, enter the service type information.

    • Author contract terms and review contract deviations.

    • Designate contacts as signers on the contract.

  4. Validate the contract and correct any errors.

  5. Submit the contract for approval.

Here's the figure that outlines the process described in the sections of this topic.

The figure outlines the process described in the
sections of this topic.

Entering Basic Contract Information

In the Create Contract window, you enter the basic information to create the contract. This includes:

  • Business Unit

    The business unit where you are creating the contract. Selecting the business unit determines the contract types you can select. If your contract is not project-based, you can also select a business unit with no assigned ledger or legal entity.

  • Legal Entity

    The internal legal entity entering into the contract. This field is required only for project-based contracts.

  • Type

    A contract type is a contract category that determines the nature of the contract. For example, the type determines if the contract is a project contract, a purchasing contract, a service contract, or simple nondisclosure or employment agreement. A contract type also specifies what kind of information you can enter and the contract lines, parties, and party contacts are permitted.

  • Primary Party

    The primary customer entering into the contract.

  • Contract Start Date

    The date on which the contract is initiated.

  • Contract End Date

    For service contracts, you must enter the duration - the numeric value of the validity of the contract, and the period - day, month, or year which corresponds to the duration. This value generates the end date of the contract. The end date is always calculated as start date + duration - 1 day. For example, if you enter the start date as 2/28/2018 (last date of the month) and duration as 1 year, the application calculates the end date as 2/27/2019. But, If you enter the start date as 2/28/2019 (last date of the month) and duration as 1 year, the application calculates the end date as 2/28/2020 because 2020 is a leap year and the last date of the month is 2/29/2020.

  • Contract Currency

Depending on the business unit and contract type you selected, you may also be asked to enter:

  • Number

    This field appears only if you are required to enter the contract number manually. The number you enter can include any alphanumeric characters and must be unique.

  • Item Master

    If the contract type includes item-based lines, then you must enter the item master inventory organization, associated with the contract business unit, that will be used to select the inventory items you are selling.

  • Pricing Effective Date

    This field appears in contracts related to services. It is the date the application uses to get pricing information for a contract.

  • Pricing Strategy

    This field is displayed as a read-only field created during setup. It is the strategy to price the contract based on the tiered pricing segment of the contract. The pricing strategy can include Price, Discount, Currency, Cost, and so on.

Caution: You cannot change the business unit, the legal entity, the contract type, and the contract number after the contract is created.

Adding Contract Information to the Contract Header

On the contract header tab, add additional information depending on the contract type you selected. This may include:

  • Additional contract parties and contacts

  • Billing information related to projects and services, such as bill plans, revenue plans, and purchase order number

  • Information about possible contract risks and their probabilities

  • Contract documents

  • List of related contracts

  • Notes

Adding Contract Lines

If the Lines tab is visible, add contract lines to specify what you are selling. Depending on the contract type, you may enter one or more of the following line types:

  • Item

    For items selected from inventory based on the item master you selected for the contract.

  • Free Form

    For goods or services you are selling that are not tracked in inventory, such as consulting services, for example.

  • Subscription

    For a recurring sale of items associated with the service contract over a period of time, such as backup services, for example.

  • Coverage

    Services that are provided on covered assets, such as maintenance, for example.

If the type of line you added is related to projects, then you can add project and billing information in the Line Details region. If the type of line you added is related to services, then you can add billing and renewal information.

Note: For item, project-based contract lines, the item master, inventory item identifier, and unit of measure are all passed to the receivables invoice staging tables.

For project-based contract lines, if no purchase order number is entered at the header level, there is no default value at line level. In this case, enter the purchase order number for the line. This number is passed as a reference on Receivables invoices.

Authoring Contract Terms

If the Contract Terms tab is visible, you can add and edit contract terms and conditions.

Just what actions you can take during contract terms authoring depends on your implementation, your privileges, and contract type. Some contracts may have their contract terms already populated from a contract terms template and permit you only to add and delete clauses from the Contract Terms Library. Other contracts may allow you to create nonstandard clauses or require you to answer questions to determine if additional clauses are required. For some contracts, you may attach the contract terms in a separate document and not use the authoring capabilities of the application at all.

If you do author contract terms for your contract, select the Review Contract Deviations action on the Contract Terms tab to determine if your contract deviates from your company standards. You can add any explanations for the deviations in the report which can be attached to the notification sent to the contract approvers.

Validating and Submitting the Contract for Approval

The contract must pass validation before it is sent for approval. To validate the contract, select Validate from the Actions menu. Clicking the Submit button to submit the contract for approval also triggers the same validation process. You must fix all errors for the contract to pass validation. Resolving warnings is optional.

A contract typically moves through a variety of states throughout its life cycle, from initial drafting to negotiation to active management and eventually to contract closeout. A contract status indicates where a contract is in its life cycle, and also determines what actions and operations are permitted for the contract.

Some of the actions available for a contract have no effect on the status of the contract. These actions are:

  • Preview: Displays contract with terms and conditions in PDF format.

  • Validate: Displays errors and warnings, if any.

  • Duplicate: Creates a new contract in Draft status with a new number for which you can select to retain dates, primary and other party information, contract terms, notes, and contract line information from the original contract.

  • Save as Contract Template: Creates a new contract template in Draft status with the same attributes as that of the contract.

  • Delete: Removes the contract.

  • Edit Contract in Wizard: Enables you to use the Wizard to upload documents and enter contract details such as contract terms template, variable values, and answers to questions before approving and signing the contract. This action is therefore available only in Draft and Under Amendment contracts.

  • Autocreate Fulfillment Lines: Creates fulfillment lines for buy intent contracts.

  • Track Completion: For sell intent contracts with lines, tracks percent complete for the project at line level.

Note: Contract statuses are predefined and you cannot define new statuses. However, you can define user statuses and their transitions and use them, for example, to pass the contract from one team to another for review before submitting the contract for approval.

The following table describes the available contract statuses and lists those permitted actions for each status that cause a change in contract status:

Status Description Available Actions and Resulting Statuses

Draft

The initial status of a contract

  • Cancel

    Resulting status: Canceled

  • Submit for Approval

    Resulting status: Pending approval

  • Create New Version

    Resulting status: Draft

    When a contract is in Draft status and a new version of it is created, this new version will also be in Draft status.

Canceled

The status of a contract changes to Canceled when the draft is canceled.

There is no action available that changes the status of the contract.

Pending approval

The status of a contract changes to Pending approval when it is submitted for internal approval.

  • Stop Approval

    Resulting Status: Draft

    The contract is withdrawn from approval. You can now make corrections to the contract and resubmit it for approval.

  • Stop Approval

    Resulting Status: Under amendment

    The current contract is in Under amendment status if it has an earlier active version.

  • Approve

    Resulting status: Active

    If, based on the contract type, signature is not required for acceptance, and all approvers have approved.

  • Approve

    Resulting status: Pending signature

    If, based on the contract type, signature is required for acceptance.

  • Approve

    Resulting status: Hold

    When a contract is approved, if there is an existing Hold on it with Hold date later than the system date, its status changes to Hold.

  • Reject

    Resulting status: Draft

    When one or more approvers do not approve the contract.

  • Reject

    Resulting status: Under amendment

    This status results when one or more approvers do not approve the contract and the contract has a previous active version.

Note: The Approve and Reject actions are available from the approval workflow notification.

Pending signature

The status of a contract changes to Pending signature when it is internally approved by all approvers but is pending customer or supplier acceptance. Acceptance can be by manual or electronic signature.

  • Sign Contract

    Resulting status: Active

    If manual signature is required for acceptance, then clicking on this action displays the Accept Contract page where designated signers enter their name and date of acceptance.

  • Sign Contract

    Resulting status: Sent for signature

    If electronic signature is required for acceptance, then this action displays the integrated Sign Contract page. On this page, the sender must click on Send to send the contract for electronic signature to the designated signers.

  • Sign Contract

    Resulting status: Hold

    When a contract is accepted, if there is an existing Hold on it with Hold date later than system date, its status changes to Hold.

  • Sign Contract

    Resulting status: Expired

    Sign Contract can go straight to Expired if the end date has been reached.

  • Create New Version

    • Resulting status: Draft

      When a contract is pending signature, if a new version of it is created, this new version is in Draft status.

    • Resulting status: Under amendment

      If the original contract pending signature was under amendment, the new version will also be in Under amendment status.

  • Cancel

    Resulting status: Canceled

Sent for signature

The status of a contract changes to Sent for signature when the contract is sent for signature using the integrated electronic signature solution.

  • Manage Signatures

  • No resulting status

    If the sender corrects the envelope and resends it for signature.

  • Resulting status: Pending signature

    If the signer declines to sign or the sender voids the envelope.

  • Resulting status: Active

    If all the signers sign the contract.

Active

If the contract does not require signature for acceptance, then the status of the contract changes to Active when it is approved by all the approvers. If the contract requires signature for acceptance, then the status of the contract changes to Active only when it is approved by all the approvers and signed by all the signers.

  • Amend

    Resulting status: Under amendment

    Enables you to make changes to the contract and resubmit it for approval.

  • Apply Hold

    Resulting status: Hold

  • Close (Terminate)

    Resulting status: Closed

    This contract is no longer available except from contract history.

Hold

The status of a contract changes to Hold when a hold is applied.

  • The Update Contract Status process will ignore contracts or contract lines on hold and will not change them to the Expired status.

  • Amend

    Resulting status: Under amendment

    Enables you to make changes to the contract and resubmit it for approval.

  • Remove Hold

    Resulting status: Active if prior to end date. otherwise the status will be Expired.

  • Close (Terminate)

    Resulting status: Closed

    This contract is no longer available except from contract history.

Under amendment

The status of a contract changes to Under amendment when it is amended.

  • Submit for Approval

    Resulting status: Pending approval

  • Revert

    Resulting status: Active

    The status of a contract under amendment changes to Active if the latest changes are canceled by reverting. The contract returns to its state prior to its amendment.

  • Create New Version

    Resulting status: Under amendment

    When a contract is in Under amendment status and a new version of it is created, this new version will also be in Under amendment status.

Closed

The status of a contract changes to Closed when you close (terminate) it. Closed status implies either a foreclosure or a closeout after expiration.

  • Reopen

    Resulting status: Draft

    Makes this contract available for corrections and resubmission for approval.

Expired

The status of a contract changes to Expired when its end date is reached.

  • Amend

    Resulting status: Under amendment

    Opens the contract for corrections and before resubmitting for approval.

  • Apply Hold

    Resulting status: Hold

  • Close

    Resulting status: Closed

    Resulting status: Closed This contract is no longer available except from contract history.

Tip: When the contract end date is reached and the contract status is Active, the Update Contract Status concurrent program changes the contract status to Expired.

The following figure shows a contract flow from draft to approval to acceptance.

Contract approval and acceptance flow

The following figure shows contract amendment, contract delete, and contract hold flows.

Contract amendment, contract delete, and contract
hold flows

You can select the Create Contract in Wizard and Edit Contract in Wizard tasks to quickly author enterprise contracts using a guided process.

The Contract Wizard guided process is based on the origin of the contract terms. If the contract terms originate internally in your organization, then you add the contract terms by applying a contract terms template. If the contract terms originate from an external party such as a supplier, then you upload the file containing the contract terms because the contract terms are authored outside the application.

The following figure outlines how Contract Wizard guides you to create a contract where the contract terms originate with an internal party:

  1. You select Internal as the authoring party and enter basic contract information on the Create Contract window.

  2. The application displays the page of the Contract Wizard where you can select and preview the contract terms template you want to use. Depending on the setup, the application may recommend the template or let you select one of your own.

  3. Depending on the business rules set up for the selected template, you may be required to enter values for contract variables (Step 3) and to answer questions (Step 4). These steps are the equivalent of running the Contract Expert. On this figure, they are outlined in dashed lines.

  4. Based on your entries in Steps 3 and 4, the application may insert additional clauses into the contract terms.

  5. You may upload supporting documents.

  6. You may preview the contract terms, including any additional clauses inserted by the application.

  7. If you are satisfied, click Submit on the Review Contract page to validate the contract. If there are no validation errors, the contract is submitted for approval.

  8. If you want to make changes, instead of submitting, save and do one of the following: select the Edit Contract in Wizard action to revise what you entered in the wizard or select the Edit Contract action if you want to add contract lines and other details or edit the contract terms.

    The following figure outlines the contract authoring process using the Contract Wizard for an internal party.

This figure outlines the contract authoring process using
the Contract Wizard for an internal party.

Here is how Contract Wizard guides you to create a contract with contract terms that an external party supplies in a file:

  1. You select External as the authoring party and enter basic contract information on the Create Contract window.

  2. You upload the file containing the contract terms as the primary contract document and any other supporting documents.

  3. You review the contract information.

  4. If you are satisfied, you click Submit on the Review Contract page to validate the contract. If there are no validation errors, the contract is submitted for approval.

  5. If you want to make changes, save the contract and either select the Edit Contract in Wizard action to revise what you entered in the wizard or select the Edit Contract action if you need to add contract lines and other details.

    The following figure outlines the contract authoring process using the Contract Wizard for an external party.

This figure outlines the contract authoring process using
the Contract Wizard for an external party.

Entering Basic Contract Information

To create the contract, you select the contract type and enter basic contract information, including the contract party and the contract amount. If you set the Authoring Party field to External, then the contract terms are being authored outside the application in a separate document which you upload in the Upload Documents page.

Selecting and Previewing the Contract Terms Template

If the Authoring Party is Internal, depending on the setup, the application recommends a contract terms template or lets you select one of your own. You can preview templates by clicking the Preview Contract button. The preview does not appear in the same format as the final contract and does not include the clauses that may be inserted by the application in later steps.

Entering Variable Values

Depending on the business rules for the selected template, you may need to enter variable values. The application substitutes the values in the contract and may use them to determine if additional clauses are required. This step is the equivalent to entering variable values using the Editing Variable Values action or running the Contract Expert feature during authoring without the wizard.

Answering Questions

You may also need to answer a few questions. Based on your answers, the application inserts additional clauses into the contract. This step is equivalent to running Contract Expert during authoring when you do not use the wizard.

Uploading Documents

You can upload files as contract attachments. If you selected External as the Authoring Party, then you must upload the file with the contract terms as the primary contract document. If the contract terms are taken from the template, then the primary contract document is generated by the application automatically when you submit the contract for approval.

Reviewing the Contract

You can review the final contract terms, including any additional clauses inserted by the application. The displayed contract terms are formatted for HTML, but not in final format yet. If you want to view the contract in the final format, select the Preview Contract button. The PDF version is sent to approvers when you submit the contract for approval.

Editing the Contract and the Contract Terms

You can edit basic contract information using the Edit Contract in the Wizard action. Using the Edit Contract action, you can edit both the contract and the contract terms, and also add contract lines and other contract details.

You can create a contract by duplicating an existing contract or by creating an entirely new one either with or without the Contract Wizard. You can also create a contract from a contract template or using file-based import or web services. This topic outlines when you should use each method.

Duplicating an Existing Contract

To create a contract that is similar to an existing contract, select the Duplicate action either from within an existing contract or from the contract search page. When you duplicate an existing contract, you can select what to copy to the new contract.

Creating a Contract Using the Contract Wizard

Select the Create Contract in Wizard task in the Contracts work area to use a quick and simple method for creating a contract without lines and without party information. You can later edit this to add additional details. With the Contract Wizard:

  • You are guided through a set of steps to create contracts

  • You are not required to run Contract Expert separately

  • You are not required to preview any clauses that Contract Expert automatically inserts into the contract terms

Creating a Contract Without the Contract Wizard

Select the Create Contract task in the Contract work area to create complex contracts. Using this task you can:

  • Add and edit parties and party contacts.

  • Add and edit contract lines.

  • Edit the contract terms.

  • Export the contract terms for editing in Microsoft Word.

  • Add notes and view contract history.

  • Run Contract Expert, when required.

  • Preview any clauses recommended by Contract Expert before they are inserted.

  • Create and manage contract fulfillment lines in buy-intent or supplier contracts.

  • View and enter contract risk management and projects billing information for sell-intent or customer contracts.

  • Create contracts of contract types with no contract terms.

Creating a Contract from a Contract Template

Select the Manage Contract Template task in the Contract work area and search for an active contract template. You can then open the template in edit mode or select the template in the search results area and click on the Create Contract from Template action menu item to create a contract quickly.

Using this method, you can create a contract for the default system date, or choose any other date as the start date of the contract. You can also choose to retain party and line information from the template, if available. If you enabled the contract type for terms, then the template inserts the latest terms from the Contract Terms Library. You can also create a contract for a different party, or one with retaining lines, billing information, associated projects and tasks, and notes. These contracts will be in Draft status.

Creating a Contract Using Web Services

You can use Web services to create many contracts in one go in an integrated application such as partner management or projects.

Use the ContractService endpoint URL and select the createContract operation and the required source, if HTML or XML. To create a contract in integrated applications, select and enter the following required parameters to be included in the message:

  • Contract header information

  • Party information,

  • Amounts and currency

  • Contract lines

  • Bill and revenue plans

  • Labor and non-labor rates and rate overrides

  • Labor multipliers

  • Job title and assignment details

Create a Sales Agreement Line

When creating a contract, you can add a sales agreement line to accommodate future sales and avoid negotiating terms on each individual quote or order. You can capture the customer information, the pricing terms, and volume commitments if any, between suppliers and customers. You can also author customer-specific terms for a period of time into the future while adding a sales agreement line to a contract.

You create and manage a sales agreement line with the same Enterprise Contracts UI that is used for creating a contract. Besides the information you enter while creating a contract, you must enter the following additional information for a sales agreement line:

  • Effective Agreement Date: Date that this agreement goes into effect or becomes active.

  • Item: Any part, material, product or service that is unique as compared with other items by nature of its attributes.

  • Pricing and Adjustments: See the "Pricing Terms in a Sales Agreement" section.

  • Commitment Amounts: Total amounts that were agreed upon for the sales agreement.

Note: Sales agreements are integrated with the Price Book application for your cloud service to obtain pricing information (list prices) for agreement line items.

Pricing Terms in a Sales Agreement

The pricing in a sales agreement line is based on a price book. You can use an existing standard price book as the starting price for a line item. For example, a Preferred Customer price book, a Computer Accessories price book, and so on. You can then specify a price, a discount, or a markup for a particular product if needed.

The header price book is preset as the price book for the line if the item and UOM (unit of measure) selected for the line exist on the header price book. If not, you can select a different price book from the price book drop-down list at the line level. You can also override the preset price book.

You can specify a price book for a given price adjustment. If more than one price book is applicable, then select a price book other than the default. You can make the following pricing adjustments on an agreement line item:

  • Override the price for a particular product.

  • Specify a discount or a markup value to adjust the list price of the product as the adjustment when creating the sales agreement line.

  • Specify a discount or a markup percentage to adjust the list price of the product as the adjustment when creating the sales agreement line.

Create a Service Contract

In order to create a service contract, you must enter the fields from the Drop Down list - Business Unit and Legal Entity, following which you must choose the contract Type that you created during contract Setup. You create and manage a service contract with the same Enterprise Contracts UI that is used for creating a contract.

Besides the information you enter while creating a contract, you must enter the following additional information for a service contract:

  • Pricing Effective Date: Date that the service contract becomes active or effective.

  • Number: A unique number to identify your service contract.

  • Start Date: The effective start date of the contract.

  • End Date: You must enter either the End Date of the contract or enter the Duration and Period of the contract after which the End Date is generated.

Currency and Item Master are generated when the contract type, Business Unit and Legal Entity are chosen. Pricing Strategy of the contract is generated when the Primary Party is selected. This is based on the setup of the contract done prior to contract creation. On clicking Save and Close, you can then edit the contract based on your Business Unit, while your contract is in 'Draft' status. This includes information on contract billing, pricing, line types, renewal, and so on.

Create a Service Contract Subscription Line

While creating a service contract, you can add subscription lines for recurring sale of items associated with the contract over a period of time.

They can include a number of serviceable items, both tangible and intangible, within each line along with their pricing terms. You must create and manage a subscription line with the same Enterprise Contracts UI that is used for creating a contract. You must enter the following additional information for a subscription line to be processed:

  • Number: Line number of the subscription line for the item selected.

  • Start Date: Start date of the subscription line. This value can be changed and may differ from the start date of the contract.

  • End Date: Date until which the subscription line is valid. This value can be changed and may differ from the start date of the contract.

  • Line Quantity: Number of subscriptions of each item selected.

  • Name: Inventory item name of the subscription line.

  • Price UOM: Optional for service contracts, it is the unit of measurement for pricing. For example, the Price UOM can be 'Each'.

After creating a subscription line, you can review the billing schedule of each item within the line. You can create more subscription lines by following the same process. In case of amendment to the contract lines, you must regenerate the billing schedule for the changes to reflect on the contract.

In addition, you can create, amend and cancel subscription items in the contract, after which you can submit the contract for approval.

Note: Prior to subscription line creation, ensure setup of the 'Sales Product Type' and 'Service Duration Type' fields in the Create Item task.

Create a Service Contract Coverage Line

While creating a service contract, you can add coverage lines which include the setup and maintenance of serviceable items for a specified period of time.

Coverage lines describe the type of service required for covered assets within the line. You must create and manage a coverage line with the same Enterprise Contracts UI that is used for creating a contract. You must enter the following additional information for a coverage line to be processed:

  • Number: Line umber of the coverage line for the item selected.

  • Name: Service type extracted from the inventory to the coverage line.

  • Price UOM: Optional for service contracts, it is the unit of measurement for pricing. For example, the Price UOM can be 'Each'.

  • Start Date: Start date of the coverage line. This value can be changed and may differ from the start date of the contract.

  • End Date: Date until which the coverage line is valid. This value can be changed and may differ from the start date of the contract.

On creation of the coverage line, you can view the details of each covered asset including the Net Price, Price Periodicity, Tax estimations and Unit Price in the billing summary. The charges of price type 'One time' are the charges per covered asset quantity, like registration fee, for example. The charges of price type 'Recurring' are the charges per covered asset quantity per recurring periodicity, like usage and consumption fee, for example.

Note: Prior to the coverage line creation, ensure setup of the pricing and periodicity of the covered lines following which the contract line can be created with associated billing schedules.

Service Contract Billing

For service contracts, you can create billing templates on the UI which you associate with billing attributes. You can apply these templates to new and renewed contracts based on various criteria. These attributes of subscription and coverage line types constitute the billing tab of the contract. The billing frequency - Year, Month, or Day - is chosen during the billing template creation.

The billing attributes for both, subscription and coverage include the following:

  • Billing Frequency: Period for a serviceable item. For example, MONTH.

  • Bill-from and Bill to Date: The start and end dates of the serviceable item.

  • Tax: The tax levied on the service based on the region and regulations of the contract. All tax control information that is captured in the contract header is generated at the subscription or coverage line level. The estimated tax calculation is performed every time the subtotal changes for a line or covered asset.

  • Invoice Date and Invoice Number: Billing invoice date and unique number specific to the billing summary of the contract line type.

  • Invoicing Rule: Rule that indicates the time of payment - Advance Invoice and Arrears Invoice for subscription and coverage items.

  • Billing Sequence: All values are generated in the Billing Sequence based on the following information: line start date, line end date, line subtotal, invoicing rule, billing frequency, and partial period attributes.

  • Accounting Rule: Indicates the rule for revenue recognition. Accounting rule is mandatory during contract creation.

  • Sales Credit: Region with the following fields - Salesperson, Credit Type, Percent, Start Date and End Date.

Upon creation of billing attributes of the subscription and coverage lines, the billing information is then sent to Account Receivables (AR) through the Scheduled ESS Programs for contract execution. You can generate invoices with individual charge information in cases of multiple charges.

Note: The Invoicing Rule for 'Advance Invoice' indicates the time of payment which applies only to one time, and recurring charge whereas consumption fee is done based on usage; that is Arrears Invoice.

Service Contract Pricing

For service contracts, you must first set up the pricing strategy for the contract. The pricing strategy of the contract is then retrieved when the Business Unit, Legal Entity, contract Type, Number and Primary Party are entered during contract creation. When lines are added, the pricing information is retrieved automatically and finalized during contract submission.

The pricing attributes of the service contract, as seen in the Overview, Billing, and Lines tabs include the following:

  • Charge Name: The type of charge - one time, recurring, multiple charge for a service.

  • Pricing Effective Date: Mandatory for contracts, the system date is taken as the effective date of the contract and can be changed during the process of contract creation, after which you cannot update or change it.

  • Pricing Strategy: Displayed as a read-only field and is created during setup.

  • Price as of Date: Pricing date of the contract line, which may vary from the final price of the serviceable items.

  • Price UOM: Optional for service contracts, it is the unit of measurement for pricing. For example, the Price UOM can be 'Each'.

  • Price List: List containing the one time, recurring, and usage charges for serviceable items in the contract line.

  • Price Periodicity: Period for which the contract line is priced. For example, 'MONTH'.

  • Unit Price: Price per unit of the serviceable item.

  • Net Price: Price of the total number of items in the contract line.

For details on the pricing profile, pricing segment, and pricing strategy of service contracts, see the Managing Pricing for Covered Items section in the Oracle SCM Cloud, Administering Pricing guide.

Contract Line Actions and Status Changes

A contract line can move through a variety of states throughout its life cycle. A contract line status indicates where a line is in its life cycle, and also determines what actions and operations are permitted for the line.

Some of the actions available for a contract and associated lines have no effect on the status of the contract. These actions are:

  • Preview: Displays contract and lines with terms and conditions in PDF format.

  • Validate: Displays errors and warnings, if any.

  • Duplicate: Creates a new line in Draft status with a new number for which you can select to retain contract line information from the original line.

  • Delete: Removes the line.

Note: Statuses are predefined and you cannot define new statuses. However, you can define user statuses and their transitions and use them, for example, to pass the contract from one team to another for review before submitting the contract for approval.

The following table describes the available contract line statuses and lists those permitted actions for each status that cause a change in the line status:

Status Description Available Actions and Resulting Statuses

Active

The initial status of a line.

  • Apply Hold

    Resulting status: Hold

  • Close (Terminate)

    Resulting status: Closed

    This line is no longer available except from contract history.

Hold

The status of a line changes to Hold when a hold is applied. The Update Contract Status process will ignore contract lines on hold and will not change them to the Expired status.

  • Remove Hold

    Resulting status: Active if prior to end date. otherwise the status will be Expired.

  • Close (Terminate)

    Resulting status: Closed

    This line is no longer available except from contract history.

Expired

The status of a line changes to Expired when its end date is reached.

  • Apply Hold

    Resulting status: Hold

  • Close

    Resulting status: Closed

    Resulting status: Closed This line is no longer available except from contract history.

Contract validation performs a series of checks that determine if your contract can be submitted for approval. You must correct all errors. Fixing the warnings is optional.

You can validate your contract at any time during contract authoring by selecting the Validate Contract action. The same validation is performed automatically when you submit the contract for approval.

Required Information

The application checks the contract for the following:

  • The selected contract type and line type must be active.

  • A contract must have at least one of its contacts as its owner. The owner role is defined in the contract type set up.

  • The contract must have at least one contract line if the contract types allows contract lines.

Date Validations

Date validations include the following checks:

  • The contract must have a start date.

  • Line start and end dates must be within the header start and end date.

  • Line due date must be equal to or later than the line start date, and must be equal to or earlier than the line end date.

Validations for Supplier Contracts

Validations for supplier contracts include:

  • The purchasing category must be valid.

  • For a supplier contract, the supplier site must be valid and active.

  • If line type is Item, Item must be valid for the purchase category.

  • Payment terms, freight terms, FOB, and ship-to-location must be valid.

  • Supplier site must be valid for Supplier.

  • The selected carrier must be active and valid for ship-to-organization.

Validations for Customer Contracts

Validations for customer contracts include:

  • Ship-to site must be entered if the contract is billable.

  • Days to expiration must be less than the contract duration.

  • At least one contact must be entered for the contract expiration notification.

  • If the contract requires expiration information, then you must enter a contract end date and a contact for the expiration notification.

  • Ship-to account must be active for the line.

  • Supplier at the line level must be one of the suppliers entered as a party for the contract.

  • The sum of all sales credits must equal 100.

Validation of Parties, Accounts, and Sites

Validations of parties, accounts, and sites include checks such as:

  • A contract must have at least two parties: a buyer, and a seller.

  • For a contract that is enabled for electronic signature, all contacts marked as signers must have a valid e-mail address.

  • Billing control effective dates on a contract header must be within contract effective dates.

  • Billing control effective dates on a contract line must be within contract line effective dates.

  • Billing control start date for a contract or its line must be earlier than its end date.

  • For project billing, the contract must have a bill plan and a revenue plan. Select a bill plan and a revenue plan for each contract line that has a contract line type source of project-based.

  • For project billing, when a contract line is associated with a percent complete or percent spent bill or revenue plan, and the calculation level is associated project, a funded amount must exist for at least one active associated project.

  • For project billing, when a contract line is associated with a rate based, percent spent, or percent complete bill plan or revenue plan, at least one active associated project must exist for that contract line.

  • For project billing, when a billing resource is specified for an active billing control, the billing resource must be active in the resource breakdown structure.

  • For project billing, the bill-to contact must be currently valid for the bill-to account.

  • For project billing, the bill-to account, bill-to site, and bill-to contact values must be entered.

  • For project billing, when revenue is fixed price, invoicing must be in the contract currency.

  • For project billing, a contribution percentage between zero and 100 must be entered.

  • For project billing, a contract organization must be entered.

  • For interproject billing, the associated project must be different to the receiver project.

  • Billing control hard limit amount must be between 0 and the contract amount or the contract line amount, depending on whether the billing control is at the header or the line level, when the contract type limit type is hard.

  • The bill plans and revenue plans for contract lines must have valid combinations of invoice and revenue method classifications.

Contracts Frequently Asked Questions (FAQ)

If you're creating a contract without project information, you can select a business unit that has no assigned ledger or legal entity. To enable autonumbering for such a contract, you must enable the contract type for the different global numbering levels and business unit. In this case, the numbering levels of the ledger and the legal entity are don't apply. In addition, you must have created document sequences for the document categories of the global and business unit.

Note: The currency on such a contract is the currency of the business unit of the contract.

Select the risk type, probability of such risk occurring, impact of such a risk, and any other relevant comments. You can record the occurrence of any of these contracts risks by entering the date of occurrence for the contract risk, at any point of time.

Recording contract risks helps your organization prepare for potential problems. It doesn't affect contract processing.

Note: Entering or editing contract risk information doesn't require you to amend the contract.

You select the Manage Contract Risks task from the Setup and Maintenance work area, as part of the Enterprise Contracts offering in the Enterprise Contracts Base functional area. Contract authors use this list during contract authoring to record contract risks.

Recording contract risks helps your organization prepare for potential problems. It doesn't affect contract processing.

Note: Risk names must be unique.

Select the salesperson name, credit type, and credit percentage on the contract's Parties tab. The sum of all sales credits must be 100.

You can attach any kind of file, including images, to a contract in the Documents region of the contract Header tab. Files or URLs added in the Contract Document region can only be updated when the contract is in the Draft or Under Amendment statuses.

You can classify the documents you attach in this region as:

  • Contract: For documents describing the contract

  • Approval Abstract: For comments and notes made by approvers

  • Contract Image: For scanned copies of the contract

The files or URLs you add to the Supporting Document region can be updated at any time. The files you attach are automatically submitted for indexing so they are available for text searches.

Note: If you create a new version of a contract, the application automatically carries the attachments forward to the new contract version.

When it's in Draft, Under Amendment, or Pending Signature status. Create a new version when a customer or supplier requests changes in a contract that is internally approved and pending signature. The new version is in Draft or Under Amendment status based on whether it was created for a Draft contract or an Under Amendment contract that is Pending Signature.

Note: You cannot create a new version after you submit the contract for approval and the contract is in Pending Approval status.

This new version will be in Draft status if the original contract was in Draft or Pending Signature status. For a contract in Under Amendment status, the new version that you create is also created in the Under Amendment status. You can also create a new version of an active contract using the Amend action. This new version will be in Under Amendment status. Once a new version is created, the original version retains the status it was in when the new version was created and is only accessible from the Contracts History page.

The application carries the attached documents forward to the new contract version.

Select the Delete action. You can delete either all versions or only the current draft. You can delete a version of a contract only if the contract has more than one version.

Selecting the Delete action when there are multiple versions provides two options: Delete Current Version Only, and Delete All Versions. Deleting the current version reverts the contract to its previous version while deleting all versions removes the contract and all its versions. If there is only one version for a contract, selecting the Delete action asks for a confirmation, and deletes the contract.

To be notified about the contract end date in advance, you must specify certain criteria during the contract type set up.

  • Number of days before the contract end date by when the renewal notification should be sent.

  • Who should receive the notification: contract administrator, seller, or buyer.

Note: Note the following while setting up renewal notifications:
  • Setting up of renewal notification in contract type setup is optional.

  • Renewal notifications set up for a contract type are applicable to all contracts created using such a contract type.

  • Renewal notifications are sent only for contracts that have an end date specified.

What's the purpose of a customer PO number?

You can capture a customer purchase order (PO) number while creating a contract for tracking purposes. The customer PO number you entered in the contract header is duplicated at the line level but is not copied across contracts.

How can I edit a sales agreement in a spreadsheet?

To edit your sales agreement offline, save any changes you have made and click Manage in Spreadsheet to download the agreement lines to a Microsoft Excel file on your computer. You can update the pricing adjustments of the agreement line and upload the spreadsheet.

Note: The other attributes are read-only. You can neither delete the existing lines nor add new ones using this option.

Project Contract Billing

Bill plans and revenue plans provide you with the ability to create a consolidated set of billing attributes that can be shared across contract lines within a contract. Create bill plans and revenue plans within a contract, and associate them to one or more contract lines.

Configure the regions of a bill plan and revenue plan according to your invoicing and revenue recognition requirements. The regions are:

  • Hold option

  • Invoice or Revenue Method Name

  • General Information

  • Billing Extensions

  • Schedules and Overrides

Hold Option

Enable the hold option to prevent transactions associated with contract lines using the bill plan or revenue plan from being included in invoice or revenue generation.

Invoice or Revenue Method

Determine how you want to invoice or recognize revenue for the contract lines that use the bill plan or revenue plan. Select the invoice method or revenue method that has a method classification with the invoicing or revenue recognition instructions that meet your requirements.

General Information

Define customer information, invoicing instructions and invoice summarization options for the bill plan. Select the associated contract lines for the bill plan or revenue plan. The following table explains the options.

Feature Description

Customer Information

The invoice customer, site, and contact person that receives the invoice for project-related work on contract lines that use the bill plan.

Invoice Information

Instructions for the billing currency, billing cycle, payment terms, billing offset days, and the bill set number for the invoices. Enter any specific comments that you want to appear on the customer invoice. Also enter any instructions for the billing administrator to follow during invoice preparation.

Letter of Credit Details

Only award contracts can use letter of credit billing. Select the Letter of credit billing check box and provide a unique Document Number for the bill plan.

Caution: If any bill plan of an award contract uses letter of credit, then all the bill plans must use letter of credit billing and the bill plan can't be set to the federal invoice format SF270.

Invoice Summarization Options

Select the labor, nonlabor, and event formats that group transactions on invoice lines.

Associated Contract Lines

Select the contract lines that you want to use the bill plan or revenue plan. Each bill plan or revenue plan can be associated with multiple contract lines within a contract. However, a contract line can only be linked to one bill plan or revenue plan.

Associate contract lines to the bill plan or revenue plan when the contract is in Draft status. After the contract is approved, you must place the contract under amendment to change or add contract lines.

Billing Extensions

Optionally, add a billing extension to calculate the invoice or revenue event amounts for contract lines using the bill plan or revenue plan. If the invoice or revenue method uses a billing extension, it's automatically copied onto the bill plan or revenue plan.

The billing extension status must be Active for the invoice or revenue generation process to call the billing extension. Select whether you want the billing extension to calculate an event for either the Associated Project or the Contract Line. If you select Contract Line, the event amount will be for all projects associated with a contract line.

Schedules and Overrides

Select the labor and nonlabor schedules that determine the origin of the standard bill rates, burdening, or transfer prices for contract lines associated with the bill plan. Enter any applicable discount information for standard bill rate schedules. Optionally, enter any overrides or multipliers that will take precedence over the standard bill rate schedules, if applicable.

Note: Schedules and overrides are only available for bill plans and revenue plans that use a rate-based invoice or revenue method classification.

Project Billing Options for Contract Types

Select the features on a contract type that you want to use for project billing. When enabled, these features are available on contracts that are used to create invoices and recognize revenue.

The options you can select for project billing are:

Intercompany

Enable the intercompany option on a contract type for contracts designed to invoice internal parties and recognize intercompany revenue between two different business units for project-related work. The work is charged to a single project, which is associated to both an external and intercompany contract. Project transactions identified as intercompany are processed twice, once for the external contract and once for the intercompany contract. Internal billing features are available on contracts enabled for intercompany billing.

Interproject

Enable the interproject option on a contract type for contracts designed to invoice internal parties and recognize interproject revenue between two different business units for project-related work. The external work is charged to one project, which is associated with an external contract. The interproject work is charged to a separate receiver project, which is associated with an interproject contract. Project transactions identified as interproject are processed once for the interproject contract. The interproject invoice is imported into Oracle Fusion Project Costing as a separate cost transaction for the receiver project. Internal billing features are available on contracts enabled for interproject billing.

Billing Controls

If you enable billing controls for a contract type, you can control the amounts, resources, and dates for transactions associated with contracts of that type. Specify whether the contract line amount is a hard limit or a soft limit. If you specify the billing limit type as hard limit then you can only edit the soft limit. If you specify the limit type as soft limit then you can only edit the hard limit. When you create a contract line, a default billing control is added with a hard limit or soft limit, as specified in the contract type.

Associating a project or a project and task to a contract line enables you to easily manage invoicing and revenue recognition for a contract. You must associate a project or a project and tasks to a contract line if either the invoice or revenue method classification on the bill plan or revenue plan is something other than amount based.

  • For amount-based contract lines, the association of a project or task to a contract line is optional.

  • For percent spent and percent complete contract lines where the percent spent or percent complete billing extension is calculated at the associated project level, you must enter a funded amount for the associated project.

  • A contract line can be associated with multiple projects and tasks.

  • Similarly, a project can be associated with multiple contract lines.

Creating and associating contract lines to projects involves the following steps:

  • Create a contract line and associate one or more projects to it.

  • Define billing controls for the contract line, if the contract type is enabled for billing controls.

  • Add a bill plan and revenue plan to the contract line.

Create and Associate Contract Lines to Projects

Associate each contract line to multiple projects or tasks as necessary.

Define Billing Controls

Create billing controls to determine the allowable limits, date range, and types of project transactions that can be invoiced and revenue recognized for the contract line. Define billing controls both at the header and line levels, including both soft and hard limits for the transactions. The application warns you when you reach a soft limit and prevents further transactions when you reach a hard limit.

Select the Bill Plan and Revenue Plan

Add a bill plan and revenue plan that you created for the contract to the contract line.

Project and contract components work together to create invoice distributions. The contract contains the instructions for calculating invoice amounts, and the project owns the cost transaction details. When you generate an invoice, invoice distributions are created for the contract.

Expenditure items and events are the transactions for projects and contracts. Invoice method classifications determine how transactions are invoiced. The invoice method determines how invoice amounts are derived.

  • Enter an invoice method on a bill plan, which you create for a contract and assign to contract lines to provide a set of instructions for creating an invoice.

  • Create billing controls for a contract or contract line to define the valid transaction dates, billing resources, and amount limits for transactions associated with the contract.

  • Generate invoices to calculate the invoice amounts for a contract.

The following figure illustrates the components of a project and a contract that determine invoice amounts, and the relationships between the components.

Project and contract components used to determine invoice
amounts and generate invoices.

Invoice Method Classification

Assign a predefined invoice method classification to an invoice method. The invoice method classification determines whether the invoice amount is calculated based on rates, amounts, or progress.

Invoice Method

Create invoice methods for bill plans to use for determining the approach for generating invoice amounts. The invoice methods contain invoice generation instructions in the form of the invoice method classification and rate definition schedule types. Rate definition schedule types determine whether the rate source for invoicing comes from rate schedules, burden schedules, or transfer price schedules.

You must assign an invoice method to a bill plan, which contains the invoice generation instructions for a specific contract or contract line. An invoice method can be used by more than one bill plan.

Caution: Enable the invoice method for intercompany billing if it will be used for intercompany billing only.

Bill Plan

Create a bill plan within a contract that uses the invoice method you require. Assign the bill plan to one or more contract lines.

Note: Oracle Project Billing doesn't create new invoices for:
  • Contracts on hold

  • Contract lines on hold

  • Contract lines with a bill plan on hold

Previously generated invoices can still be updated, submitted for approval, approved, rejected, released, and transferred when the contract, contract line, or bill plan is on hold.

Billing Control

A billing control defines the types of permitted transactions (using billing resources), transaction date range, and maximum invoice (and revenue) amounts for a contract or contract line. Create a billing control within a contract at either the contract or contract line level. The inception-to-date (ITD) invoice amount can't exceed the hard limit amount of a billing control. If the ITD invoice amount exceeds the soft limit, invoice generation will still occur, but you will receive a warning the first time this occurs.

Expenditure Item

The project and task for an expenditure item are matched to the associated contract line during invoice generation. Invoicing can occur if the transaction date, billing resource, and amount for the expenditure item pass the contract billing controls. If the expenditure item is mapped to more than one eligible contract line, the processing order is determined as follows:

  • The contract billing sequence determines the processing order of multiple contracts.

  • The contract billing controls determine the processing order of multiple contract lines within a single contract.

  • The contract contribution percentage determines the eligible invoice amount for each contract line.

Oracle Fusion Project Billing creates a billing transaction for each unique combination of expenditure item and contract line. The billing transaction is the source for creating invoice distributions.

Event

Invoice events are automatically created during invoice generation if the invoice method is percent spent or percent complete. Manual events are also processed during invoice generation. Oracle Fusion Project Billing creates a billing transaction for each automatic or manual event. The billing transaction is the source for creating invoice distributions.

Examples of Using Billing Controls

To create a billing control for a contract, you must enable billing controls for the associated contract type. You can create billing controls for a contract or contract line to limit the amounts, billing resources, dates, and funds available for billing consumption. The following scenario demonstrates how billing controls regulate the transactions that are invoiced and recognized for revenue.

In this example, the contract type has billing controls enabled with a hard limit. The contract has two contract lines. A default billing control was automatically created for each contract line, using the line amount as the hard limit. A default billing control was also automatically created at the contract header level, with a hard limit equal to the sum of the hard limits for the two contract lines. A soft limit was manually entered for these default billing controls. Two additional billing controls were manually created for Contract Line 1, to further restrict invoicing and revenue recognition. The following table displays the billing controls.

Billing Control Location Default Billing Control Billing Resource Start Date End Date Soft Limit Hard Limit

Contract

Yes

N/A

N/A

N/A

190,000

270,000

Contract Line 1

Yes

N/A

N/A

N/A

120,000

170,000

Contract Line 1

No

Labor

6/1/2010

12/31/2010

30,000

45,000

Contract Line 1

No

Expenses

6/1/2010

12/31/2010

20,000

30,000

Contract Line 2

Yes

N/A

N/A

N/A

70,000

100,000

Contract Header Billing Control

Oracle Fusion Project Billing creates a warning during invoice or revenue generation the first time the inception-to-date (ITD) invoice or revenue amount for the contract exceeds 190,000. The total amount invoiced to the customer or recognized for revenue cannot exceed 270,000 for the contract.

Contract Line Billing Controls

The billing controls for Contract Line 1 causes Oracle Fusion Project Billing to perform the following functions during invoice and revenue generation:

  • Creates a warning the first time more than a total of 120,000 is invoiced or recognized for revenue for Contract Line 1.

  • Creates a warning the first time more than a total of 30,000 of labor or 20,000 of expenses is invoiced or recognized for revenue for Contract Line 1 between 6/1/2010 and 12/31/2010.

  • Prevents more than a total of 45,000 of labor and 30,000 of expenses to be invoiced or recognized for revenue for Contract Line 1 between 6/1/2010 and 12/31/2010.

  • Prevents more than a total of 170,000 to be invoiced or recognized for revenue for Contract Line 1.

The billing control for Contract Line 2 causes Oracle Fusion Project Billing to perform the following functions during invoice and revenue generation:

  • Creates a warning the first time more than a total of 70,000 is invoiced or recognized for revenue for Contract Line 2.

  • Prevents more than a total of 100,000 to be invoiced or recognized for revenue for Contract Line 2.

Example of Creating a Contract for Billing

This example describes how to add an existing negotiated contract to perform project work into the application so that you can invoice customers and recognize revenue.

The following table summarizes key decisions for this scenario.

Decisions to Consider In This Example

What is the invoice method classification?

Rate Based

What is the revenue method classification?

Percent Spent

What are the maximum invoice and revenue amounts?

735,000

Summary of the Tasks

Create a new contract by duplicating an existing contract. Verify the information on the bill plan and revenue plan. Verify the billing controls. Associate existing projects to the contract lines. Submit the contract for approval.

Prerequisites

  1. Verify the setup for the cost and bill rates that the project and contract use.

  2. Create a project and project plan.

  3. Create an approved cost budget.

Creating the Contract

  1. On the Manage Contracts page, expand the Search: Contract region.

  2. Select Number.

  3. Enter "New Company TM Percent Spent Contract Template" as the name.

  4. In the Search Results region, select the row for New Company TM Percent Spent Contract Template.

  5. Click Actions - Duplicate.

  6. In the Duplicate Contract window, enter the values, as shown in this table.

    Field Value

    Contract Number

    Your initials, followed by New Company TM Percent Spent Contract.

    Start Date

    1/1/2011

    All other fields

    Select the check boxes, except for the Associated projects and tasks.

  7. Click Ok.

  8. Click Yes in the warning message that appears.

  9. Click Header.

  10. Click Parties.

  11. Confirm the Customer is New Company and Associates.

  12. Confirm that Andrew Robinson, Contract Administrator is created as the contact for the supplier role and is selected as the owner. If necessary, add this supplier contact.

  13. Confirm that the Bill-to Account Number, Sold-to Account Number, and Ship-to Account Number are 1004.

  14. Click Save.

Reviewing the Bill Plan
  1. Click Billing.

  2. In the Bill Plans region, click Rate. Verify the Method Name is Bill Rate Invoice.

  3. Click General Information. Verify that the information in the Customer Information, Invoice Information, Invoice Summarization Options, and Associated Contract Lines matches the information in the following table.

    Field Value

    Bill-to Customer

    New Company and Associates

    Bill-to Site

    Tulsa (OPS)

    Bill-to Contact

    Betty Lewis

    Billing Currency

    Contract

    Billing Cycle

    Last Day of the Month

    Payment Terms

    30 Net

    Bill Set

    1

    Labor Format

    Time and Material

    Nonlabor Format

    Contract Line Project/Task Exp

    Event Format

    Event Type Format

    Contract Line Number

    1

    Line Amount in Contract Currency

    735,000

  4. Click Schedules and Overrides. Verify the information in the Schedules region matches the information in the following table.

    Field Value

    Person Rate Schedule

    T&M Employee Bill Rate Schedule

    Job Rate Schedule

    T&M Job Bill Rate Schedule

    Nonlabor Rate Schedule

    T&M Zero Markup Nonlabor Rates

  5. Click Save and Close.

Reviewing the Revenue Plan
  1. In the Revenue Plans region, click Percent Spent Revenue. Verify the Method Name is Percent Spent Revenue.

  2. Click General Information. Verify the information in the Associated Contract Lines region matches the information in the following table.

    Field Value

    Contract Line Number

    1

    Line Amount in Contract Currency

    735,000

  3. Click Billing Extensions. Verify the information in the Billing Extensions table matches the information in the following table.

    Field Value

    Name

    Percent Spent Revenue

    Status

    Active

    Calculation Level

    Associated project

  4. Click Save and Close.

Reviewing the Billing Controls
  1. In the Billing Controls region, verify that the values for Hard Limit Amount, Invoice Funds Available, and Revenue Funds Available are 735,000.00.

Reviewing the Contract Line Overview

  1. Click the Lines tab, and select the row for Line Number 1.

  2. Click Overview.

  3. Verify the information matches the details in the following table.

    Field Value

    Number

    1

    Name

    Contract Line 1

    Start Date

    1/1/2011

  4. Click Save.

Modifying the Billing Controls for the Contract Line

Modify the existing billing control so that labor expenditures are included in invoice and revenue generation.

  1. In the Line 1: Details region, click Billing, and select the billing control with the 735,000.00 limit.

  2. Click Billing Resource.

  3. Select Labor (Expenditure Category).

  4. Click Save.

Associating a Project to the Contract Line

Associate the project that was created in the Prerequisite steps with this contract.

  1. Click the Associated Projects tab.

  2. Select Actions, Add Row.

  3. Select Project Name. Select the project that was created in the Prerequisite steps.

  4. Optionally, select a Task Number. If you don't select a task number, all eligible transactions charged to this project are selected for invoice and revenue generation for the contract line.

  5. Click Save.

Submitting the Contract for Approval
  1. Click Submit.

  2. Review the validation results and fix any errors, then click Submit again to submit the contract for approval.

Project Contract Billing FAQ

A set of instructions on a contract that define how to invoice a customer. Multiple contract lines on a contract can use the same or different bill plans.

Common set of instructions for recognizing revenue within a contract. Multiple contract lines on a contract can use the same or different revenue plans.

Transactions originating from different bill plans with the same bill set number on a contract are included on the same invoice. If a contract has multiple bill plans and each have different values for the bill set, Oracle Fusion Project Billing creates a separate invoice for each bill plan.

The type of currency in which you issue invoices to the Bill-to Account on a contract bill plan, generate revenue, and transfer revenue to Oracle Fusion General Ledger as entered currency. Valid values are Bill Transaction, Contract, and User. For rate-based bill plans, bill transaction currency is either currency of the bill rate schedule or cost transaction currency of the expenditure item, depending on whether bill rates or markups are used. For fixed price bill plans, billing currency type must be either Contract or User.

A user-defined billing currency type indicates that you, as a user can specify the particular single currency in which invoices are issued and revenue is generated.

What's a billing control?

Contract feature that controls the types of transactions, dates, and amounts a customer may be invoiced for and revenue can be recognized for a contract or contract line. Define billing controls at the contract or contract line level.

Contract billing controls restrict the amounts, transaction dates and resources eligible for invoicing or revenue recognition for the entire contract. For example, if a contract level billing control has a hard limit of 500, the total invoice amount or recognized revenue for the contract cannot exceed 500.

Contract line billing controls restrict the amounts, transaction dates and resources eligible for invoicing or revenue recognition for a specific contract line. Continuing with the example, a contract line has a billing control with the attributes shown in the following table.

Contract Line Billing Resource Start Date End Date Hard Limit

1

Travel

2/01/2011

3/15/2011

250

Transactions associated with Contract Line 1 are eligible for invoicing or revenue recognition if they are travel expenditures or events with an amount of 250 or less that occurred between 2/01/2011 and 3/15/2011.

The billing controls must be enabled on the contract type used by the contract. If the billing controls are not enabled for the contract type, you cannot create billing controls for the contract or contract lines.

Why can't I associate a billable task with a contract line?

You can either associate a project and task to a contract line, or a project without any tasks to a contract line. If you associate a project without any tasks to a contract line, any future associations of that project to another contract line cannot include a task.

If you associate a project and task to a contract line, you can perform the following actions for future associations: Associate the same project and task to another contract line Associate a task in another branch of the same project hierarchy to the same or another contract line. For example, if you associate Project 1, Task 1 to Contract A, Line 1, you can associate in Project 1, Task 2.2.1 to Contract A, Lines 1 and 2, and also Contract B, Line 1.

To select a task from another level in the same branch of the task hierarchy, you must first inactivate the existing associated project and task. In the example, before you can associate Project 1, Task 1.1 to Contract A, Line 1, you must inactivate the existing association between Project 1, Task 1 and Contract A, Line 1.

Enter a numeric value for the billing sequence that represents the order you want to invoice, recognize revenue, and use funding for the contract. If a project or task is associated with multiple contract lines, the contract is billed in this order.

What happens to transactions if I place a bill plan or revenue plan on hold?

Unprocessed or partially processed invoice and revenue transactions are not included in invoice and revenue generation when you place a bill plan or revenue plan on hold. These bill plans and revenue plans are considered ineligible and appear in the Ineligible Bill Plan or Ineligible Revenue Plan sections of the Generate Invoice or Generate Revenue output reports.

There is no impact to transactions that were already processed for invoice or revenue.

The schedules and overrides on a bill plan are visible only if the invoice method classification is Rate Based.

The schedules and overrides on a revenue plan are visible only if the revenue method classification is Rate Based. When the revenue method classification is As Billed or As Incurred, revenue generation uses the schedules and overrides on the bill plan to derive a common rate to be used for both invoice and revenue.

Why can't I associate a billable task with a contract line?

You can either associate a project and task to a contract line, or a project without any tasks to a contract line. If you associate a project without any tasks to a contract line, any future associations of that project to another contract line cannot include a task.

If you associate a project and task to a contract line, you can perform the following actions for future associations: Associate the same project and task to another contract line Associate a task in another branch of the same project hierarchy to the same or another contract line. For example, if you associate Project 1, Task 1 to Contract A, Line 1, you can associate in Project 1, Task 2.2.1 to Contract A, Lines 1 and 2, and also Contract B, Line 1.

To select a task from another level in the same branch of the task hierarchy, you must first inactivate the existing associated project and task. In the example, before you can associate Project 1, Task 1.1 to Contract A, Line 1, you must inactivate the existing association between Project 1, Task 1 and Contract A, Line 1.

Intercompany and Interproject Billing

This example describes the requirement of a professional services organization with global offices that must share contract revenue for a resource between different business units.

Scenario

You are a specialized information technology professional services organization with headquarters in the New York, and international offices in Aberdeen, Scotland, Paris, France, and Jakarta, Indonesia. Your organization provides design, support, and maintenance expertise for energy companies. You just received a contract to provide information technology upgrade services for an oil and gas exploration company located in the United States. Resources will work on the contract for four weeks, and the client will be invoiced for labor hours and expenses at the end of each month. One consultant who will work on the project is based in Paris. The remainder of the resources are based in the United States.

Billing Requirements

Major features of the contract are:

  • Invoice and recognize revenue based on hours worked by resources, and expenses incurred. The travel budget is limited to $25,000.

  • The resources allowed on the contract are project manager, senior consultant, and junior consultant.

  • The contract is expected to be complete in four months.

Analysis

To share revenue for the consultant from Paris, you must create an intercompany contract. Your corporate policy dictates that borrowed resources from different legal entities or business units receive 70 percent of the standard job bill rate. The following table summarizes the setup of key contract and project features.

Key Feature Configuration

Provider business unit

Paris

Receiver business unit

New York

Project

Create a project with the following key features:

  • Enabled for time and materials.

  • Enable the project to receive cross-charge transactions.

Project plan

Assign the following resources to a chargeable and billable task:

  • Project Manager

  • Senior Consultant

  • Junior Consultant

  • Expenses

Set the baseline for the project plan.

Contract type

Intercompany

Contract lines

Create the following contract lines:

  • Line 1 for the Paris consultant's labor.

  • Line 2 for the Paris consultant's expenses.

  • Line 3 for all other consultants' labor.

  • Line 4 for all other consultants' expenses.

Bill plan

Select an invoice method with a rate-based invoice method classification , and associate it with the contract lines. Enter the transfer price schedule on the bill plan.

Revenue plan

Select a revenue method with an as-incurred revenue method classification, and associate it with the contract lines. Enter the transfer price schedule on the revenue plan.

Billing controls

Create at the contract level, with the following details:

  • $25,000 hard limit for expenses.

  • Billing resources: expenses and labor.

Project transactions

All resources charge transactions for this contract to the same project.

Resulting Intercompany Invoice and Revenue Details

After you submit the cross-charge identification process and generate invoices, your client receives one invoice from the New York business unit that contains charges for the work performed by all resources. The invoice amounts are determined from the transfer price schedule in the bill plan, and calculated from transactions charged to the receiver project. Revenue amounts are determined from the transfer price schedule in the revenue plan, and calculated from transactions charged to the receiver project.

Examples of Transfer Price Rates

Use these examples to understand how to configure cross-charge options on bill plans and revenue plans to achieve various interproject and intercompany billing scenarios.

One Cross-charge Rule or Rate, One Provider Business Unit, Any Receiver Business Unit, All Projects

The following table explains how to configure your contract billing information to share one cross-charge rule or rate between one provider business unit and any receiver business unit, and all projects associated with the contract.

Bill Plan Bill Rate Schedule

Bill Plan 1

Assign the bill rate schedule you want to use for the contract (provider) business unit to this bill plan.

One Cross-charge Rule or Rate, One Provider Business Unit, One Receiver Business Unit, All Projects

The following table explains how to configure your contract billing information to share one cross-charge rule or rate between one provider and receiver business unit, and all projects associated with the contract.

Bill Plan Bill Rate Schedule

Bill Plan 1

Assign the bill rate schedule you want to use for the provider business unit to this bill plan.

Bill Plan 2

All contract lines associated with the receiver projects can use this bill plan.

Assign the bill rate schedule you want to use for the receiver business unit to this bill plan.

Override a Cross-charge Rule or Rate, One Provider Business Unit, One Receiver Business Unit, One Project

The following table explains how to configure your contract billing information to override a cross-charge rule or rate between a provider and receiver business unit for one project.

Bill Plan Schedules and Overrides Associated Projects

Bill Plan 1

Create a rate override for the contract line associated with the receiver project.

Project level

Override a Cross-charge Rule or Rate, One Provider Business Unit, One Receiver Business Unit, Task

If a resource is assigned to multiple roles and has more than one rate on a project, you may need to create an override at the project task level. The following table explains how to configure your contract billing and contract line details to override a cross-charge rule or rate between a provider and receiver business unit, for the task on a specific project.

Bill Plan Schedules and Overrides Associated Projects

Bill Plan 1

Create a job rate override for the contract line associated with the receiver project.

Task level

Override a Cross-charge Rule or Rate, One Provider Business Unit, One Receiver Business Unit, Resource

If you are invoicing for a contractor, you may want to create an override at the resource level. The following table explains how to configure your contract billing and contract line details to override a cross-charge rule or rate between a provider and receiver business unit, for a specific resource on a project.

Bill Plan Schedules and Overrides Associated Projects

Bill Plan 1

Create a person rate override for the contract line associated with the receiver project.

Task level

Create Contract for Percent Spent Invoice and Revenue Methods

This example describes a scenario where transactions for a contract line need to be invoiced and the revenue recognized using the percent spent method.

The following table summarizes key decisions for this scenario.

Decisions to Consider In This Example

What are the revenue and invoice method classifications?

Percent Spent

What is the billing extension calculation level for the contract line and project association?

Project level

Summary of the Tasks

Create a contract, create the percent spent contract lines, create the bill plan, create the revenue plan.

Prerequisites

  1. Create a project.

  2. Create the project plan for percent spent revenue. Specify the plan type on the percent spent billing extension.

  3. Create an approved cost budget.

  4. Create cost and burden rates.

  5. Enter labor and expense transactions for the project.

  6. Collect costs for the transactions.

Creating the Contract

  1. On the Contract Overview page, expand Search and look for the contract with the attributes listed in the following table.

    Field Value

    Contract Type

    Sell: Project Lines

    My Contracts

    If this field is checked, remove the check mark.

    Party Name

    Vision Software Install

  2. Click Search.

  3. In the Search Results region, select the row for the PJB contract (VO), Version 1.

  4. Click Actions > Duplicate.

  5. On the Duplicate Contract window, enter the values listed in the following table.

    Field Value

    Contract Number

    Your initials, PS001 (For example, TP PS001)

    Start Date

    01/01/2010

    All other fields

    Enable check boxes

  6. Click Yes.

Creating the Percent Spent Contract Lines

  1. Select the Lines tab, and select the Amount Based Invoice, Percent Spent Revenue row. Confirm the amount is $250,000.

  2. Select the Billing tab, and select the row with the $250,000 soft limit.

  3. Click Resource Member, and select Labor (Expenditure Category).

  4. Click the Create icon. Click Resource Member, and select Expenses.

  5. Enter 30,000 for Soft Limit.

  6. Click Save.

  7. Select the Associated Projects tab, and the Create icon.

  8. Enter the information listed in the following table.

    Field Value

    Project Name

    Select the project you created in the earlier example.

    Funded Amount

    100,000

  9. Click Save.

Creating the Bill Plan

  1. Select the Header tab, and click Billing.

  2. Select the row with the BP PS1 Bill Plan.

  3. Verify the information described in the following table.

    Field Value

    Method Name

    Percent Spent

    Billing Cycle

    Last Day of the Month

  4. In the Associated Contract Lines region, select the Add icon.

  5. In the Select and Associate: Contract line window, click Search.

  6. Select the row containing Contract Line Number 4.

  7. Click Submit.

  8. Click Save.

  9. Select the Billing Extensions tab.

  10. Verify the information described in the following table.

    Field Value

    Name

    Percent Spent Invoice

    Status

    Active

    Calculation Level

    Associated Project

  11. Click Save and Close.

Creating the Revenue Plan

  1. From the Header tab, click Billing.

  2. Select the row with the RP PS1 Revenue Plan.

  3. Verify if the following information is present:

    Field Value

    Method Name

    Percent Spent Revenue

    Contract Line Number

    4

  4. Select the Billing Extensions tab.

  5. Verify the information described in the following table.

    Field Value

    Name

    Percent Spent Revenue

    Status

    Active

    Calculation Level

    Associated Project

  6. Click Save and Close.

Managing Project Contract Intercompany and Interproject Billing FAQ

Yes, but only if you derive rates for an intercompany contract based on an organization hierarchy structure instead of the bill rates defined on a bill plan. The contract line and bill plan architecture lets you specify a different bill plan for each provider and receiver organization. Select a bill rate or burden rate schedule for each of your contract bill plans. However, if your rates are defined at a granular level, you may need to derive rates for an organization hierarchy structure using transfer price rules.

Searching for a Contract

This topic describes the two ways that you can search for enterprise contracts: either by using contract attributes, or by searching for specific words or phrases in the text of the contract's attachments. Searching by contract attributes is the quickest way of searching for an enterprise contract.

Note: The application has to index the text of a contract before performing a text search so you cannot search by text for several hours after you create or edit a contract.

Searching by Enterprise Contract Attributes

You can search for enterprise contracts using one attribute, such as the party name or contact number, or by using multiple attributes.

  • To search using a single attribute, enter your search term in the Search: Contract pane.

  • To search using multiple attributes, use the advanced search available in the Search regions of the Manage Contract page and Contracts work area.

You can use the advanced search to find all the contracts that list you as an owner, and to save your most common searches for reuse.

Searching Contract Text

You can search for specific text within a contract or its attachments using the Search Contract Text page. The text can be a word or a phrase. You can enter additional search criteria, such as status or dates, to narrow the search results. By default, your search returns only the latest versions of documents, but you can expand the search to all versions by selecting the Include All Versions option.

You can use the same text search to also search for the following documents with contract terms authored in the Oracle Purchasing and Oracle Sourcing applications:

  • Standard purchase orders

  • Blanket purchase agreements

  • Contract purchase agreements

  • Requests for information

  • Requests for quotation

  • Quotations

Select the contract or document name link in the search results to view the contract or the purchasing document in its native application.

Global Search

You can also search enterprise contracts and documents from other applications using the Search field. This search, which also searches the text of attachments, lets you search for documents in a broader variety of applications, including Oracle Fusion Projects and Oracle Fusion financial applications, depending on your level of access. While you can use this search to find and display enterprise contracts, you cannot narrow your searches or include all versions in your search.

Search Contracts FAQ

The worklist only lists contracts that require your approval.

Contract Amendments

Update an active contract by selecting the Amend action. When you amend a contract, you change it. This can include the terms and conditions of a contract. Cancel the changes and return to the original active contract by selecting the Revert action.

Amend a Contract

If you amend a contract, its status as well as the status of its contract lines change to Under Amendment For a procurement contract that is under amendment, you can change all contract details except fulfillment. However, you can process fulfillment lines on the latest active version of the contract under amendment. You can also amend a contract when its status is On Hold or Expired. Amendments are effective after the amended contract is approved or rejected.

If the amendments are approved, the contract status changes as follows:

  • If the contract was active before amendment, its status returns to Active.

  • If the contract was On Hold, its status returns to On Hold.

You can print a summary of the amendments made with or without the amended terms and conditions of the contract if you selected the appropriate terms layout template for the contract type. For example, for contract types with extensive terms and conditions, such as public sector contracts, recipients of the contract may prefer to see just a summary of changes annotated with sections added and deleted, clauses added, deleted, and updated, and amendment description instead of the full terms and conditions.

Note: You can create a new version of a contract that is under amendment.

You can edit some information in an active contract without amending it. This includes the contract description, name, and party information. For customer contracts related to projects, you can place a hold on the billing and revenue plans.

View Amendment Summary

When a contract is in the amendment process you can view a summary of the amendments made to the contract by selecting View Amendment Summary from the Terms Actions list on the Contract Terms panel. This summary provides visibility to updates to sections, clauses, variables, contract documents, and deliverables made during the current revision process.

Revert a Contract

When you revert a contract, changes made in the latest amendment and changes made through Create New Version are canceled. The contract returns to its state prior to the amendment.

You can revert contract changes only when it is Under Amendment. You cannot revert after the contract is approved.

Note: Reverting does not affect the contract information that you edit without amending the contract.

Contract Amendment FAQ

In cases where a customer requests changes in a contract that is internally approved and pending signature, you can create a new version for that contract to make the required changes.

If you create a new version of a contract, this new version is in Draft status, and the original version is no longer available for approval or acceptance.

Note: You cannot create a new version once a contract is signed and accepted. You can create a new version only for a draft, under amendment, or pending signature contract. Once the contract is signed and active, if you still need to make changes, you can amend the contract. Amending a contract creates a new version of the contract in Under Amendment status.

For contract types with extensive terms and conditions such as public sector contracts, where contract terms may often be amended, you can select a terms layout template that enables you to print a summary of the amendments made to contract terms with or without the full list of amended contract terms and conditions. In such cases, recipients of contracts prefer to see just a summary of the amendments instead of the entire terms and conditions, especially as the summary is annotated with sections and clauses added and deleted, and clauses updated.

You can then use the Preview action on the Edit Contract page to view the contract and contract terms or amendment summary before you print it to send it to the recipients of the contract. Alternatively, you can also control the printing of the amendment summary without adjusting the terms layout template for each contract in the Contract Terms tab.

Note: The View Amendment Summary action in the Contract Terms tab of the Edit Contract page displays a tabular view of amendments made to contract terms and conditions and also to contract documents.

Revert a contract to its previous active version by selecting Revert action when the contract is under amendment. You cannot revert a contract after the amendment is approved.

Yes, you can modify the contract attributes, listed in the following table, that do not impact the legal agreement between the parties, without putting the contract under amendment.

Tab/Page Region Attributes

Overview

Description, Name

Parties

All fields of Contacts table

Risks

All attributes

Notes

All attributes

Bill Plan

Manual Hold

Revenue Plan

Manual Hold

How can I track updates to the variables when a contract is amended?

You can view updates to the values of variables as well as updates to sections, clauses, contract documents, and deliverables in the contract amendment summary. Use the View Amendment Summary action in the Contract Terms tab of the Edit Contract page to display a tabular view of amendments made to contract terms and conditions.

How can I use social collaboration to communicate a contract change?

Use the Social link on the Edit Contract page to invite a contract manager to a conversation regarding recent changes.

  • Click Social to open the Oracle Social Network window and share or join the contract.

  • Click New Conversation and add the contract manager as a member.

  • Post your concerns and ask for a preference.

The contract manager can see certain attributes of the contract, such as Status and Name, and your action. The contract manager responds, you complete any changes to the contract, and move on.

Contract Renewal

Understanding Contract Renewal

Contract Renewal makes a copy of the existing source contract. The source contract can be in an active or expired status. The effectivity and price details on the new renewal contract are changed based on the configured renewal defaults. Other attributes such as negotiation settings of the new renewal contract can also be changed. You can choose to activate contract renewal for service contracts on a header and line level. This means that you can choose to renew the entire contract or specific contract lines, or both.

The three options to edit the renewal process at the time of contract creation are as follows:

  • Automatic: This implies automatic contract renewal, which is generated by the Automatically Renew Eligible Contracts and Contract Lines scheduled process prior to contract expiration.

    Note: For the scheduled process to pick the eligible contract, the renewal template must have mark-up, mark-down, or reprice enabled.
  • Manual: This implies that the contract or line must be renewed manually. This can be done at any point during the contract lifecycle. You are notified prior to contract expiration.

  • Do not renew: This implies that you do not want to opt for contract renewal. On selecting this, the Renewal Type column is removed from the dashboard columns list for all lines and covered assets of the contract.

When contract renewal is selected on a header level, it does not reflect on the existing contract lines. The following renewal options are provided for each contract line as a Drop Down list:

  • Renew: Renewal of the coverage or subscription line.

  • Keep duration: Available for subscription only, the duration of the line remains unchanged in a renewed contract. It remains the same as in the source contract.

  • Do not renew: This means that the subscription line, and coverage line along with the covered assets are not renewed when the contract is renewed.

Note: The scheduled process Automatically Renew Eligible Contracts always considers the header level Edit Renewal Process drop-down list value to determine a contract's eligibility for renewal over the Renewal Process drop-down list value set in the Negotiations and Renewal tab.

Contracts can be renewed either manually or automatically. The user can manually renew a contract using the renew action, or the application can be configured to automatically renew a contract. The application uses renewal rules to determine the renewal defaults. The life cycle of a renewal contract is similar to a newly authored contract. However, you can configure a different life cycle for a renewal contract using the Event Model configuration. You can configure an event model to route the renewal contract to the customer for acceptance, or to the contract administrator for internal approval. You can also activate the contract without either Customer Acceptance or Internal Approval. The application, therefore, evaluates renewal rules template configured in the contract rules to retrieve the renewal process, customer acceptance criteria and internal approval criteria.

The following table provides an overview of the combinations of the Renewal Process, Customer Acceptance, and Internal Approval criteria:

Renewal Process Customer Acceptance Internal Approval Description

Automatic

Not Required

Not Required

The application will renew and activate the contract.

Automatic

Not Required

Required

The application will renew and submit the contract for approval.

Automatic

Required

Required/Not Required

The application will renew the contract and leave it in the contract administrator's queue for further action. You can configure event notification rules to automatically send the contract to the customer for acceptance.

Manual

Required/Not Required

Required/Not Required

The application will renew the contract and leave it in the contract administrator's queue for further action.

Do not renew

N/A

N/A

The application will not renew the contract.