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Managing a purchase contract


A contract is a binding agreement between two or more parties for the delivery of goods or services, usually in return for the payment of a defined sum of money. In Matrix42 Software Asset & Service Management, a contract consists of one or more contract items that define the type of the service and the amount to be paid. A contract can be signed in connection with a previously or simultaneously concluded master contract.

Navigation groups all contracts by their statuses:

  • Open displays contracts with the following statuses: Submitted, Draft, Signed, Approved, Legally Reviewed, Rejected, Postponed, Content Reviewed.
  • Purchase displays contracts with the following statuses: Requested, Executed, Abandoned.
  • Effective displays contracts whose expiration date is greater than now and status is one of the following: Canceled, Active, Litigated, Pending.
  • Expiring displays contracts whose expiration date is either today or within 90 days and status is one of the following: Canceled, Active, Litigated, Pending.
  • Historic displays contracts with an expiration date in the past.

How to create a purchase contract

You can store the essential information of a purchase contract in the following fields on the General tab:

  • Contract Type. The relevant type of contract.
  • Contract Number
  • Title
  • Closing Date
  • Parent Agreement. Master Contract to which this contract belongs.
  • Business Partner
  • Legal System. Country whose legal system is applicable if parties disagree about the interpretation or fulfillment and want to have recourse to the courts.
  • Place of Jurisdiction. Location of the court that is eligible for any legal intervention from the counterparties. If you select Other, the Other Place of Jurisdiction field becomes editable and you can provide the details.
  • Expected Volume. Estimated amount of turnover that will be generated by this agreement during its validity period.

Keep in mind this value is recalculated and changed automatically whenever a cost plan is created for a related contract item.

  • Internal Signer
  • Internal Contact
  • External Contact
  • Contract Items

In order for the agreement to be valid in terms of contract management processes, you should also fill in the Effective Date and Expiration Date (or select Contact does not expire) on the Period tab.

Renewing expiring contracts

On the Period tab, you can set up automatic renewal for your contract:

  1. Select the Renews upon expiration checkbox.
  2. Specify the Renewal Period and Time Unit.

If you enable automatic renewal, the system will update expiration date information according to the given settings automatically when the current expiration date arrives. In case of the first automatic renewal, the original expiration date will be stored in the corresponding attribute for transparency.

Managing terms of cancellation

Usually contracts may be terminated on request prior to agreed expiration date during a period of time by end of month, end of quarter, end of year, etc. This cancellation term is defined in the By field providing a list of possible values. In case that early termination must not be possible before a certain date, the corresponding day must be set in Not Before.

The period of cancellation is configured by the values of the Period of Notice and Time Unit fields.

Example: If a contract can be cancelled 4 weeks before the end of each quarter at the latest, specify 4 as period of notice, weeks as time unit, and End of Quarter in the By field.

The Cancellation Effective On field shows the closest possible date of cancellation taking into account the Not Before value. Based on the closest possible cancellation date and period of cancellation notice, Notice Deadline is calculated. It displays the latest date when you can inform another party of your intent to cancel the contract.

Example: if a contract can be cancelled 5 days before the end of month and today is March 5, the Cancellation Effective Date will be March 31 and the Notice Deadline will be March 26.

Consider enabling the cancellation notification option. This will send an email to the given recipient (and all people in the Reminder Copy list) whenever the next period of notice is due (this date is specified in Notice Deadline). This allows you to review your options whether to terminate the contract or not. Enter a numeric value in Days in Advance to define how many days prior to the notice deadline you want to be reminded.

If current status of an agreement is set to Cancelled, the Canceled On field contains the date of effective termination provided in the Change Status wizard.

Cancelling a contract

To cancel a contract, run the Change Status action. When you change the contract's status to Cancelled, the wizard shows the Canceled On field. Use it to enter the date starting from which the contract is no longer valid. If this date is set in the future, the contract status becomes Cancelled immediately while the contract items remain active until this date is reached. When the date is reached, both the contract and its items become Expired.

Managing procurement profit information

The system could calculate and display total, monthly and daily procurement profit. You should fill in Period (Months)/( Days) and specify amount of profit in either Total Profit, Monthly Profit or Daily Profit. Other fields will be updated based on the entered values.

Tracking payments

The Billing tab contains information about type, frequency, and terms of payments along with the date of the first installment. If this information is specified as well as the supplier and contract volume data, you can create a list of payments automatically. Click Auto-Create Contract Payments to generate payments based on provided data. You can also create payments manually by adding items in the Contract Payments grid.

If you add a payment in the Contract Payments grid, all fields on the General tab are mandatory.

Contract family and related contracts

The Contract Family tab shows connections to other contracts if any.

Saving links to files

The Documentation > Linked Documents tab can store links to digital documents located on a network drive and online. Both a network link and a web link should lead directly to a file and therefore end with an extension (with .txt.mp3.jpg, etc.). To be able to add links to network folders, you need to modify your browser settings.

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