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Understanding auto contract extension

An overview of this feature

Written by Raymond Carrel
Updated over a week ago

What does it do?

Auto Contract Extension is an optional feature that lets you link expiring contracts with new ones, in order to appropriately account for:

  • the adjusted expiry date of the new contract

  • negative profit adjustments as a result of early deal termination

  • positive profit adjustments due to the extended contract term

How it works

An existing service asset is linked to an item on a new quotation. An estimated connection date is then set on the new line via quotation Data Capture.

If the estimated connection date occurs before the existing asset's expiry date, then two profitability adjustments will be made to the quote:

  • A negative deal termination adjustment

    • This covers profit that is lost by terminating the existing contract early

  • A positive profit adjustment

    • This covers the additional profit that is gained by extending the new term

As part of this process, an extension term is calculated. This is the number of days between the expiry date of the old asset and the estimated connection date.

The estimated connection date at quote-level will become the actual connection date at sales order stage.

With regards to the new service, the actual term on the new service is not changed. Instead, the new service's expiry date will be pushed back by the number of days in the extension term.

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