Most SaaS suppliers tend to favour automatic renewal for their contracts. Before agreeing to an automatic renewal, you need to consider the (a) preference of your organization’s procurement department, (b) the annual fee of the contract and the (c) criticality of the system.
Should you have an automatic renewal in a SaaS contract?
The answer like most legal answers – it depends.
There is no one size fits all when it comes to renewals. While some will swear by a manual renewal, others may prefer to have their SaaS contracts continue without any intervention.
How do you decide if autorenewal is right for you? Most companies have their preferences on how to manage the renewal process, so start there. If there is no clear policy on renewals, here are somethings to consider for the customer:
My preference as the customer is to opt in for a manual renewal. In most cases, even if someone forgets to renew the contract, it is unlikely the supplier is going to terminate as long as the invoice is being paid. If you didn’t intend to renew and are invoiced, you can point to the fact that you did not provide a notice of renewal. Of course, the preference is always to have a strong contract management process in place and make sure that renewal notices are sent in time.
If automatic renewal is mandatory, I always try to get as short a notice period as possible to allow the client more room to terminate. In the end, one way of renewal isn’t inherently better than the other if you have a good contract management process in place that tracks renewal dates and notice periods.
To learn more and join in the discussion, check out my LinkedIn Post
Contract playbooks can be used to improve relationships, empower stakeholders, speed up the contracting process, and save time in CLM implementation.
Acceptance is an important commercial concept to understand as it pertains to implementation services in SaaS agreements.
By having a strong grasp of finance aspects of SaaS agreements, you are helping the business win new customers and generate revenue quicker
A strong GC brand doesn’t just bring more influence, compensation, and respect; it also opens doors to the executive table.
Follow Contract Nerds
© 2022 Contract Nerds United, LLC. All rights reserved.
The opinions expressed throughout this website are not intended to provide legal advice or create an attorney-client relationship.
By subscribing to our newsletter, you agree to our Terms of Use and Privacy Policy. We promise not to spam you!
