Avoid Missing Contract Notice Periods

A mistake that many of us make is not giving the correct notice on a supplier contract. As a result, either a contract rolls over automatically or an out-of-contract rate is applied.

The cost of forgetting to give notice will vary depending on the value of the contract, the supplier and what kind of goods or services are involved. While these costs might not seem like much, cumulatively, they can add up. Other times, it might be more expensive, for example when the lease is auto-renewed every year for redundant equipment. Some countries allow leases to roll over for the duration of the original contract if the proper notice period isn’t given. Fortunately, this isn’t the case in the UK. If you assume a 10% sales margin, then every £1 wasted is equal to £10 of lost revenue.

In addition to increasing costs, not giving notice can mean continuing to work with a vendor who is okay, when ideally a new vendor would have been awarded the contract, who would offer a better service.

The reason for not giving notice on a contract can vary, such as not reading the small print when signing the contract, being too busy, or just forgetting about it. As the contract terms are enforceable, the reasons are mostly irrelevant, and getting out of an automatically rolled over contract will likely cost money.

Because many contracted goods and services have changed over the last two years, it is critical to review them thoroughly before agreeing to a new agreement since the requirements are likely to have changed as well as the need to reduce consumption and waste. Remember that it is easier and cheaper to increase a contract’s value than to reduce it during the course of the contract.

In the past, supplier contracts were kept in desk drawers, and more recently they have been stored on shared cloud drives. There’s nothing wrong with this, so long as they are easily accessible and there’s a record of exactly when notice periods need to be given. As a result, notice periods will still be missed if spreadsheets and documents are not checked regularly.

Cloud-based contract management software can prevent contract notice periods from being missed. The contract repository stores all the details and documentation about the contract in one place that’s easily accessible and collaborative. Additionally, it sends out automated reminders of contract notice periods, so you never have to worry about missing one again.

oboloo provides a simple and cost-effective Contract Management solution designed exclusively for SMEs. oboloo is an intuitive self-service solution that also incorporates sourcing, supplier and savings management to enable companies to be supplier smart. To learn more please visit www.oboloo.com.