Overview
Contract Statuses provide immediate clarity on whether a contract is Active - In Effect, Active - Future, Inactive, or Undetermined. By leveraging key details such as effective dates and renewal information, Contract Statuses allow you to monitor your contractual obligations in real-time.
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Why are Contract Statuses Important?
Understanding the current state of your contracts is crucial for informed decision-making. Contract Statuses help ensure compliance with contractual terms, avoid lapses in service, and manage renewal or termination processes efficiently. They provide a snapshot of each contract's lifecycle, aiding in proactive management and timely interventions.
Types of Contract Statuses
The status of a contract plays a crucial role in helping you determine the current state of an agreement. Statuses are automatically assigned based on contract details and provide real-time insight into the state of a contract. Let's explore the meanings of Active, Inactive, and Undetermined statuses and examples to illustrate their practical implications.
Active - In Effect Status
Definition: A contract is active and currently within its effective period.
- Criteria: This status is set automatically when a contract's end date is in the future and the start date is on or before today's date.
- Example Scenario:A software subscription agreement that started on January 1, 2024, and ends on December 31, 2024, will be Active - In Effect from January 1, 2024, to December 31, 2024.
Active - Future Status
Definition: A contract is active but its effective period has not yet started.
- Criteria: This status is set automatically when a contract's start and end dates are both in the future.
- Example Scenario: A contract signed today that starts on January 1, 2025, and ends on December 31, 2025, will be "Active - Future" until January 1, 2025.
Note of Perpetual contracts: Perpetual contracts indicate ongoing availability and remain Active unless terminated. If services are no longer used, mark the contract as Terminated to transition it to Inactive.
Inactive Status
Definition: A contract is considered inactive when it meets certain criteria that indicate it no longer represents an active, enforceable contractual agreement. Contracts transition to an inactive status upon expiration or termination.
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Criteria:
- The end date is less than today's date.
- The termination date is equal to or less than today's date.
- Example Scenario: A service agreement with a fixed term of one year expires today. Today the contract is active; tomorrow, the contract will be inactive.
Undetermined Status
Definition: Contracts are classified as undetermined when the details necessary to determine whether they represent an active or inactive contractual agreement are missing.
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Criteria:
- If the renewal type is automatic, optional, or non-renewing, the status will be undetermined if the contract end date is empty.
- If the renewal type is perpetual, the status will be undetermined if the contract start date is empty.
- Example Scenario: A contract with a renewal type of automatic is created, but the contract end date is empty. In the absence of a contract end date, the status remains undetermined until an end date is provided.
Additional Resources
For more details on managing contract statuses, please visit our Help Center.