Contract Management
Guide to managing Purchase Contract lifecycle including amendments, renewals, and closing.
Contract Lifecycle
CONTRACT LIFECYCLE
═══════════════════════════════════════════════════════════════════
CREATE ACTIVE MANAGE END
────── ────── ────── ───
┌─────────┐ ┌─────────┐ ┌─────────┐ ┌─────────┐
│ Create │───►│ Active │───►│ Amend/ │───►│ Renew │
│ & │ │ Use │ │ Monitor │ │ OR │
│ Approve │ │ │ │ │ │ Close │
└─────────┘ └─────────┘ └─────────┘ └─────────┘
│ │
└──────────────────────────────┘
Continuous Cycle
Contract Amendments
When to Amend
| Scenario | Amendment Type |
|---|---|
| Price change | Update item rates |
| Add items | New items to contract |
| Extend dates | Modify effectivity |
| Change limits | Update min/max amounts |
| Update terms | Modify payment terms |
Amendment Process
AMENDING A CONTRACT
───────────────────────────────────────────────────────────
1. Open Contract Record
Transactions > Purchases > Purchase Contracts > [Contract]
2. Click "Edit"
3. Make changes:
┌────────────────────────────────────────────────────┐
│ Original Amended │
│ ──────── ─────── │
│ Max Amount: $100,000 Max Amount: $150,000 │
│ End Date: 12/31/2026 End Date: 06/30/2027 │
│ WIDGET-100: $25.00 WIDGET-100: $24.00 │
└────────────────────────────────────────────────────┘
4. Add note in Memo field:
"Amendment 1: Increased max, extended 6 months,
reduced WIDGET-100 price per negotiation 01/2026"
5. Save
Note: Amendment may trigger re-approval if limits exceeded
Amendment Tracking
TRACKING AMENDMENTS
───────────────────────────────────────────────────────────
Contract: PC-00125
System Notes: Show amendment history
┌────────────────────────────────────────────────────────────────┐
│ Date Field Changed Old Value New Value │
│ ──── ───────────── ───────── ───────── │
│ 03/15/26 Maximum Amount $100,000 $150,000 │
│ 03/15/26 End Date 12/31/2026 06/30/2027 │
│ 03/15/26 WIDGET-100 Rate $25.00 $24.00 │
└────────────────────────────────────────────────────────────────┘
Best Practice: Document reason in memo field
Contract Renewal
Renewal Process
CONTRACT RENEWAL OPTIONS
───────────────────────────────────────────────────────────
Option 1: EXTEND EXISTING CONTRACT
• Edit contract
• Update expiration date
• Adjust terms if needed
• Maintains history
Option 2: CREATE NEW CONTRACT
• Copy existing contract
• Update for new period
• Fresh tracking
• Links to previous
Option 3: RFQ FOR COMPETITIVE BIDS
• Issue new RFQ
• Evaluate vendor quotes
• Award to best offer
• May change vendor
Copy Contract for Renewal
COPY CONTRACT FOR NEW PERIOD
───────────────────────────────────────────────────────────
1. Open expiring contract
2. Actions > Copy
3. Update new contract:
┌────────────────────────────────────────────────────┐
│ New Contract from Copy │
│ │
│ Based on: PC-00125 │
│ │
│ Update: │
│ Effectivity Date: 01/01/2027 │
│ Expiration Date: 12/31/2027 │
│ │
│ Review and update: │
│ • Pricing (if negotiated) │
│ • Items (add/remove) │
│ • Quantities │
│ • Terms │
└────────────────────────────────────────────────────┘
4. Save and submit for approval
5. Link new contract to previous:
Use custom field to reference predecessor
Closing Contracts
Close Scenarios
| Scenario | Action |
|---|---|
| Expired | Automatic status change |
| Fulfilled | Purchases complete |
| Replaced | New contract created |
| Terminated | Cancel before expiry |
Manual Close
MANUALLY CLOSE CONTRACT
───────────────────────────────────────────────────────────
1. Verify no pending POs linked to contract
2. Open contract record
3. Click "Close" or change Status to "Closed"
┌────────────────────────────────────────────────────┐
│ Close Contract PC-00125? │
│ │
│ Summary: │
│ Maximum: $100,000 │
│ Purchased: $85,000 (85%) │
│ Remaining: $15,000 (unused) │
│ │
│ Reason for Close: │
│ ○ Replaced by new contract │
│ ○ Vendor relationship ended │
│ ○ Business needs changed │
│ ● Other: [Consolidated with PC-00130] │
│ │
│ [Cancel] [Close Contract] │
└────────────────────────────────────────────────────┘
4. Closed contract cannot be used for new POs
Vendor Rebates
Rebate Overview
VENDOR REBATES CONCEPT
═══════════════════════════════════════════════════════════════════
Purchase from Vendor ───────────► Accumulate Purchases
│
Reach Threshold ◄──────────────────────┘
│
▼
Receive Rebate ───────────► Credit/Payment from Vendor
Tracking Rebates with Contracts
REBATE TRACKING EXAMPLE
───────────────────────────────────────────────────────────
Contract: PC-00125
Vendor: ABC Supply Inc.
Rebate Terms (documented in memo):
Purchase >$50,000: 2% rebate
Purchase >$100,000: 5% rebate
Tracking (custom fields or notes):
┌────────────────────────────────────────────────────────┐
│ Purchases to Date: $85,000 │
│ Rebate Tier: 2% │
│ Rebate Earned: $1,700 │
│ │
│ Next Tier at: $100,000 (need $15,000 more) │
│ Potential Rebate: $5,000 (at 5%) │
└────────────────────────────────────────────────────────┘
Note: Use Vendor Rebates SuiteApp for automation
Recording Vendor Credits
VENDOR CREDIT FOR REBATE
───────────────────────────────────────────────────────────
When vendor issues rebate:
1. Create Vendor Credit
Transactions > Payables > Enter Vendor Credits
┌────────────────────────────────────────────────────┐
│ Vendor: ABC Supply Inc. │
│ Date: 03/31/2026 │
│ Memo: Q1 2026 Volume Rebate - PC-00125 │
│ │
│ Account: Vendor Rebates (5900) │
│ Amount: $1,700 │
└────────────────────────────────────────────────────┘
2. Apply to future bills or request payment
Vendor Performance
Performance Tracking
VENDOR PERFORMANCE METRICS
───────────────────────────────────────────────────────────
Contract: PC-00125
Vendor: ABC Supply Inc.
Performance Scorecard:
┌────────────────────────────────────────────────────────┐
│ Metric Target Actual Status │
│ ────── ────── ────── ────── │
│ On-Time Delivery 95% 92% ⚠️ Below │
│ Quality (Defects) <1% 0.5% ✓ Met │
│ Price Compliance 100% 100% ✓ Met │
│ Response Time 24 hrs 18 hrs ✓ Met │
└────────────────────────────────────────────────────────┘
Use for renewal negotiations
Vendor Scorecard
Use NetSuite Vendor Scorecard or custom tracking:
| Metric | Description | Weight |
|---|---|---|
| Delivery | On-time % | 30% |
| Quality | Defect rate | 30% |
| Price | Consistency | 20% |
| Service | Responsiveness | 20% |
Audit Trail
Contract History
CONTRACT AUDIT TRAIL
───────────────────────────────────────────────────────────
Contract: PC-00125
System Notes Subtab:
Chronological History:
┌────────────────────────────────────────────────────────────────┐
│ Date User Action │
│ ──── ──── ────── │
│ 01/01/26 John Smith Created contract │
│ 01/02/26 Jane Doe Approved │
│ 01/02/26 System Status → Active │
│ 01/15/26 John Smith Created PO-00501 │
│ 02/10/26 John Smith Created PO-00523 │
│ 03/15/26 Mary Jones Amended: Max $100K → $150K │
│ 03/15/26 Jane Doe Re-approved amendment │
└────────────────────────────────────────────────────────────────┘
Contract Status Summary
Status Dashboard
CONTRACT STATUS OVERVIEW
───────────────────────────────────────────────────────────
All Purchase Contracts:
Status Count Total Value
────── ───── ───────────
Active 15 $1,250,000
Pending 3 $175,000
Expiring (30d) 4 $320,000
Expired 12 $890,000
Action Items:
⚠️ 4 contracts expiring within 30 days
⚠️ 2 contracts below minimum threshold
✓ 15 active contracts in good standing
Best Practices
Contract Management
| Practice | Recommendation |
|---|---|
| Review cycle | Monthly contract review |
| Renewal lead | Start 60 days before expiry |
| Documentation | Note all amendments |
| Performance | Track vendor performance |
| Compliance | Ensure purchases use contract |
Common Issues
| Issue | Cause | Resolution |
|---|---|---|
| Contract expired | No renewal process | Set up alerts |
| Amendment not approved | Re-approval needed | Submit for approval |
| Rebate missed | No tracking | Implement tracking |
| Performance poor | No metrics | Start scorecard |
Related Topics
- Contract Setup - Creating contracts
- Contract Fulfillment - PO creation
- Contract Reporting - Analysis