Back to Glossary
What is a Contract Renewal?
Contract renewal and termination mark the final phase of the contract lifecycle, when an organization decides whether to extend, renegotiate, or end an agreement. A renewal continues the relationship under the same or updated terms, while a termination formally ends the contract due to expiration, breach, or strategic change.
Automated renewal management features in CLM software help teams avoid missed deadlines or unwanted auto-renewals by surfacing key dates and required notice periods in advance.
Why Contract Renewal / Termination Matters
Mismanaged renewals can drain budgets, extend poor vendor relationships, and create unnecessary risk. A disciplined approach to contract renewal and termination ensures that organizations stay in control of spending, vendor performance, and compliance.
Strong renewal management:
- Prevents auto-renewals from triggering unnoticed
- Allows time for renegotiation or rebidding
- Tracks performance metrics before renewing vendors
- Maintains accurate data for financial forecasting
Best Practices for Contract Renewal / Termination
-
Centralize all contract renewal and expiration dates in one system.
-
Set alerts 60–90 days before expiration for proactive review.
-
Evaluate vendor performance and pricing before renewal decisions.
-
Define clear termination notice periods within each contract.
-
Document renewal or termination decisions for audit records.
Example of Contract Renewal / Termination in Practice
A finance team receives automated reminders 90 days before vendor contracts expire. Using performance data, they decide to terminate one underperforming vendor and renew another at a negotiated discount—capturing both outcomes in the CLM system.
