Beware of zombie contracts: A terrifying tale of auto-renewals 

As the leaves turn golden and the air gets crisp, we all know what time of year it is—Halloween! 🎃 It’s the season of scary stories, haunted houses, and, of course, the dreaded “zombie contracts.” Yes, you heard that right. Just when you thought you were safe, these undead auto-renewal agreements rise from the grave, ready to wreak havoc on your budget and sanity. 

The horror of contract auto-renewals

Picture this: It’s a dark and stormy night. You’re sipping your pumpkin spice latte, feeling cozy and content. Suddenly, you get an email notification. Your heart races as you open it, only to find that a contract you thought had expired has auto-renewed. Cue the horror music! 

These zombie contracts are the stuff of nightmares. They lie dormant, waiting for the perfect moment to reappear and drain your resources. You thought you had canceled that software subscription or ended that service agreement, but no—these contracts have a life of their own. They auto-renew without your knowledge, rearing their ugly heads when you least expect it. (Just ask BISSELL.) 

Encountered a zombie contract and lived to tell the tale? You’re not alone. Subscription service models have become the norm these days, ranging from streaming services to software licenses to meal delivery services. In fact, one recent study showed respondents had nearly four active subscriptions at any given time — and 38% of respondents reported forgetting to cancel unused subscriptions!  

These scary subscription-based business models have caught the attention of legislators, too. In the past year, the US and Germany have tightened rules on subscription plans with automatic renewals. Starting in July 2022, laws in California and Germany required businesses to get clear consent from customers, send confirmation emails, and provide easy ways to cancel their subscription. The FTC and various states also have similar rules to protect consumers.  

The plot twist: Contract Lifecycle Management (CLM) software

Fear not! There’s a hero in this tale: Contract Lifecycle Management (CLM) software.  

Think of CLM software as your trusty ghostbuster, a solution that automates and streamlines the entire lifecycle of a contract. This includes contract creation, negotiation, execution, compliance, and renewal – plus automatic notifications so you never miss a renegotiation period. A robust CLM solution provides a centralized repository for all contracts, automated alerts for key dates, and advanced analytics to monitor contract performance and compliance.  

CLM systems can help with: 

• Visibility and tracking: CLM software gives you a clear view of all your contracts, so you know exactly when they are set to renew. No more surprises! 

• Automated alerts: Get timely notifications before a contract auto-renews. It’s like having a friendly ghost whispering in your ear, “Hey, don’t forget about this one!” 

• Centralized repository: Store all your contracts in one place, making it easier to manage and review them. It’s like having a map to the haunted house so you know where every jump-scare is hiding. 

• Compliance and control: Ensure that all your contracts comply with company policies and legal requirements. No more rogue zombie contracts running amok! 

Best practices to avoid unwanted auto-renewals 

There are several best practices to keep these undesirable auto-renewals from haunting you: 

1. Centralize contract information: As mentioned above, it’s important to store all contract details in a central location to ensure you capture key dates and avoid missed deadlines. 

2. Regularly review contracts: Periodic reviews help you stay on top of renewal dates and terms, allowing you to renegotiate or terminate agreements as needed. 

3. Set up renewal notifications: Implement automatic alerts well in advance of renewal dates, giving you ample time to make informed decisions. 

4. Define clear cancellation procedures: Ensure that all contracts have clear notice and cancellation procedures to mitigate risks associated with auto-renewal clauses. 

The happy ending

With the help of CLM software and these contract management best practices, you can finally put those zombie contracts to rest. No more unexpected renewals, no more budgetary shocks. You’ll have the peace of mind to enjoy your Halloween festivities without the fear of undead agreements lurking in the shadows. 

So, as you carve your pumpkins and prepare your costumes, remember to check your contracts. And if you haven’t already, consider investing in CLM software. Because in the battle against zombie contracts, it’s always better to be prepared. 

Happy Halloween! 👻 

Still scared? Learn the top 9 risks of contract mismanagement (that you can’t afford).