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Contract Management

A contract is a binding agreement between two parties.

In the ServiceNow platform, contracts contain detailed information such as contract number, start and end dates, active status, terms and conditions statements, documents, renewal information, and financial terms.

Contract Management is enabled automatically in the base ServiceNow platform.

THE Contract Lifecycle

Contracts follow a lifecycle based on state and substate.  This determines when they can be edited and when they are in compliance (expiration).

Contract States

State | Description
Draft | User adds information about the contract and specifies an approver.
Active | Contract was approved and has reached the specified start date.
Expired | Contract reached the specified end date. Expired contracts with an active renewal workflow that are waiting for approval have a substate of Awaiting Review. Expired contracts with an active renewal workflow where the renewal was approved, but the renewal date has not yet passed, have a substate of Renewal Approved. Expired contracts with no active renewal or extension pending workflow have an empty substate.
Canceled | Contract was discontinued and is no longer active.

Contract substates

Substate | Description
Awaiting Review | Contract is being prepared for review.
Under Review | Contract is sent to the approver and the approver is reviewing the contract.
Approved | Contract is reviewed and accepted by the approver.
Rejected | Contract is reviewed and declined by the approver.
Renewal Approved | Contract renewal is approved by the approver.
Renewal Rejected | Contract renewal is rejected by the approver.
Extension Approved | Contract extension is approved by the approver.
Extension Rejected | Contract extension is rejected by the approver.
None | No substate is specified.

Process

Create a contract

You need the contract_manager or admin role to create a contract.

1. In the Left Navigator Bar, go to Contract, and then under Insurance, Leases, Non-Disclosure, Maintenance, etc, click the type of contract you want to create.

Please note that some contracts like Software Licenses may function differently.

2. Click the New Button

Contract New Button

3. Fill in the fields and click submit.  The full list of fields and what they do is listed here
4. If you filled in an approver, the contract now has a substate of "Under review"
5. The approver received an approval

Contract Management Approval

6. If the approver approves, the contract goes to state:active

There are also optional steps in the contract creation process:

Adjust a contract

You need the contract_manager or admin role to adjust a contract.

1. Open an existing contract
2. Click the Adjust button

Contract Adjust

3. Click Apply Changes to complete the adjustment

There are also optional steps in the contract adjust process:

Verify contract administrator assignment for notification

You need the contract_manager or admin role to adjust notifications.

This can be one of the most helpful (or most annoying) part of ServiceNow.  It is important you adjust this.

When the contract.expiration event runs on the Contract [ast.contract] table each night, an email message is sent to the person identified as the contract administrator. This occurs at the following times.

  • 90 days ahead of the contract expiration date
  • 60 days ahead of the contract expiration date
  • 30 days ahead of the contract expiration date
  • On the contract expiration date

A user with the admin role can edit the contract.expiration condition check that processes contract notifications. Follow the procedure below to verify that the right contract administrator is assigned to the contract.

Procedure

  1. Navigate to Contract Management > Contract > All.
  2. Select a contract.
  3. Check that the Contract administrator field contains the correct name. A single name can be specified.

Terms and conditions

You can add terms and conditions to a contract to keep all documentation that is relevant to a contract in one location.

Contract Terms and Conditions

The terms and conditions can be searched and used in reports. If multiple terms and conditions records are added to a single contract, set an order for the records so they appear in a specific sequence. The terms and conditions fields become read-only after a contract is sent for approval.

Users with the contract_manager role can read contract history and add terms and conditions.

There are three procedures involved in adding terms and conditions to a contract, as follows.

Create a contract rate card

A contract rate card provides detailed price information for a contract and enables you to generate expense lines for recurring expenses automatically. There can be multiple rate cards for the same contract.

You must activate Cost Management to use rate cards. You need the role of financial_mgmt_user, asset, or contract_manager use them as well.

In my opinion, this is only applicable unless you are doing a full cost management implementation.  You can read about it here however.

Monitor a contract

You need the contract_manager or admin role to view contract history.

On any contract, you can view the Contract History Related list to see who edited the contract or view earlier versions.

You can also view 12 different contract reports in the base system as well.  Those reports are just a start, you'll probably want to create your own reports as well.

More information

Here is an video tutorial on Contract Management