The Good, the Bad and the Risky of Auto-Renewal Clauses - Photo by Glenn Carstens-Peters on Unsplash We’ve all been there. You check your credit card bill and see a service you forgot you subscribed to. Perhaps a meal kit trial, or a streaming service you meant to unsubscribe to before its free trial ended. Instead, it has auto renewed, and you’re on the hook for a full monthly or annual charge.

Something similar can happen with subscription-based services used by businesses. This type of clause may be prevalent in service, distribution, and supply contracts. Unfortunately, preventing it isn’t as simple as changing your account settings to “ban all auto-renewals.”

The best way to protect your company against mounting costs from unmonitored auto-renewal is to address it at its source: the contract.

What is an Auto-Renewal Clause?

Simply put, an auto-renewal clause stipulates that unless the customer actively cancels the contract, it will automatically renew at the end of the term.

The advantages of these clauses are obvious from a sales perspective. It puts the heat on the customer to take action to stop payments. This explains why auto-renewals are boilerplate for most sales contracts.

Procurement professionals are wary of auto-renewal clauses because they eat up budgets if not monitored and properly reviewed.

How Contract Lifecycle Management Can Help

So, what’s a company to do?

Companies need a single source of truth for all their contractual agreements and the terms therein. By doing so, they can execute global searches against contract language—both active and in negotiation. When a company gains a 360-degree view of where auto-renewal clauses exist, they can take proactive action to avoid unwanted renewals or eliminate clauses before they are signed.

The best tool for gaining comprehensive views of contracts is contract lifecycle management (CLM) software. At its most basic, CLM allows managers to execute keyword searches against contracts to surface potentially risky clauses like “auto-renewal.” Advances in contract management software have introduced artificial intelligence, trained on millions of contracts, to quickly detect auto-renewal clauses that don’t comply with company-defined policies and surface them for review. Advanced AI can include clauses that don’t explicitly use the term “auto-renewal” but carry the same intent.

What’s more, once clauses are identified, CLM technology can simplify steps to address auto-renewal clauses without slowing down the contracting process. For example, legal departments can upload approved, alternative clauses that contract managers can offer in redlines.


Today, technology can address auto-renewal issues by helping companies proactively identify auto-renewal clauses before they are agreed to. It also makes it easy for contract negotiators to access approved, pre-defined alternative language.

Many organizations don’t see the risk inherent in auto-renewed contracts, which leads to them being forgotten during most business processes. Considering how often those meal kit promos or streaming service free previews get away from you in your personal finances, you can imagine how costly it is to lose track of auto-renewal clauses at an enterprise scale.

By leveraging contract management technology that offers visibility into contracts, organizations can alleviate excessive spending and provide a big win for procurement teams.

IcertisWith unmatched technology and category-defining innovation, Icertis pushes the boundaries of what’s possible with contract lifecycle management (CLM). The AI-powered, analyst-validated Icertis Contract Intelligence (ICI) platform turns contracts from static documents into strategic advantage by structuring and connecting the critical contract information that defines how an organization runs. Today, the world’s most iconic brands and disruptive innovators trust Icertis to fully realize the intent of their combined 10 million+ contracts worth more than $1 trillion, in 40+ languages and 90+ countries.


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