New to NetSuite | Understanding the Contract Renewal Process Flow

Clarisa De Torres-Oracle

Now that you have an understanding of contracts and contract renewals from the previous articles, New to NetSuite | Understanding Contracts in the Contract Renewals SuiteApp and New to NetSuite | Understanding Renewals in the Contract Renewals SuiteApp, let us review how the complete contract renewal process works. 

The Software Vertical Contract Renewals SuiteApp connects the initial sales order, customer contract, contract items, renewal transaction, and renewal contract into one continuous lifecycle. 

The diagram below provides a simplified view of that process:

1. Enter the Initial Sales Order 

The process begins when a sales order is created for the customer. The contract term and start date entered on the sales order establish the overall contract period, while eligible transaction lines are later used to create contract items. 

A new contract is associated with the sales order based on the Sales Order Status to Create Contract preference: 

• Sales Order: Pending Approval: The contract is generated after the sales order is saved. 
• Sales Order: Pending Fulfillment: The contract is generated after the sales order is approved.

This means the contract is not always created immediately upon order entry. Its creation timing depends on the account’s Contract Renewals preferences. 

After the contract is generated, users can access it from the Contract field on the original sales order. Contracts can also be reviewed from the Contracts subtab of the associated customer record. 

From Customer record:

2. Approve and Bill the Order

The sales order must proceed through the organization’s approval and billing process. 

Under the default configuration, contract items are generated after the sales order is fully billed. However, the exact transactions processed depend on the Transaction Status to Process and other contract-item creation preferences configured in the account.

The contract remains in a Pending status until its contract items have been created. 

3. R03 Creates the Contract Items 

The scheduled R03 script processes eligible sales transactions and creates contract-item records from their qualifying item lines. 

When the contract items are successfully generated: 

• The contract status changes from Pending to Active. 
• The contract and its contract items form the customer’s install base. 
• The install base becomes the source of renewable items for future renewal processing.

4. R05 Generates the Renewal Transaction

The scheduled R05 script evaluates eligible active contracts. 

R05 automatically generates a renewal transaction when the contract’s target renewal date is earlier than or equal to the current date. The type of transaction created is determined by the Transaction Type to Create preference via Contract Renewals > Setup > Contract Renewals Preferences:

Only contract items configured as renewable are automatically included in the renewal transaction. 

When the renewal transaction is a sales order, or when a renewal opportunity or estimate is converted to a sales order, a renewal contract is created with a Pending status. After R03 creates the renewal contract items, the renewal contract becomes Active, and the preceding contract changes to Renewal Processed. 

Renewal Contract:

Original/Preceding Contract:

The complete lifecycle can be summarized as: 

Initial Sales Order → Contract → Approval and Billing → R03 Contract Items → Customer Install Base → R05 Renewal Transaction → Renewal Contract → R03 Renewal Contract Items → New Install Base 

Before changing the R03 or R05 schedules, preferences, or transaction statuses, validate the complete process in a sandbox account. 

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