Terminating a Contract

Contract Termination Procedure

Ability to terminate a contract within our system and specify the necessary user permissions

Procedure:

1. Access the contract: Open the specific contract in the system.
2. Locate the Actions menu: Navigate to the top right of the screen to find the Actions section.
3. Initiate termination: Select “Terminate” from the Actions menu.

User Permissions: To access the Terminate function, users must meet the following criteria:

• Hold Finalizer status
• Have Contract Approval rights assigned to their role

Note: Ensure that only authorized personnel with the appropriate permissions can perform contract terminations to maintain system integrity and comply with organizational policies.

After clicking Terminate, a Terminate popup will appear with 3 Terminate options and date associated with each:

Contract Termination Options and Procedures

This outlines the various termination actions available within the contract management system, their implications, and best practices for implementation.

General Termination Guidelines:

• A specific date is required for each termination action.
• Users may choose to terminate Accruals or Claims independently.
• The Sweep option should only be used in conjunction with other termination actions.
• To execute any termination action, input the desired date (current date or later) and select “Terminate.”

Termination Actions:

Accruals Termination

• Effect: Accruals become static as of the specified date and cease to change thereafter.
• System Actions: a. Automatically updates the contract end date to match the entered date. b. Adjusts the end date of any lump sum payments to align with the entered date.
• Note: The contract state remains unchanged and does not update to “Terminated.”

Claims Termination

• Effect: Claim processing ceases after the specified date.
• System Action: Updates the contract state to “Terminated” on the date entered for Claims.

Sweep Action

• Effect: Zeroes out the balance of accrued funds on the contract after the specified date.
• System Actions: a. Transfers the current balance to a “swept amount” category. b. Reflects the swept amount in relevant reports.
• Note: This action does not alter the contract status.

Best Practices:

• When implementing the Sweep option, it is recommended to terminate both Accruals and Claims concurrently.
• Carefully consider the implications of each termination action on contract management and financial reporting.

Example: In a scenario where a contract has a $4,000 balance, executing a Sweep action would result in:

• The $4,000 balance being reduced to $0.
• The $4,000 being recorded as the “swept amount” in subsequent reports.

By adhering to these guidelines and understanding the implications of each action, users can effectively manage contract terminations while maintaining accurate financial records.

Contract Termination: Critical Considerations and System Behavior

This outlines key aspects of the contract termination process, including date requirements, system actions, and the impact on contract status and related components.

Date Requirements

• The “Date” field is mandatory for all termination actions.
• All entered dates must be either the current date or a future date.

Contract Status Updates

• Only the Claims termination date triggers an update of the contract status to “TERMINATED”.
• Accruals termination may result in an “EXPIRED” status under specific conditions (see section 4).

Accruals Termination

• Upon submission of an Accruals termination date via the user interface: a. The contract header's end date is automatically set to the termination date. b. If the termination date is the current date, the contract status immediately changes to “EXPIRED”. c. If the termination date is in the future, the end date is updated, but the contract remains in its original state.

Simultaneous Accruals and Claims Termination

• When both Accruals and Claims are terminated with the current date: a. The contract status changes to “TERMINATED” (Claims termination takes precedence). b. The contract end date is set to the Accruals termination date.

Impact on Lump Sum Payments

• For contracts terminated for Accruals: Lump sum payments that begin before the termination date and end after it will have their event end date adjusted to match the termination date.

Sweep Date Considerations

• The Sweep date does not affect the contract status or end date modifications described above.

By understanding these system behaviors and considerations, users can more effectively manage the contract termination process while maintaining accurate records and contract statuses. Copy

Contract Termination: Prerequisites and Implications

This outlines important considerations regarding contract termination, focusing on the relationship between active contracts and draft versions, as well as the impact of termination on claim processing.

Termination Prerequisites

• Active Contract with Existing Draft: a. An active contract cannot be terminated if a draft version of the same contract exists. b. Resolution: The draft version must be cancelled prior to initiating termination of the active contract.
• Best Practice: Regularly review and manage draft contracts to ensure they do not impede necessary terminations of active contracts.

Post-Termination Implications

• Claim Processing: a. Once a contract's status is updated to “Terminated,” the system prohibits the creation of new claims against that contract. b. This restriction helps maintain the integrity of the claim process and ensures compliance with contract terms.
• Best Practice: Prior to terminating a contract, ensure all valid claims have been processed and consider notifying relevant stakeholders of the impending termination.

System Safeguards

• The system's built-in logic prevents unauthorized terminations and claim submissions, thereby: a. Maintaining data consistency across contract versions. b. Enforcing proper contract lifecycle management. c. Mitigating the risk of processing invalid claims

Un-Terminating a Contract

Contract Un-Termination Process

This document outlines the procedure and implications of reversing a contract's terminated status, including the effects on accruals, claims, and swept balances.

Authorization Requirements

• Only users with appropriate system permissions can execute the un-termination process.
• Access to this functionality is restricted to ensure proper contract management oversight.

Un-Termination Procedure

• Initiation: Select the “Un-Terminate” button within the contract interface.
• System Response: The contract will automatically revert to its appropriate operational state.

Impact on Contract Components

• For accruals, Upon un-termination, accrual calculations resume if previously terminated. System continues tracking and updating accruals according to contract terms.

• For claims, claims processing capability is restored if previously terminated. System allows new claim submissions according to contract parameters.

• For swept balances, un-terminating a swept contract restores the original accrual balance. All previous financial tracking mechanisms are reactivated.

• System Behavior- The contract management system automatically: a. Restores appropriate contract status b. Reactivates relevant financial tracking c. Enables associated business processes

If a contract is terminated, it can't be un-terminated if there is another contract out there with overlapping timeframe.

The Terminated Date displays on the Contract Header. Hover over the date to see who terminated the contract and on which date the terminate action was performed.