Framework Contract Budget Tracking
Framework or master contracts often have pre-approved spending limits. Cost control ensures spending under these contracts does not exceed agreed limits.
Key Elements:
- Contract value ceiling: Total max amount agreed in the contract.
- Drawdown tracking: Track how much has been spent under the contract.
- Purchase order linkage: Link each PO to the contract and update remaining budget.
- Notifications: Alerts when approaching or exceeding the contract budget.
Renewal/extension tracking: Know when a contract’s financial limit or term is near.
Example:
Your company has a $100,000 contract with a supplier for IT services. Each service order deducts from that contract’s total. After $85,000 is used, a warning triggers so you can renegotiate or renew.
Framework Contract Budget Control
features to manage contract budgets. These systems typically allow for:
- Setting contract value ceilings
- Tracking expenditures against contracts
- Linking purchase orders to contracts
- Receiving alerts when approaching or exceeding contract budgets
For instance, ERP solutions like SAP or Oracle NetSuite provide modules for contract and procurement management, enabling businesses to monitor and control spending under framework contracts effectively.