Contracts

Contract drift

The divergence between the terms actually signed and the terms the systems are operating on.

Drift arises whenever the contract is a document and the configuration is data with nothing binding them. A rate keyed in wrongly, an amendment never applied, a renewal that carried forward the old terms — each silently misprices or misaccrues every subsequent transaction.

It is dangerous because it compounds and because it is asymmetric: the counterparty who benefits from the drift has no reason to raise it.

Related terms

Contract lifecycle management (CLM)

Managing a commercial agreement from drafting through negotiation, execution, amendment, renewal and expiry.

Amendment

A formal change to an executed agreement, creating a new version with its own effective date.

Price triangulation

Reconciling the three prices that exist for one transaction — invoice price, contract price and net-net pocket price — into a single agreed number.

Revenue leakage

Money that was earned but never collected, or paid out when it was not owed, through failures of process and data rather than of commercial judgement.

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