Definition
Contract liability
The total an organisation is still committed to pay under its current software contracts, useful for budgeting and audits.
Also known as: Committed spend, Contractual liability
Contract liability is the total amount an organisation is still contractually committed to pay across its active software agreements. It is the sum of what each contract will cost between now and its next decision point.
It is a key figure for budgeting, for board reporting, and for due diligence, because it shows committed future spend that cannot simply be switched off overnight.
Related terms
- Software renewalThe point at which a software subscription or licence reaches the end of its term and either continues, is renegotiated, or ends.
- Renewal dateThe date a contract term ends and renews for another period. It is the anchor from which the cancellation deadline is calculated.
- Cancellation deadlineThe last day you can give notice to stop a contract renewing, worked out by counting the notice period back from the renewal date.