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10 Things You Need to Know about Contract Renewals

Business phone contracts can be a double-edged sword. On one hand, they can ensure that you and your business are receiving all the promised features from your provider at the best possible price. However, they can also be used to chain your services to a particular price point, service level, hardware, and provider for a period of time, usually years.

Here are 10 things you need to know about business phone contract renewals.

1: You should be notified 30, 60, and/or 90 days before the end of your contract

A good business phone service provider will remind you well in advance that your contract is expiring and should begin to talk with you about potential upgrades to your service and renewing your contract. In fact, you shouldn’t only hear from your provider at renewal time. But unfortunately…

2: Some service providers don’t give a lot of warning

Service providers currently only need to give warning 120 days before your contract expiration date. This is considered “fair warning”, and is usually found in the small print of your monthly invoice.

3: Verbal proof is not enough

It’s easy for large organizations to be disorganized as information travels through multiple departments. It is kind of like those old games of “telephone”. Don’t rely solely on what a representative tells you over the phone about your contract renewal, ensure you have it in writing or via email as well. This gives you proof of any change that has occurred, such as going from a contract to month-to-month after your contract ends, increasing the service level, or adding features to your plan.

4: If you’re thinking of changing service providers, request to be switched to month-to-month services

Informing your current provider that you want to be switched to month-to-month services gives you the leverage to change providers at the end of your contract, or negotiate a better deal if you wish to stay with your current provider. Some service providers will inflate the monthly price when you leave the contract in the hopes that you will make a decision soon. Be aware of this tactic and see it as a sign you need to move on.

5: Cancelling mid-contract? It’ll cost you

As a penalty for leaving the contract early, some service providers will charge business clients 50% of the remaining balance of the contract. Recently I have even heard of providers trying to charge 75-100% of the remaining contract balance, which could cost even small accounts thousands of dollars.

6: Beware, some contracts are auto-renewing!

Some contracts have a clause whereby the contract automatically renews at the end of the term with no action needed on your part. If this is the case, your telecom provider should keep a written and signed record of your contract, with the clause that it will be an auto-renewing. It is their responsibility to show that they have given fair warning that the contract is auto-renewing at a given date as well (re: point #2). If not, your business can be released from the contract much easier.

7: Know your billing start date

Some phone service providers will start billing your organization as soon as you plug the phones in, even if you haven’t you actually begun to use the service at that point or if the system even works. At net2phone Canada, we wait until everything is fully-functional on your end before prompting your first invoice and provide a 30 day money back guarantee!

8: Thinking of cancelling? Make sure you give notice

Mark your calendar! 60 to 90 days before your contract end date, notify your provider that you wish to move to a month-to-month service plan with the ability to cancel at any time. If you do not give your telco enough notice, your contract may auto-renew or prove difficult to get out of, leaving you trapped in the contract for another term.

9: Have you added services mid-contract?

Ensure you check when each of your added services’ contracts end. Some service providers will renew all contracts at the same time when a new service is added, while others will leave all services on separate terms. Having multiple contract end dates makes it harder to leave the provider as some necessary contracts will expire before the additional contracts.

10: Turn it all off!

So your contract is done and you’ve cancelled all your services. Make sure that all of your services will be turned off when you switch providers. I’ve heard many cases where businesses have been billed for services they thought they weren’t receiving any more because they didn’t specify to turn off those services as well. As always, get everything related to cancelled services in writing too.