Contract Rollovers: The Silent Cost Draining Business Budgets

The Budget Killer Hidden in Plain Sight

Rollovers, also known as auto-renewals, are notorious for locking businesses into contracts they no longer want, need, or can justify. With economic pressure rising, we’re seeing more businesses surprised by renewal notices they didn’t spot, leading to another costly year of commitment.

Why Suppliers Include Them

Rollovers are likely to serve suppliers more than customers. They provide:

• A stable revenue stream

• Reduced churn

• Administrative simplicity

• A high likelihood that customers miss renewal windows

Some rollovers are harmless, but many are designed in a way that makes them difficult to avoid.

Typical Traps

• Narrow notice periods (e.g., termination only permitted 90–120 days before expiry)

• Automatic extension to multi-year terms

• Price increases baked into the renewal

• Renewals that are “deemed accepted” unless you object

  
  

A Realistic Scenario

A business signs a 12-month cleaning contract. The auto-renewal clause states that notice must be given “no later than 30 days prior to the expiry of the initial term.” The business misses the deadline by a week. The contract renews automatically for another 12 months at an increased rate permitted by the contract. This is completely lawful and extremely common.

When Rollovers May Be Unfair or Challengeable

In some cases, auto-renewals can be problematic:

• If the renewal mechanism wasn’t clearly highlighted

• If the window for termination is unreasonably restrictive

• If price increases weren’t adequately disclosed

• If the supplier relied on misleading statements

Certain industries (e.g., consumer sectors) have stricter rules; business-to-business arrangements are more flexible.

How to Reduce the Risk

• Maintain a centralised contract key dates calendar

• Set up automated reminders months ahead of renewal dates

• Ask suppliers to switch to “opt-in renewals”

• Insist price increases cannot apply automatically

• Review the contract 4–6 months before expiry

Rollovers Aren’t Inherently Bad — But They Must Be Controlled

Without monitoring, they become expensive, restrictive liabilities. With the right processes, they’re harmless.

Worried you might be tied into a contract longer than you thought?

We can assess your renewal terms, spot your exit routes, and help you avoid another accidental rollover. Drop us a message and we’ll review the contract with you.