Creating and Managing Contracts

#Understanding Contract Structure

A contract links a customer to products, pricing, and delivery terms. Contracts support:

• One-time invoices: Single, standalone contracts
• Recurring contracts: Monthly, quarterly, annual, or custom intervals
• Multi-period revenue recognition: Deferred revenue spread across periods
• Net terms: When payment is due relative to invoice date
• Discounts: Fixed or percentage-based reductions

#Creating a Contract

1. Navigate to Revenue & Invoicing → Contracts

2. Click + Create contract

3. Fill in the contract details:

   • Contract Name: Internal identifier (e.g., "Acme Corp - Annual License 2024")
   • Customer: Select the customer
   • Start Date: When the contract period begins
   • End Date: Contract expiration (optional for ongoing contracts)
   • Company Entity: Which legal entity is providing the service
   • Currency: Billing currency

4. Click Next to add products and pricing

#Adding Products and Line Items

Contracts can include multiple line items for different products or services:

1. Click Add Line Item
2. Select a Product from your catalog (or create inline)
3. Set the Quantity and Unit Price
4. Apply optional Line Discount (amount or percentage)
5. Select the Tax Category (if applicable)
6. Click Add

Good to know: You can add as many line items as needed. Light will calculate totals including tax and discounts automatically.

#Payment Terms and Invoicing

Configure how and when invoices are generated:

1. In the contract details, find Payment Terms

2. Set the Net Terms (e.g., 30, 60, 90 days)

3. Choose the Invoicing Frequency:

   • One-time: Single invoice at contract start
   • Monthly: Recurring invoice each month
   • Quarterly: Every three months
   • Annually: Every 12 months
   • Custom: Define your own schedule

4. If recurring, set the Number of Invoices or End Date

#Revenue Recognition Setup

For contracts with multi-period revenue:

1. Navigate to the Revenue Recognition section

2. Choose the recognition method:

   • All upfront: Entire amount recognized on invoice date
   • Straight-line: Equal amounts over contract period
   • Custom schedule: Define specific amounts per period

3. Set the revenue recognition Start Date

4. Review the calculated recognition schedule

5. Click Save

The system will automatically create deferred revenue entries in GL when the invoice is posted.

#Contract Amendments and Versioning

Contracts in Light maintain version history:

1. Open an existing contract
2. Click Edit
3. Make your changes to products, pricing, or terms
4. Click Save as New Version
5. Add a Reason for Change (e.g., "Customer requested price reduction")

Previous versions remain accessible for audit and historical reporting.

#Auto-Invoicing

Enable automatic invoice generation from contracts:

1. Open the contract
2. Enable Auto-Invoice
3. Set Invoice Generation Date (e.g., "1st of each month")
4. Optionally, set Invoice Reminder Schedule (e.g., send reminder 5 days before due date)
5. Click Save

Light will automatically create and send invoices on schedule. You can review and adjust auto-generated invoices before they're sent.

#Contract Status Lifecycle

Contracts progress through these states:

• DRAFT: Contract created but not yet active
• ACTIVE: Currently in effect
• AMENDED: Contract has been modified (maintains current status)
• COMPLETED: All invoicing periods have ended
• CANCELLED: Terminated early

#Related Articles

• Creating and managing customers
• Products and pricing
• Invoice generation and customization
• Revenue schedules and deferred revenue