When you escalate a contract, Kube performs different tasks based on what charge types were selected for escalation and whether another scheduled task is taking place the same day. Price escalations coincide with the monthly posting, but are always considered for the first of the following month. For example, if the next price escalation is July 1st, then during the monthly posting in June, the escalation will be considered and applied to those charges.
This article explains different price escalation scenarios and how they are affected by amendments, end of term renewals, and auto renewals.
If your organization uses the Consumer Pricing Index (CPI) to determine escalation rates, see also the scenarios outlined in Contract Escalation Scenarios with Consumer Pricing Index (CPI).
Escalation scheduled task summary
Scenario | Auto Renew On | Auto Renew Off | Scheduled Task Occurs During Term |
Auto Renew and Escalation | The auto renew scheduled task is skipped. The scheduled escalation occurs and renews the contract with the applicable settings. | The auto renew and the escalation scheduled tasks are both skipped, and the contract expires. | Not applicable to this scenario. |
Amendment and Escalation | First, the scheduled escalation takes place, and then the amendment takes place.
The auto renew scheduled task is skipped if the auto renewal were to also take place on the same day. | Not applicable to this scenario. | First, the scheduled escalation takes place, and then the amendment takes place. |
End of Term Renewal and Escalation | First, the scheduled escalation takes place, and then the end of term renewal takes place.
The auto renewal scheduled task is skipped. | First, the scheduled escalation takes place, and then the amendment takes place. | Not applicable to this scenario. |
Escalation accounting scenarios
Scenario | Original Contract Start Date | Contract Term | Price Escalation Term | Kube Actions |
The contract is set to auto renew on January 1, 2024 and change to a month to month term using the last known price with no prior discounts. | January 1, 2023 | 12 Months | 3.5% every 12 months on Rent charges. | Kube auto renews the contract on January 1, 2024 with a month to month term and applies a 3.5% increase to all Rent charges on the contract. The price escalation timer updates to January 1, 2025. |
The contract is set to end on January 1, 2024, but an end of term renewal is scheduled for January 1, 2024. | January 1, 2023 | 12 Months | 3.5% every 12 months on Rent charges. | Kube ignores the price escalation and renews the contract using the end of term renewal configurations. The price escalation timer updates to January 1, 2025. |
The contract is set to end on January 1, 2024, but an end of term renewal is started for November 1, 2023. | January 1, 2023 | 12 Months | 3.5% every 12 months on Rent charges. | This scenario is not possible. End of term renewals can only take place on the day after a contract expires or in the future. |
The contract is set to end on January 1, 2024, but an end of term renewal is scheduled for February 1, 2024. | January 1, 2023 | 12 Months | 3.5% every 12 months on Rent charges. | Kube auto renews the contract on January 1, 2024 with a month to month term and applies a 3.5% increase to all Rent charges on the contract.
Kube then renews the contract on February 1, 2024 using the end of term renewal configurations. The price escalation timer updates to February 1, 2025. |
The contract is set to auto renew on June 1, 2024 and change to a month to month term using the last known price with no prior discounts. | January 1, 2023 | 6 Months | 3.5% every 12 months on Rent charges. | Kube auto renews the contract on July 1, 2024 with a month to month term and no price escalation.
The contract renews again on January 1, 2025 as a month to month contract with a price escalation of 3.5% on all Rent charges on the contract. The price escalation timer updates to January 1, 2026. |
The contract is set to auto renew on July 1, 2024 and change to a month to month term using the last known price. | January 1, 2023 | 18 Months | 3.5% every 12 months on Rent charges. | Kube applies the 3.5% price escalation on January 1, 2024 to all Rent charges on the contract. The price escalation timer updates to January 1, 2025. |