Vendor Contracts

Vendor contracts capture the terms you agreed with a supplier — the contracted amount per period, the billing frequency, effective and expiration dates, a terms summary, and the original document PDF. When a bill comes in, DayZero compares it against the vendor's active contract and stamps a match status. That signal is what the AP approval workflow reads to decide whether a bill auto-approves or escalates, so keeping contracts current is what makes routing accurate. Vendor contracts are part of the AP Automation add-on.

Key capabilities

• Per-vendor contracts with name, contracted amount, and billing frequency
• Contract lifecycle: draft → active → expired / terminated
• Effective and expiration dates, with auto-expiry once the expiration date passes
• Amount-based comparison of incoming bills against contracted terms (5% tolerance)
• AI document comparison (bill PDF vs contract terms) when the amount check is inconclusive
• Match status feeding AP approval: matched, over_contract, under_contract, no_contract, needs_review
• The matched contract linked back onto the bill
• Original MSA/contract PDF stored securely and a terms summary (AI-extracted or manual)
• AI contract analysis surfacing renewal, overspend, and terms insights with severity
• Shared vendor records across AP and inventory

How it works

When a bill is created, DayZero finds the vendor's active contract, compares the amount within tolerance (escalating to an AI document check when ambiguous), and stores a match status the approval workflow routes on.

flowchart TD
  bill["New bill"] --> active{"Active contract?"}
  active -->|"no"| nocontract["no_contract -> route by amount"]
  active -->|"yes"| amt["Compare amount (5% tolerance)"]
  amt -->|"within"| matched["matched"]
  amt -->|"over / under"| drift["over_contract / under_contract"]
  amt -->|"ambiguous"| ai["AI document compare -> needs_review"]

How to use it

1. Open Vendor Contracts under the Payables sidebar group (requires the AP Automation add-on).
2. Click New Contract, select the vendor, and enter the contract name and contracted amount.
3. Choose a billing frequency (weekly, biweekly, monthly, quarterly, annually, or one_time).
4. Set the effective and expiration dates and the status (draft, active, expired, terminated).
5. Optionally attach the contract PDF and add a terms summary.
6. As bills arrive, DayZero compares them against the active contract automatically; run AI analysis for renewal and overspend insights.

Pro tips

• Only an active contract is used for comparison — a contract left in draft won't influence routing, so activate it once signed.
• Bills flagged over_contract or needs_review skip auto-approve even when the amount is under your threshold; update the contract when vendor terms change.
• The amount check uses a 5% tolerance, so small fees won't trip an escalation, but a genuine rate increase will land as over_contract.
• An AI document comparison only runs when the amount check is inconclusive (needs_review) and both a contract PDF and bill PDF are available — attach the MSA to unlock it.
• Set the expiration date accurately: a contract auto-counts as expired once that date passes, which removes it from active comparison.

In-depth guide

Match status (feeds AP approval)

Comparison logic

The comparison service first runs an amount check on the ratio of bill amount to contracted amount:

• Within ±5% → matched
• Clearly above → over_contract
• Clearly below → under_contract
• Either amount missing → needs_review
• Vendor has no active contract → no_contract

When the result is needs_review and both a bill PDF and the contract's stored PDF exist, an AI document comparison runs. It looks at amounts, rates, quantities, descriptions, and billing frequency to resolve the status.

How it feeds the AP approval workflow

• Before the workflow starts, DayZero pre-computes the bill's match status and links the matched contract, so routing has a concrete value to act on.
• The workflow then escalates over_contract and needs_review bills past auto-approve regardless of amount — see AP Approval Workflow.
• You can also re-run the comparison on demand from a bill's contract-comparison action.

AI contract analysis

Contract analysis reviews your contracts as a procurement advisor and returns up to ten insights:

• Each insight is typed as renewal, overspend, or terms.
• Each carries a severity of info, warning, or critical.
• Useful for catching upcoming renewals and spend drift before they bite.

Permissions & add-on

Vendor contracts (and the AP approval queue/policies) require the AP Automation add-on, which is bundled into the Firm Enterprise tier.

Edge cases

• A vendor with multiple contracts is compared against its single active one; keep only one active to avoid ambiguity.
• Deleting a contract clears the link from any bill rather than deleting the bill.
• If the AI comparison fails or times out, the status falls back to the amount-based result so routing still proceeds.

Start free and keep vendor terms enforced automatically.