Understand contracts in HubSpot

Use the contracts object in HubSpot as a centralized source of truth for committed revenue. Contracts integrate with Revenue Hub to merge subscriptions and invoices from an initial quote, and include the option to manage mid-contract changes and renewals. Contracts can be used with other records and tools, such as deals and quotes, to manage end-to-end revenue in HubSpot.

Learn how you can use the contract record for your business, including:

• How to use contracts in combination with other HubSpot objects such as deals, quotes, and invoices.

• How to manage mid-contract changes and renewals.

• How proration is managed when making contract changes.

Before you get started

• Enroll in the Connected CPQ, Billing, and Payments beta to automatically accept payments on invoices managed through contracts with HubSpot payments or Stripe as a payment processing option. Learn more about the Connected CPQ, Billing, and Payments beta process.
• Accepted quotes can create contracts whether or not you're enrolled in the Connected CPQ, Billing, and Payments beta. If you're not enrolled in the beta, payment collection remains tied to the existing quote or standalone invoice experience. With the beta, contracts are used to manage ongoing billing, invoice creation, and payment collection. Learn more about the quote billing and payment collection process.

What is a contract?

Contracts are the centralized source of truth for committed revenue in HubSpot, detailing one-time and recurring products, revenue metrics, and changes over time. Unlike deals, which track individual sales opportunities, contracts are designed to support the entire customer agreement lifecycle, including amendments and renewals.

With contracts, your teams can report on revenue metrics, set up renewals and amendments, and align revenue operations across the business.

Contracts can be created, associated with related records, and used in reporting. Change and renewal quotes can be added to contracts to reflect the customer's current arrangement.

Do HubSpot contracts replace legal contracts?

HubSpot contracts don't replace legal contracts, such as master service agreements (MSAs) or signed PDF contracts. If you need to reference a legal contract in HubSpot, you may be able to create a custom contract property with a File or URL field type and upload the document or add its URL. Before storing a legal contract in HubSpot, review the document carefully and learn more about storing Sensitive Data in HubSpot.

How is a contract created?

A contract record is created automatically when a quote is accepted (if the Automatically create contracts from accepted quotes setting is turned on). The contract record provides an overview of key contract details, such as contact and company information, committed revenue, and associations to other records.

Please note: a Revenue Hub seat is required to create and edit contracts. Additional contract creation and editing options may become available in the future. Refer to the product for the most current availability information.

How to use deals, quotes, contracts, and invoices together

• Deals: use deals to track a sales opportunity and close it.

• Quotes: create quotes based on the deal, and send to the buyer to review. Once the quote is accepted, a contract is automatically created to reflect the revenue commitment of the quote. Deals, quotes and contracts can contain both one-time and recurring line items.

• Invoices: issue invoices for payment. You can collect payments online in HubSpot or manually mark invoices as paid if using another payment method.

• Contracts: if you're enrolled in the Connected CPQ, Billing, and Payments beta, contracts are used to manage ongoing billing, invoice creation, and payment collection. Learn more about the quote billing and payment collection process.

What information can I view on the contract record?

Use the contract to view the following details:

• Status: view the current status of the contract.

• Financial and revenue information: view the total contract value (TCV), annual contract value, monthly recurring revenue (MRR), and annual recurring revenue (ARR).

• Billing details: understand the billing details including the billing contact, billed amount, billing history, and upcoming payments.

• Renewal dates: view when the renewal of the contract is due.

• Associations: view the records the contract is associated to including contacts, companies, deals, invoices, line items, payments, quotes, and subscriptions.

Can customers view their contracts?

The HubSpot contract object can't be viewed by your customers. They are sent quotes, invoices, receipts, and other billing-related notifications for their billing records.

How to manage future and mid-contract changes

Future and mid-contract changes can be managed through change quotes, which must be associated with a deal (e.g., expansion or upsell). Deals can be created during the change quote process or created separately and manually associated. Once change quotes are accepted, the contract is updated with the changes outlined in the quote. Consider setting up different pipelines for change quotes' associated deals (e.g., expansion, upsell) to forecast and report on them separately. The contract history tab updates whenever changes are made to the contract, either directly or through change quotes.

Please note: if you're enrolled in the Connected CPQ, Billing, and Payments beta, if a credit memo has been applied to an invoice, the adjusted invoice amount won't be reflected on the contract.

How to manage renewals

Renewals can be triggered through renewal quotes, which must be associated with a deal. Deals can be created as part of the renewal quote process, or created and associated manually. Once the renewal quote is accepted, a new contract is created and is automatically associated with the existing contract. Consider setting up a renewal pipeline for deals associated with renewal quotes to forecast and report on renewals separately.

How is contract proration calculated?

If the proration setting is turned on, mid-term changes are prorated daily based on the number of days remaining in a billing term. The daily rate of a line item is calculated and applied to the number of days left in the term starting from the Effective date of the change. If the proration setting is turned off, mid-term contract changes will follow the next billing cycle.

When a mid-term contract change is made, the existing line items are updated based on the line items and acceptance date of the change quote. Existing line items are shortened, with new line items added after it. Line items on change quotes and contracts have unique record IDs. Learn more about line item behavior.

Next steps

• Learn more about the Connected CPQ, Billing, and Payments beta.

• Learn more about setting up contracts in your HubSpot account.

• Learn more about creating contracts from accepted quotes.

• Learn more about viewing and managing contracts, including how to create change and renewal quotes, terminate contracts, associate contracts with other records, and export contracts.