Contract compliance
The degree to which parties actually do what was contractually agreed: delivery timelines, SLAs, pricing, reporting obligations. Often <70% without active monitoring.
What is contract compliance?
Contract compliance measures: are parties actually doing what the contract requires? Research shows that without active monitoring, contract compliance drops to 60-70%. That means 30-40% of agreed value is not delivered or not collected.
Example
Supplier contract: 5% volume discount at spend >€500,000/year. Without monitoring: procurement doesn't know if the threshold was met, invoicing continues unchanged — €25,000 discount goes unclaimed. Classic revenue leakage.
What needs to be complied with
- Pricing — discounts, tiers, indexation caps
- SLAs — uptime, response times, credits
- Reporting — quarterly report, security attestation, ESG
- Delivery — deadlines, milestones
- Obligations — commitment volumes, exclusivity, geographic scope
- Confidentiality — data handling, sub-processors
When it matters
Always, but most critical for:
- Large contracts (>€250K/year)
- Complex SLAs
- Multi-vendor environments
- Public sector (audit-mandatory)
- Regulated industries
Common pitfalls
- Compliance = a legal task — no, it's procurement + finance + operations.
- Sample-based checking — you only find what you happen to test.
- Manually in Excel — stales and outdates within months.
- Only reviewing at renewal — you're 12 months of damage late.
How GuardPilot flags this
GuardPilot reads every contract, extracts all measurable obligations, and continuously compares against actual data (invoices, ERP, ticketing). Every deviation is scored and assigned. See Contract Monitoring and Invoice Verification.
Related terms: Obligation management · Revenue leakage · SLA