In today’s digital-first world, the software your business relies on isn’t just a tool; it’s the backbone of your operations, often driving everything from sales and HR to finance. Consequently, the potential risk to business continuity and financial stability could be huge if a software supplier suddenly claims your business owes £millions in additional licensing fees, threatening to sue, or even cut off access to crucial software, unless you pay up.

How do you respond in the face of such threats? The stakes are high, with the potential for severe, even existential, consequences for your business.

This situation arises more often than you might think, and is increasing in frequency. The pressure applied is amplified as the supplier approaches peak trading periods and financial year-ends. For some suppliers, this process of targeting customers for additional licence fees has become a lucrative source of revenue. Understanding how to navigate these treacherous waters isn’t just beneficial – it’s essential for safeguarding your business’s future.

Based on reports (including by G2 and CompareSoft), around 85% of licence “audits” (usually conducted by a supplier, or a third-party auditor on their behalf, either remotely or on-site), result in claims that the customer is not fully compliant with its licence terms. Non-compliance is usually alleged to have occurred due to (a) over-usage by the customer’s own personnel (or those to whom the customer has given access to the software), or (b) third-party software being integrated in a way that it (and therefore everyone using that third-party software) is now “directly or indirectly” using or accessing the supplier’s software.

We often support businesses in dealing with claims by software suppliers that the business (its customer) owes £tens of millions in additional licence fees, often based on the business’s end-customers using third-party software which interacts with the supplier’s own software. This interaction might only allow end-customers very limited visibility of the supplier’s software – but this is nevertheless leveraged by the supplier to pursue the business for large £sums.

Clients facing such claims have a decision to make: pay up to avoid disruption to the business; or refuse to be pressured, and invest resources in challenging the supplier’s allegations. Where the business stands its ground and engages with technical, commercial and legal teams, it often proves a very effective approach to minimise, and sometimes even eliminate the need to pay, additional licence fees.

If you are a business that wants to pre-empt risks and seek to mitigate these to avoid uncertainty, then the following top tips will help: