Regardless of the type of business, one is dealing with a particular facet that is unquestionably common in all industry contracts. Contracts give rise to almost all relationships formed in a business. It is an agreement among parties that creates and defines their mutual rights and obligations. Stated its significance, effective contract management carries perpetual ethics for the organization.

What is Contract Management?

Contract management is the process of managing agreements or contracts from the point where they are created, interpreted, and evaluated, through their execution and eventually their termination.

Contract management is crucial for any business. Determining how important contracts are for a business, and managing them will ultimately improve efficiency and profitability. Structured contract management will protect businesses from various operative and pecuniary risks.

Let’s look at some benefits of managing contracts.

1. Helps in business functioning
2. Boosts practical efficiency
3. Facilitate transparency on spending, etc.

There are numerous ways of managing your contracts. This blog elucidates on:

• Contract management through spreadsheets
• When should a firm use spreadsheets for contract management?
• Tips to frame a spreadsheet for managing contracts.
• Benefits and risks of managing contracts through spreadsheets.
• Finally, an indication that one should consider other options.

contract management through spreadsheets

Keeping hard copies of all contracts has always been a trouble for a business, especially law firms. Shifting to a digital format is a customary step for both large and small companies.

A spreadsheet is an arrangement made of rows and columns that aids in sorting, organizing, and arranging data efficiently. They are familiar, attainable, and require nominal tutoring. Although spreadsheets aren’t an ideal solution for keeping track of important dates and terms of the agreement, they still can be useful and help stay organized.

Spreadsheets are a great starting option for firms that need to collect contract data. But, when a business grows and indulges in more and more contracts, spreadsheets can quickly become inconvenient and cumbersome.

when should a firm use spreadsheets for contract management?

Contract management through spreadsheets comes with its own drawbacks, but that doesn’t indicate that it is useless and can’t be helpful.

Let’s look at a few examples when managing a contract through a spreadsheet is nifty!

1. Tiny businesses or businesses managing a small number of contracts. An individual is more likely to get by with a meticulous spreadsheet if they are accountable for only an ounce of contracts or if they’re part of a small business. Without a doubt, a spreadsheet is a very simple and easy option, but as the number of contracts increases, there will be more drawbacks than advantages. More contracts mean more data which eventually leads to more manual work. Hence, they’ll want to reconsider.
2. One isn’t accountable for upscale or perilous agreements. If a contract doesn’t carry major risks or value, one can opt for a spreadsheet for contract management. But if not, they will have to ask themselves if they are ready to face the repercussions. The more important agreements are, the more care they will want to put into monitoring them.
3. The agreements don’t hold susceptible data. Spreadsheets aren’t very secure, and it can be difficult to manage permissions and control access within. Prior to adding data to a spreadsheet, make sure to understand that the data may be exposed and can be stolen.

Tips to frame a spreadsheet for managing contract

The secret to successfully managing contracts using spreadsheets isn’t much of a secret now. We just need a plan and here are a few tips to consider.

1. Always make a list of key fields to track. For this, start by reviewing the contracts and concluding important information to track. The most commonly used key points are agreement type, start, and end date, client details, etc.
2. Invariably build the spreadsheets in such a way that one can easily pinpoint whenever a contract needs to be renewed.
3. Keep the data protected. Although we’re aware that spreadsheets are not very reliable and can be edited by whoever has access to them. Therefore, it’s important that you limit access and provide edit access to people in the organization only.
4. Remember that the spreadsheet is for managing contracts. So, make sure to capture all essential information required.
5. Never create a spreadsheet only to completely forget about it. Review and update it regularly.

benefits and risks of managing contracts through spreadsheets

“Every coin has two sides.” Therefore, contract management through spreadsheets has its own benefits as well as risks with associated it. Let’s have a look at them.

Benefits

• Cost-effective: It’s free! Who doesn’t love free stuff and what’s better than a tool that will help in contract management for absolutely free of cost?
• Basic features: If a person is looking for something less complicated, a spreadsheet is a solution. It’s a great option if one deals in a handful of contracts and only requires basic features without unnecessary complications.
• Familiar face! We can say that spreadsheet is very familiar to everybody. Therefore, there is almost no training required to work on it.

Risks

• Error-prone: Since a spreadsheet requires manual entries, there’s always a chance that the data entered are inaccurate.
• Time-consuming: As mentioned, the spreadsheet required data to be fed manually. Therefore, somebody has to review the contract first, then figure out crucial information to be added, and finally make the entry in the spreadsheet. This will require a lot of time.
• Security issues: A contract is full of data of the parties involved including their personal information as well. Sometimes an agreement might contain very sensitive information that your firm may not afford to be stolen. In such a case, spreadsheets are the problem. It is easily accessible by anyone and can be edited by everyone.

an indication For considering other options

Spreadsheets offer very limited features with major drawbacks. It might be the right choice if the resources are limited and have a fixed volume of contracts. But eventually, when a firm starts to grow, the spreadsheet no longer meets its requirements.

As a firm starts to grow, all employees will have other objectives to focus on rather than filling out entries manually and all other time-consuming tasks associated with spreadsheets for contact management.

how will we know when it’s time to reconsider your contract management methods?

1. Your company is achieving heights: If one has a micro-enterprise, contract management through spreadsheets can be an option. But if the organization is growing, one might have to reconsider the contract management method as there will be more contracts.
2. Time wastage: Spreadsheets depend entirely on manual feedings; this means information has to be reviewed and entered manually. Executing this process is time-consuming. Lawyers might spend their complete day reviewing, entering, and updating data. This is a signal to rethink using spreadsheets and switch to another contract managing system.
3. The spreadsheet is full of errors: As mentioned, contract details are fed manually. It is time-consuming as well as stressful. The contract details may be full of errors and typos. A better contract management system automatically reviews all details and manages information without much manual work.
4. Contract details are starting to leak: It has already been made clear that spreadsheets are not an ideal option when it comes to contract management as it is not very secure. Information can be viewed, used, and edited by anyone easily. If our teams are starting to find loopholes in your spreadsheets like missing details, one should assess switching to software or another contract management system.

a much better alternative

Managing contracts in a structural way brings a lot of benefits to the firm. However poor contract management comes with major risks, drawbacks, and huge costs. Despite the fact that a spreadsheet is an affordable bargain, it comes with major risks leading to huge losses.

Switching to automated contract management software means less manual work with a better and more time-efficient result. There are many practical, economical contract management software that will make managing a contract an easy and pleasant job.

It is a completely automated system that not only lets us see everything in one place but also manages contracts and sets reminders to ensure to meet renewal or termination dates. It is a very secure system with many reduced costs and human labor. The data will be stored absolutely free of error.

List of few contract management software

1. PandaDoc
2. ConnectWise Sell
3. Conga CPQ
4. Coupa
5. Kira

A job like contract management comes with a huge responsibility. One will be responsible if something good or bad happens. Ensure to play your cards right because one definitely does not want to fail at something that is a major pullback for their firm in the industry.