The Excel Contract Management Process
A mature business invests in contract management. Small businesses, entrepreneurs, garage start-ups, and sole proprietors are the kinds of businesses that can afford to manage their contracts manually – that is, when they’re just getting started.
The early days of any business are marked by more concern over landing those first few contracts than managing them. However, as a business ages and accrues contracts, some form of contract management system must be chosen by any business.
For those businesses which aren’t at a scale where an full fledged contract management system is required, manual contract management is possible using common office tools. Using tools already at their disposal, like Microsoft Excel or Google docs, small businesses can keep track of key contract clauses, terms, and dates through vendor management excel templates, creating contract databases in excel, and free contract management software excel sheets.
Excel Contract Templates for Contract Lifecycle Management and More
We will assume that you already have a contract (or several) that are in various stages of execution. The first step in creating a spreadsheet is going through your contracts individually and tagging key terms, clauses, dates, and other pertinent data. Anything that has to be manually input, like party names, terms of sale (e.g. price), and dates should be tagged, along with any clauses that we’re subject to more intense negotiation.
In your contract tracking spreadsheet, your next concern is with the termination, due, or action dates. These would be the dates on which your contract requires something to happen, such as payment, delivery of goods, or meeting some other condition. These are the dates by which you want to sort your spreadsheet, with rule-based highlighting so you can easily see which actions are coming up on a deadline. Remember, we're trying to address any and all contracts with one method.
Next, here are some key fields for columns you may want to create, depending on what information is relevant to your business. Some of these are mandatory, but others will vary depending on the type of contract.
- Contract Identifying Number: An unique identifier for tracking contracts
- Contract Title: Come up with a consistent naming scheme that makes contracts easy to find later (mandatory)
- Counterparty/External Contact: The other named party in the contract besides your business, along with their contact info if relevant (mandatory)
- Department/Internal Contact: Whatever department will be assigned the task of fulfilling the contract
- Start/Expiration Date: Note that this may not be an action date (mandatory)
- Agreement type: Vendor, NDA, Lease, Purchase order, etc. (mandatory)
- Cash amounts: Depending on which party is paying, if any
- Status: May be "active," "closed," or other (mandatory)
- Contract Review or Renewal Date: If one is specified in the contract, you should at least set one for internal review (mandatory)
- Days to Notify: The requirement to notify the other party before renewal or termination
- Notes: To record any other relevant information
There may be other fields which may be wise to track, but the above fields are the starter kit for any business. Individual businesses may want to customize their fields further.
A good contract management template should use conditional formatting rules on fields that are critical to your business, such a expiration dates, so that they can be easily be flagged when they are nearing expiration.
Vendor Management Excel Template
The vendor management process is comprised of many moving parts requiring careful calibration to manage vendor relationships. Relying on an excel spreadsheet or a vendor list template to maintain contact information, payment terms, products and services agreements, and so on requires diligent oversight.
Securing Centralized Contract Management
Your contract library, database, or spreadsheet is the "crown jewels" of your company, so to speak, so the spreadsheet’s security is paramount. The loss of customer information due to viruses, hacking, or standard breaches of confidentiality can lead to business liabilities like permanently damaged customer relationships, loss of revenue, and, in the most egregious cases, legal liabilities.
You can set a password in Excel for individual documents by accessing the “File” tab, selecting “Info” in the left-hand column, and choosing “Encrypt with Password” from the drop-down menu that appears after you select the “Protect Workbook” button. Storage of the spreadsheet and electronic copies of contracts should be secured the way you would any of your company’s data, ready to recall instantly in real time.
A central document repository using Google Docs, DocuSign, DropBox, or other standard office shared storage tools will suffice, with the password shared only among teammates who have direct need-to-know over contract dealings.
Contract Tracking and Other Shortfalls of Excel Templates and Spreadsheets for Contract Management
As your business grows, the issues with spreadsheet contract tracking become rapidly apparent. Briefly, here are some of the pitfalls to watch out for:
- Version control: If many teammates need access to edit one document, it may become difficutl to track changes and ownership
- Errors: Large spreadsheets can accumulate errors like typos over time, especially if they're based on manual reading and data entry
- Lack of Security: A spreadsheet is a pretty fragile tool in which to trust your company’s confidentiality
- Difficult Revision: To introduce a new field to track, you can create a new column, but then have to backfill all previous contracts for that column
- No Integration with Other Contract Tools: A spreadsheet is easy enough to import into a database, but that might not be useful
Moreover, once a company increases its contract volume, scrolling through a spreadsheet to find one data point becomes looking for the proverbial needle in a haystack. It's also likely that your company will need to begin handling several kinds of contracts, like vendor contracts, compliance documents, work orders, and more.
Managing all these different kinds of contracts in one spreadsheet becomes unfeasible and inefficient, and splitting them up into multiple pages is only a band-aid solution. As a company grows, the costs in terms of time and effort (and consequently money) of using a spreadsheet as its principal contract management tool increase exponentially.
Steps Towards Implementing Contract Management Software
If your business has grown to the point where contract oversight has become a full-time job for anyone, first congratulate yourself on your thriving enterprise. However, now it's time to think about stepping up your contract game. You can set up some processes for the next stage of your business' growth by:
- Reviewing the Contract Creation Process: how are they negotiated, what templates are used to compose them, and what is the hand-off process once they're finalized?
- Auditing the Contract Handling Process: is contract data transparent to every teammate who needs to see it? How are contract terms being communicated among responsible personnel?
- Organizing a Contract Management System: who supervises contract fulfillment? Who reviews contracts to update or renew them? Is anybody watching the counterparty's terms to make sure they are fulfilled?
- Appointing a Contract Specialist Staff: if applicable, you might need legal help to ensure compliance not just with other parties, but within laws and regulations in your industry.
An efficient contract management process within your company should have goals such as:
- Cost reduction: The more you automate, the more time you save
- Risk mitigation: Cutting out risk reduces costs, too
- Project Planning: Knowing company obligations and their schedules helps you devise a project management plan
- Streamlining of New Contract Drafting: High visibility for your existing contracts acts as a guide for creating a new one
- Evaluation of Contract Performance Relative to KPI: Key Performance Indicators, whichever ones you measure, will always reflect your company contract efficiency
Serious businesses need an automated contract management system for faster contract management. Evisort`s CLM software provides legal departments with notifications about expiration dates and other potentially costly time sensitive events that may go unnoticed with traditional systems.
Also, the ability to instantly search and revise contracts frees up legal teams for more important activities such as contract negotiations, streamlines the contract process, and provides a trackable audit trail. Evisort provides the ultimate AI contract management solution.
If you feel your business is ready for the final evolution of contract management, joining the AI revolution in contract management solutions, we at Evisort are here to help with that too! Storing contracts in a cloud-based system reduces the cost of physically storing a number of contracts.
Find out how
can help your team
Test Evisort on your own contracts to see how you can save time, reduce risk, and accelerate deals.