Keeping track of contracts and contract data with spreadsheets can be a risky proposition, but it’s still a common practice for many of today’s corporate legal teams. According to a recent ContractWorks survey, 32% of in-house lawyers have used spreadsheets to keep track of key contract milestones like end dates and renewal notice windows.
While spreadsheets aren’t the ideal solution for keeping track of the critical dates, terms, and obligations in your agreements, there are situations where they can serve as an adequate tool to help you stay organized.
This blog takes a deeper look at the role of spreadsheets in the contract management process and explores:
When and how spreadsheets can be useful to help keep track of contracts
Tips to help you optimize your contract spreadsheets
Risks of managing contracts with spreadsheets
Signs you have outgrown spreadsheets and should consider other solutions
When and how can spreadsheets help with contract management?
As mentioned, managing your valuable contract data with spreadsheets comes with risks, but that doesn’t mean they can’t be helpful in the right situation. Here are a few examples of when using a spreadsheet to keep tabs on your contracts makes sense.
You are only managing a handful of contracts
If you’re part of a small business and are only responsible for keeping up with a dozen or so contracts, you can likely get by with a well-organized spreadsheet to make sure you know the status of those documents. If you’re dealing with a growing contract portfolio, you might eventually decide to look for a more robust solution, but if not, sticking with a spreadsheet is often enough.
You aren’t managing high value or high risk agreements
The types of contracts in your portfolio will typically dictate the types of solutions you use to manage those agreements, meaning the more important they are, the more care you want to put into monitoring them. A good question to ask yourself is, “What would the impact be if we accidentally let a contract expire or auto-renew?” For many businesses, the answer is that they would face significant fines, get stuck with unnecessary expenses, or have to deal with other costly repercussions. But if your contracts don’t present major risk, you might not need to look for dedicated contract management software.
Your contracts don’t contain sensitive information
It can be difficult to manage permissions and control access within a spreadsheet, and there aren’t nearly as many security features available compared to modern contract management solutions. Before adding contract data to a spreadsheet (including links to the actual documents), be sure you understand exactly what is contained in the agreements and what would happen if that information was viewed by your competitors, customers, or others outside your organization.
Once you’ve determined that a spreadsheet is the right solution to help you keep track of your contracts, you can then start populating your spreadsheet with key information.
Here are a few ways spreadsheets can help you manage contracts:
See contract details at a glance
When all of your contract information has been entered and organized in your tracking document, you can quickly see things like start and end dates, termination and negotiation windows, and the value of your agreements.
Know where contracts are located
While spreadsheets don’t solve the problem of contract storage, they can help you remember where various documents are housed — as long as you keep that information updated.
Share contract data with others
By sharing your contract tracking spreadsheet with colleagues, you can allow other stakeholders in your organization to access that same information and assist in the tracking process as needed.
Tips for tracking contracts with spreadsheets
To successfully track and manage contracts using spreadsheets, you need to go in with a plan. Here are a few tips to consider.
Make a list of key data points to track
Start by reviewing your contracts, thinking about your goals, and determining the most important information to track. Some of the most common data points include agreement type, parties involved, start and end dates, termination window, and value.
Review and update your spreadsheet regularly
If not managed carefully, spreadsheets can quickly get out of control. To reduce the chance of costly mistakes, make a plan to review your spreadsheet on a regular basis, and update to reflect any changes as soon as possible, so anyone looking at the document is seeing accurate information.
Ensure all collaborators and stakeholders understand expectations
Because using spreadsheets to track agreements does come with risks, it’s critical that everyone who will be working in the document understands the procedures. Consider including guidelines for using the sheet in a separate tab, so it’s clear how often the document will be updated and what information needs to be included. You can also include any additional notes to help keep the document as clean and organized as possible, like naming conventions and unique identifiers to quickly reference specific contracts.
Risks of managing contracts with spreadsheets
Spreadsheets can help you stay organized during the contract tracking process, but they also present major risks to the business. Here are a few common challenges of using spreadsheets that often cause in-house teams to start exploring other solutions.
Since manual entry is required to populate spreadsheets, there’s always the chance that data is entered incorrectly. Accidentally listing the wrong renewal date or entering text in the wrong cell can cause chaos for your team — and lead to hours of work trying to sort out the errors to get the document back on track.
As mentioned, spreadsheets are created and maintained manually, so somebody has to invest the time to do so. A substantial amount of time is typically required to properly configure the spreadsheet initially, and making sure every contract change or update is reflected in the document can turn into a burdensome process.
If your spreadsheet includes links to the actual agreements, which version are you linking to? Once the agreement is finalized and signed, does the signed version replace the original draft? If not carefully managed, your team could be working from an outdated version of a contract, and potentially even agree to terms that have since been renegotiated or eliminated.
Access and security
Spreadsheets don’t offer the security and access control that most contract management software solutions do. If somebody can see one row of data on the spreadsheet, they can see all rows of data. This can be a problem if confidentiality is a concern or if sensitive corporate information is included.
Most companies will eventually reach the point when contract management spreadsheets no longer meet their needs. How do you know when it's time to start considering software?
Your company and contract portfolio are growing quickly
If you have a small, manageable contract portfolio, but your organization is in a phase of rapid growth, it's a good time to start making plans for the next stage of your contract management evolution. It will be significantly easier and less stressful to make the switch to contract management software while you're still in control of your agreements instead of waiting until you're struggling to keep up with important milestones.
You're spending all of your time updating your contract spreadsheet
The manual nature of spreadsheets means that you could end up spending most of your day reviewing and updating your tracking documents. You also have to put in extra time and attention monitoring the information that has been entered into your spreadsheets to ensure that there are no typos or errors.
If you're manually monitoring contracts with spreadsheets and struggling to make time for other facets of your job, consider looking into software to help you streamline these tedious tasks.
Contract details are starting to slip through the cracks
Many legal teams and contract managers don't prioritize contract management software until a missed deadline leads to a costly error — like accidentally letting an agreement lapse or automatically renew. This can force your company to pay for services that are no longer needed, or lose critical services that are needed to operate.