Most companies know that they need to keep track of contracts. The challenge is, they just do not know how. Usually someone is given the task of tracking contracts but they are not given direction or resources so they do the best that they can.
We typically see people using a spreadsheet as a database. Each column in the spreadsheet contains specific information. Basic contract information:
- Vendor or Customer Name
- Start Date
- End Date
- Type of contract
- Total Amount
- Renewal type
- Plus, more…
Sometimes, they will include the location of the contract documents. This is typically either a shared drive or physical file cabinets.
Why is this bad?
Well, it is not totally bad, especially when you only have a small number of contracts. The challenges arrive when you are trying to do more. Managing hundreds or thousands of contracts becomes overwhelming. This system relies on a person or people to keep everything going and current.
A few limitations of a spreadsheet-based system:
- Only one person can edit the spreadsheet even if they are working on different contracts.
- Spreadsheets do not have a way to send reminders, so everyone must set their own
- Approval tracking is manual
- No version control on the files
- People often make copies of the spreadsheet to modify and the changes never get merged back into the original
- Difficult to work on remotely
The good news is that you can convert a spreadsheet system to a contract management system and make things run more smoothly. Having the spreadsheet gives you a huge head start.