What Is a Contract Database?
A contract archive is, in most cases, an electronic collection of contracts and relevant contract data required by an organization to conduct any transactions and maintain business relationships.
The primary goal of a contract archive is to store all contracts centrally and make them accessible to ensure that all parties can quickly access the information they need. A well-organized contract archive also helps track contract renewals, terminations, and other important deadlines to ensure that all contract terms are met. A digital contract archive can also provide automated reminders and notifications for important dates and deadlines.
There are basically different types of contract archives. Modern contract archives based on CLM solutions include features such as automatic contract templates defined from individualized parameters, tracking and notifications of any contract deadlines, and detailed data analysis.
Why Is a Contract Database Essential?
A typical day of an employee in a company (after the morning coffee) often starts by looking for records and documents needed to complete the tasks at hand. It is not uncommon for these to be contracts that still need to be pulled out of the cupboard or archive.
However, this now means that the employee has to go in search of this contract and thus unnecessarily sacrifice valuable time and nerves to look up an often minor detail.
Of course, the employee could use this time well for other and also really profit-enhancing, productive tasks. Instead, he has to waste his energy on something so trivial.
Hand in hand with such tedious tasks, we often observe a drop in morale and ultimately a further drop in productivity for the company. That is why it is worth investing in a contract management system at an early stage.
It is not uncommon for companies to have to work with many different contracts and measures to cope with the overflowing chaos quickly end up in attempts to..:
1. Where Are All the Contracts?
Many employees pay little or no attention to the contracts after they have been successfully signed by both sides, which leads to them being stored incorrectly, incorrectly or not at all.
If no answer is possible to this question, this leads to a big problem, because now it is no longer possible to check the elements of the contract. This creates the danger that, for example, a breach of contract is committed or deadlines are not met.
This also leads to the fact that contract templates have to be set up again and again, or many employees create their own collections of templates, but in this way what they have learned from previous contracts is not collected on a medium that is accessible to all, and what they have learned is thus lost for many.
2. Who Keeps Track of All the Important Contract Data?
If this has not been agreed in advance, in case of doubt no one will consider themselves responsible and the contract will consequently not be managed properly. In many cases, it is advisable to inquire about a contract manager and, if necessary, to apply for one.
3. When Do Which Contracts Expire?
If important contracts have not been renewed in time, this can shut down a company if the required resources are no longer supplied. The issue of contract deadlines can basically be divided into contract renewals and contract extensions. It is therefore essential for every company to make use of a system that not only provides a detailed overview of all relevant contract deadlines, but also informs about upcoming deadline endings in a timely manner.
Creating a Contract Database: 3 Different Approaches
The Manual Contract Database
A contract management system that keeps track of all these issues is therefore recommended or even indispensable.
Here, of course, it also depends on the size of the company what kind of contract management system is needed. A small company or start-up with a manageable number of contracts may be able to keep this in mind, but obviously the goal of a start-up is to grow and expand.
Even here, it is therefore necessary to integrate such a system and this can be a simple spreadsheet at the beginning, which is linked to a database as a storage location. This can be either an Excel spreadsheet or a Google Docx in a Google Drive.
Beginner’s Method: Contract Management System in Excel
The easiest way to get order out of chaos with a centralised database for contracts is to use an Excel spreadsheet. This method is both very easy to implement and extremely cost-effective. Moreover, only basic Excel knowledge is required.
First of all, a responsible person must be appointed who will take care of the matter and also take over the maintenance of the Excel spreadsheet in the future. All important information about the contracts must now be included in the Excel spreadsheet and also updated if necessary. This alone can already save time, as it provides a rough overview and employees do not have to read through the entire contract first to get the most important content points.
Important information that an Excel table immediately reveals:
- Contracting parties
- Nature of the contract
- Summary of the content
- Deadlines and dates
- Reference number
- Status: Under negotiation, Signed, Expired
- And other important notes
Advanced Method: A Dedicated Contract Management System
Excel may still work quite well with a small number of contracts, but you will quickly realise that Excel quickly reaches its limits when a certain number of contracts and also different people involved in them are involved. Especially the limitation of the amount of data and the inconvenience of editing the Excel spreadsheet at the same time will quickly drive users to despair.
The next step could therefore be a dedicated contract management system. Through this, different departments can work together on contracts and access all current or already concluded contracts. To create a contract in such a database, the respective employee in charge only has to type the key parameters into an input mask and upload the current version of the contract.
This provides an indispensable overview of the contracts and enables collaboration between all authorised persons. For a company that works very interdepartmentally, this is a very practical, efficient and resource-saving alternative that requires very little work.
The disadvantage of this method, however, is the necessity of programming it yourself. If you want to create your own contract management system that is adapted to your own wishes, it must of course be created yourself. This means additional work for the usually already overburdened and understaffed IT department.
Moreover, the work does not end after the programming of the database, because it has to be constantly managed, errors removed or new wishes integrated.
Alternatively, an external company could be hired to code this contract management system for you. However, this involves high set-up and maintenance costs and the security of your data depends on the data protection precautions of the external company.
Professional Method: Contract Management Software for All Process Steps of the Contract Cycle
Finally, there is one more option, namely to implement professional contract lifecycle management software in your company. As the name suggests, this software tracks a contract from the beginning to the end of its lifecycle.
Typically, the process steps of a contract cycle include drafting, negotiating, signing and finally managing the finished document. One of these CLM softwares was developed by top.legal and offers many helpful functions.
1. Creating the Contract Database
First of all, all your contracts need to be transferred to the software so that you can use them in digital format and with the features of the software. This can sound daunting and a lot of work at first, but don't worry our expert team is here to help and the importing will pay off later.
2. Guided Creation of Contracts on the Basis of Approved Templates
It then makes sense to create your most frequently used contracts (e.g. non-disclosure, employment contracts, rental agreements, licence agreements, etc.) as automated templates. This way, your staff can easily access them when they need them. In this way, employees do not have to draw up the same contracts from scratch or dig out a suitable document from their own contract collection, which can contain very different contracts from one employee to the next. This saves valuable time in the creation of contracts and at the same time creates a uniform standard that allows your company to always present a professional image to the outside world.
An intelligent contract assistant helps your employees to find their way through the legal jungle and displays the appropriate clauses or text sections depending on the answer. In addition, the contract wizard displays suitable explanations for each point, should the available selection options not be self-explanatory on their own.
3. Use of the top.legal Functions
Now the time has finally come and you want to negotiate a contract with a partner. Now you simply send an invitation of the contract by e-mail to your contract opponent and they will grant you access to the contract on the top.legal platform. Here you can negotiate the contract, make changes and integrate other persons for review and approval.
All changes and suggestions made by you or your partner are saved and can be looked up in the monitoring path. Once the contract has been approved by all parties, you do not have to post it and wait for it to be sent back and forth, but the implemented 2 key factor eSignature facilitates this process and can be done in seconds on the computer.
4. Setting up Appointment Reminders
Setting deadlines and reminders in the contract database is essential. This ensures that tasks and events that are important for contract management are not forgotten. By specifying a deadline for each task, users are obliged to complete their tasks on time, reducing the risk of unnecessary delays.
A big advantage of a digital contract database is that the good overview allows for informed risk management and obligation monitoring. The software also helps you here and notifies you when contracts expire or liabilities have to be fulfilled.
5. Data Analysis
The Analytics Dashboard gives you an overview of all important information about your current and old contracts at a glance. With the help of the data, you can monitor your contract cycle and draw conclusions that can be of great help to you in the next contract negotiations.
