It goes without saying why Excel spreadsheets are so popular for managing contracts. Excel templates are usually free or at least inexpensive, easy to use, require little training, and do not require the implementation of established processes and procedures. However, even if spreadsheets are easy to use and prove to be a cost-effective contract management tool, an important question arises: can Excel spreadsheets really be trusted with your essential contract documents?
In this article, we look at the implications of using Excel spreadsheets for contract management and explain why contract management software is a much better alternative to MS Excel.
Why Excel templates are not suitable for contract management
Without a doubt, at first glance Microsoft Excel presents itself as an easy way for companies to manage their own contracts. With Excel, all stakeholders within the company can easily collect data from contracts, share them and edit them as soon as it is needed. For this reason, spreadsheets are often the first and natural choice for many companies when it comes to contract management.
Even if no one can deny that Excel is generally very useful as a tool, the risks associated with using spreadsheets for contract management should not be ignored.
Here are some of the most serious risks of using Excel spreadsheets and how they can harm your contract management processes.
1. Excel spreadsheets make it difficult to keep track of all contracts
While a simple Excel spreadsheet may be an easy way to capture and organize data at first, it can quickly become confusing as the number of contracts and the number of data fields grow.
If they use spreadsheets, general adherence to consistent control in registering their contracts is problematic. A simple reason for this could be that there are multiple versions of a job, making it difficult to ensure that the information in each file is current and reliable.
In addition, it can quickly become very tedious to bring down all relevant information such as contract details, deadlines, contact persons and documents in a single Excel table. Managing multiple Excel spreadsheets leads to confusion in many processes, making it increasingly difficult to maintain a consistent view of all contracts.
2. Excel spreadsheets are often prone to error
Contract management in spreadsheets requires manual maintenance, which increases the likelihood of incorrect data being entered into all your spreadsheets. Once you are unable to identify errors in a timely manner, your credibility in the eyes of your clients quickly plummets. It can take years to gain a client's trust, but one spreadsheet error is enough to put you back to square one.
3. Contract management via Excel can be a security risk
The security and protection of confidential data is an issue that concerns us all. Excel does not have encryption features to protect sensitive data: In Excel spreadsheets, data is easy to manipulate, hijack and falsify. As a result, sensitive and important documents such as contracts can quickly be lost. Can you imagine how much rework you would have to do to recover the data? Quite a lot!
4. It is difficult to integrate Excel into the contract management process.
Once a contract expires, it is usually time to renegotiate the terms. Likewise, if you no longer need a particular supply, the contractual relationship should be terminated promptly. For buyers, this is "Contract Management 101". Here, too, Excel's capacities are limited. Excel spreadsheets are not equipped with automatic notifications that alert you that a contract is about to expire and that you need to act.
Contract management: The better alternative to MS Excel
Many companies try to manage their daily contract processes with Microsoft Excel. While Excel is a powerful tool for some tasks, the spreadsheet programme lacks the necessary functions and features that make contract management software the best choice for managing contract drafting.
Contract management software automates and tracks the entire contract management process through a central control system. As contracts move through the process, all information is automatically updated, reducing the need for manual input and significantly speeding up the entire contract process.
Contract management software has several significant advantages over Excel spreadsheets:
1. Contract management software keeps track of your contract versions and all changes
Even if you think your team is careful and organised in cataloguing contracts using Excel spreadsheets, you will quickly run into limits when you try to find a contract that is not stored where Excel says it should be.
Contract management software gives you a secure and centralized contract repository to keep track of your contract versions and any changes, so you don't even run with the issue of how to keep track of contracts in excel. The benefits of this are that contracts can be easily searched, relevant people can access them quickly and easily, and other aspects of contract management, such as performance reporting, are automated and simplified.
2. Contract management software enables precision and eliminates room for human error
Contract management software automates the core aspects of the contract creation process and significantly reduces the potential for human error.
Instead of writing a contract manually, important information can be extracted from various sources and automatically inserted into a template document: Placeholder fields are filled with the correct information and appropriate clauses are inserted according to the requirements of the contract.
All of this happens before anyone even edits the document, eliminating the likelihood of errors in contract creation.
3. Contract management software reduces concerns about data security.
Business contracts naturally contain a large amount of highly sensitive data. These range from personally identifiable information about customers (who are subject to an increasing number of compliance requirements) to highly sensitive trade secrets. It is therefore crucial to protect these any contractual documents from unauthorised access both inside and outside your company.
This is exactly where contract management software turns out to be much more secure than any Excel spreadsheet: with the right CLM software, you can authorise access to relevant contracts for specific employees. Furthermore, you can manage and control access to information from a detailed level using roles and functions.
4. Missed deadlines and other commitments are no longer an issue with contract management software
Spreadsheets require more than just manual data entry. To ensure constant vigilance, Excel spreadsheets also require manual checking.
Especially for this action, the contract management in Excel is not optimised. For example, to ensure that important deadlines are not missed - especially in the case of contract renewals - regular reviews of existing information would have to be planned and carried out.
With contract management software, on the other hand, you can say goodbye to possible missed deadlines because you no longer have to remember every little obligation that needs to be fulfilled.
Learn more about switching from Excel to a more professional contract solution.
Contract management software supports automatic notifications and reminders. All that is needed is a short setup in advance to reduce any deadline or appointment. To do this, simply specify each upcoming action at the beginning of the contract design, and you can be sure that you will be reminded when the time comes.
5. All contracts can be signed conveniently and quickly via electronic signatures
The speed and efficiency of contract negotiations are decisive factors in the time it takes for a contract to be signed. Here, a core problem of Excel spreadsheets is that they are not able to send alerts or initiate approval processes within the contract lifecycle.
In addition, you usually need to send a contract document in writing, print it out, scan it and have it signed by another party for it to be considered a valid document.
With contract management software, on the other hand, you can easily integrate an electronic signature, reducing time-to-signature and eliminating unnecessary bottlenecks. Electronic signatures allow customers, suppliers and other third parties to securely sign agreements in a timely manner and send automatic email notifications.