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Excel in Contract Management: The Benefits and Limits

Using Excel to manage your contract database may seem like a good idea at first glance. The advantage of the spreadsheet program is that it is cost-effective for the company, and most employees are already familiar with it. In the long run, however, this option may prove to be much more expensive and restrictive. As the number of contracts to be managed annually increases, the tool is reaching its limits in terms of current monitoring, collaboration, and even security.

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 introduction of established processes and procedures. But even if spreadsheets are easy to use and prove to be a cost-effective tool for contract management, an important question emerges: Can you really entrust Excel spreadsheets with your essential contract documents?

In this article, we look at the consequences of using Excel spreadsheets for contract management and explain why contract management software is significantly better alternative to MS Excel is.

Why Excel templates aren't suitable for contract management

Without a doubt, Microsoft Excel turns out to be an easy way for companies to manage their own contracts. With Excel, all parties within the company can easily enter data from contracts, share and edit them as soon as necessary. 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 are connected, not disregarded.

Here are some of the most serious risks you can face when using Excel spreadsheets and how they are yours Contract management processes can harm.

1. Excel spreadsheets make it difficult to keep track of all contracts

A simple Excel spreadsheet may be an easy way to collect and organize data at first, but it can quickly become confusing as the number of contracts and the number of data fields grows.

If they use spreadsheets, it is difficult to generally maintain uniform control when registering their contracts. One simple reason could be that there are multiple versions of a workstation, making it difficult to ensure that the information in every single file is up to date and reliable.

In addition, it can quickly become very tedious to compile all relevant information, such as contract details, deadlines, contacts and documents, in a single Excel spreadsheet. Managing multiple Excel spreadsheets leads to confusion in many processes, which makes it increasingly difficult to have a uniform view of all contracts.

2. Excel spreadsheets are often prone to errors

Contract management in spreadsheets requires manual maintenance, which increases the likelihood of incorrect data being entered into all of your spreadsheets. As soon as you are unable to identify mistakes in time, your credibility in the eyes of your customers quickly decreases. It can take years to earn a customer's trust, but a single spreadsheet mistake is enough to get you back on track.

3. Contract management via Excel can pose a security risk

The security and protection of confidential data is an issue that concerns us all. Excel does not have encryption functions 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 be lost quickly. Can you imagine how much rework you would need to do to recover the data? A whole lot!

4. It is difficult to integrate Excel into the contract management process

As soon as a contract expires, it is usually time to renegotiate the terms. The following also applies: if you no longer need a particular delivery, the contractual relationship should be terminated promptly. For buyers, “contract management is 101.” Here too, Excel's capacities are limited. Excel spreadsheets don't come with automatic notifications to let you know that a contract is about to expire and that you need to take action.

Contract management: The better alternative to MS Excel

Many companies try to manage their daily contract processes with Microsoft Excel. Although Excel is a powerful tool for some tasks, the spreadsheet program 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 via a central control system. As contracts go through the process, all information is automatically updated, which reduces the need for manual input and significantly speeds 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 organized by cataloging contracts using Excel spreadsheets, you quickly run into limits when you try to find a contract that isn't stored where Excel says it should be.

Contract management software gives you a secure and centralized contract storage that allows you to keep track of your contract versions and any changes. The benefits of this: Contracts can be easily searched, responsible persons 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, which eliminates the likelihood of errors when drafting the contract.

3. Contract management software reduces data security concerns

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 all of these contract documents from unauthorised access both within and outside your company.

This is exactly where contract management software proves to be much more secure than any Excel spreadsheet: With the right CLM software, you can authorize access to appropriate contracts for specific employees. You can also manage and control access to information from a detailed level using roles and functions.

4. Missed deadlines and other obligations are no longer an issue with contract management software

Spreadsheets require more than just manual data entries. To ensure continuous mindfulness, Excel spreadsheets also require manual verification.

Contract management in Excel is not optimized for this action in particular. For example, to ensure that important appointments - particularly in the event of contract extensions - are not missed, regular reviews of the available information would have to be planned and carried out.

With contract management software, on the other hand, you can say goodbye to potential missed deadlines, as you no longer have to remember every little obligation that needs to be fulfilled.

Find out more about the Switching from Excel to a more professional contract solution.

Contract management software supports automatic notifications and reminders. All that is needed is a quick setup in advance to reduce any deadline or appointment. To do this, simply state each upcoming action at the beginning of drafting the contract, and you can be sure that you will be reminded of this when the time comes.

5. All contracts can be signed quickly and easily electronically

The speed and efficiency of contract negotiations are decisive factors for the length of time until a contract is signed. A core problem with Excel spreadsheets is that they are unable to send warning messages or initiate approval processes within the contract life cycle.

In addition, you usually have to send a contract document in writing, print it out, scan it and have it signed by another party so that it is considered a valid document.

With contract management software, on the other hand, you can easily integrate an electronic signature, which reduces the time required to sign and removes unnecessary bottlenecks. Electronic signatures enable customers, suppliers, and other third parties to sign agreements securely and promptly and send automatic email notifications.

Conclusion

The disadvantages of using Excel spreadsheets for contract management include the ability for errors to go unnoticed over an extended period of time, the lack of warning messages when entering extreme values, the decentralization of important contract data, and an increased security risk.

By using contract management software, you can not only avoid these difficulties, but also optimize your entire contract life cycle, increasing the efficiency and performance of your company.

If you'd like to learn more about how switching from Excel spreadsheets to appropriate contract management software can benefit your business, you can request a FREE demo below.

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