For most businesses, Excel will generally have a role to play at some point during contract and vendor lifecycle management. It’s one of the most accessible and widely used pieces of software in the world and obviously well suited to recording the kinds of data captured in contracts.
In this article, we’ll provide you with some practical tips to apply to your contract tracking spreadsheets, as well as highlighting the pitfalls of creating a contract database in Excel.
As a starting point, we've also developed some free Excel contract management templates to help you manage your contracts in a straightforward manner.
Why Excel contract management is a go-to solution
As a business grows and generates more contract agreements, so too does the need for a central repository, where the data can be centrally stored and tracked. Contract management via Excel gives businesses:
- Better contract visibility as information can be stored in one place
- A way to see upcoming renewals so early action can be taken
- A better way to track agreements rather than relying on individual knowledge
- A familiar platform that requires little buy-in or user training
If your business currently has no dedicated place to store agreements, it's likely that your contracts will be found in a variety of places. Whether it's in shared drives, emails, someone's head or a filing cabinet, you will ultimately face a common issues: finding contracts, and the right versions, will become a chore.
"71% of businesses can’t locate at least 10% of their contracts". - The Journal of Contract management
A lack of structured contract tracking can lead to other consequences including increased contract risk, unwanted auto-renewals and business disruption. This disruption can take many guises, such as a fine for non-compliance or operational issues because a service has stopped being provided without your knowledge.
For any legal representative, operations executive or vendor manager who recognises these risks, Microsoft Excel offers a better defence than having no repository at all. Let's help you to restore visibility across your business and demonstrate how you can use the free Excel contract management templates included in this article.
How to Manage Contracts with Excel
Know your dates
Effective contract tracking comes down to knowing your dates, so these need to be at the heart of your spreadsheet. This can include end dates, give notice dates and any renewal dates.
The first thing to do is set up a cell that will always have “today’s” date in - ie whenever you open the spreadsheet, this cell will be populated with the current date.
To do this, enter the following formula into your chosen cell: =today()
Now that you have this, you can use it to keep track of how long it is until specific milestones are up for each contract.
For each contract you may have different key dates, but let’s assume you’re capturing at least “renewal date” and “termination date” in your spreadsheet. In the column next to these you can subtract the cell for “Today’s Date” from these contract dates.
Doing this will give you the number of days from now until that date.
The next step is to add conditional formatting (format/conditional formatting) so that you can tell at a glance whether contracts are near to renewal.
You may want to set your own guidelines but you can use the following to start with:
Create a rule for the column that says if the number is greater than 30 but less than 90, to highlight the cell in orange. Add a further rule that says if it’s 30 or lower then highlight in red.
This way, your eye can be drawn directly to the most pressing contracts.
Top tip when entering dates - if you need to insert today’s date, you can simply press ctrl+; to populate it into a cell.
Ensure Security and Data Integrity
If it’s your responsibility to manage contracts for your business, you'll also want to consider the processes you have in place for version control. Rather than having different versions, stored in different places, that anyone can change, you should lock down the data sheet as much as possible to ensure changes aren’t made without your permission.
The simplest way to achieve this with Excel is to set a password on the workbook. This can be found under Tools/Protection. Immediately, this will limit the ability for people to change the data in your document.
Next, you may also want to limit what data can be entered into specific fields if you’re going to be permitting other people to access the document. For example, using a free text field for contract type might lead to people entering multiple different versions of the same thing - eg “NDA” and “Non Disclosure Agreement”. This will then make it difficult later on to filter and monitor your data.
The solution is to use Data Validation and a specific list. Go to Data/Data Validation and then select to allow from a list. You can then enter your specific words and phrases, or select a list you’ve already created in the sheet, and then the only data that can be put into the cells will be from the list. This will ensure your data is consistent and can be filtered accurately.
You may also want to leave “Track Changes” enabled so that any time somebody updates fields then the changes are highlighted for you to accept.
Assuming your actual contract documents are also hosted on a shared drive or similar, you can insert the links to them into your Excel document as well. This will ensure that there’s a clear line of sight to the relevant documents."
However, your system for storing contracts will also need to be robust and monitored closely to ensure that the current versions are always linked to and previous versions are retained for comparison.
Key Pitfalls of Using Excel for Contract Management
Excel can be used as basic resource for managing contracts. But some obvious limitations that mean it's not a fit-for-purpose CLM solution for every business or even for all of time. Excel is a great way to get started when it comes to contract tracking, but it is at the low-end of contract management maturity.
1. Relying on an individual's knowledge
The most crucial issue is that it generally relies on a specific person to build and maintain the sheet and be responsible for its integrity. They might delegate to colleagues to enter some of the data but that will need to be closely monitored to make sure of accuracy.
This requires time and resource. It also increases the level of contract administration required, preventing teams or individuals from focusing on strategic contract management issues. If this individual goes on to leave the business, there will also be a number of knowledge gaps such as how the spreadsheet works, what formula is most important, how often it should be updated - the list goes on.
Even the password protection feature we mentioned earlier can cause issues. If only one person can access the database, the rest of the business can't collaborate on actions required ahead of upcoming dates.
Using Excel for contract management may bring some clarity to the business, but it doesn't completely resolve a lack of contract visibility.
2. Assuming version control has been established
Version control is another major problem with Excel. A password-protected sheet can protect the database itself in some ways - but not the actual agreements themselves. Version control relies on the most up-to-date agreement being linked to the spreadsheet. If numerous stakeholders can access the database and make that change, how much confidence can you have that the link included is the most up-to-date or accurate?
, by its very nature is a collaborative process with sign-offs and comments to be acknowledged. That's why a solution that can provide a complete and auditable versioning history - without it taking hours to search through - is a much better alternative to Excel spreadsheets.
Staying in control of your contract management processes, both pre and post-signature, will put your business in a stronger position throughout each lifecycle stage. However, Excel lends itself to poor version control which can contribute to:
- Poor business decisions being made based on inaccurate information
- The wrong agreement being sent out for a signature, delaying time-to-contract
- A lack of accountability as it's not possible to track changes
- An inability to demonstrate thorough processes to auditors
The latest Microsoft Office 365 solution has addressed some of these collaboration issues and now makes it easier to access documents concurrently and remotely. However, you still run the risk of someone overwriting previous work or breaking certain formatting.
3. Failing to remain compliant with security regulations
Confidentiality is another issue when it comes to using Excel for managing contracts. A lot of agreements will contain sensitive data such as costs or salaries and will only be appropriate for certain people to view.
Linking to documents housed elsewhere, or including the information directly in the spreadsheet, can expose that information to an unnecessarily wide audience. Without different levels of access and the ability to restrict access by role, you can run the risk of breaching information security requirements.
Failing to comply with the law can cost your business and - depending on the severity - impact how your business runs in the future. Meta was recently fined €265 million over GDPR breaches - a sum that would bankrupt many companies."
Ultimately, managing contracts is a complex process, requiring a clear record of all agreements and then constant monitoring and updating. This will help to support compliance and governance.
If you have no central repository in place for your contracts, Microsoft Excel is a great place to start. These free templates will help you with all aspects of the contract lifecycle. If you're looking to introduce something more robust into your business, schedule a call with our team to discover how a specialist solution can help your business to ensure continued visibility, control and compliance.