A version of this blog originally appeared on The Official ContractWorks Blog.
For legal departments dealing with a variety of business relationships, whether internal, client or vendor, relying on spreadsheets may be necessary to keep track of all the moving pieces. Spreadsheets can be used to capture and condense bits of information, such as important dates and contract details. However, when it comes to managing critical company matters, such as those that affect expense budgets, supply lists, key milestones, and so forth, utilizing spreadsheets to monitor this information may not be wise for a number of reasons.
This guide outlines key risk factors to look for when determining if utilizing spreadsheets for contract management is putting your organization at risk, and provides you with tips for understanding what could happen because of your manual process.
If your team is relying on spreadsheets for contract management you may want to download the complete guide, and reconsider this approach for the following reasons:
Spreadsheets Are Incomplete Summaries
Spreadsheets are specifically designed to summarize a lot of information in one (though sometimes large) document. Although quickly referencing a spreadsheet for data may be necessary if searching for concrete details, a spreadsheet’s lack of specificity can make finding that particular piece of information tricky or time-consuming.
In general, the information that a spreadsheet summarizes is not saved with or even near the actual spreadsheet. For example, a spreadsheet used for contract management probably isn’t located in the same file as all of the contracts it is meant to encapsulate. As a result, members of the legal department may end up wasting precious time and resources simply attempting to find data. By transitioning to a system deliberately crafted for the intricacies of contract management, this unnecessary aggravation can be virtually eliminated.
Spreadsheets Reside in Multiple Locations
Spreadsheets may be designed to simplify the management of different company processes, but someone in the company may need to manage the spreadsheets that are managing the business. After all, different company personnel are likely in charge of different management processes, and multiple individuals may need to reference the same spreadsheet. This can result in too much spreadsheet sharing and eventual confusion as to which document is the original or most recent version. For contract management, this does not bode well as it may become difficult to stay on top of important contractual dates and terms, which may lead to compliance issues or extraneous expenditures.
Spreadsheets Are Not Secure
Computers and software are far from infallible, so saving important information on them without some cloud-based backup system is a recipe for disaster. If a computer crashes and a spreadsheet is lost, trying to recreate it from scratch may prove unfeasible. This is simply an unacceptable possibility as it relates to contract management. Contracts impose duties and responsibilities that can have significant financial and legal consequences if they are not fulfilled, so properly managing these company resources is of tremendous importance.
There may not be one perfect contract management solution that works for all companies, but there are certainly services available that are far superior to spreadsheets and their inherent flaws.
To better understand the risks your company is currently carrying by using spreadsheets download this Contract Management Risk Assessment.