With your company’s rapid growth and global expansion, keeping track of all contractual agreements becomes more critical.
These alarming statistics support this:
- 71% of businesses can’t find at least 10% of their contracts
- 85% of companies still track their contracts manually
- 60% of companies are using email to manage contracts
Most growing businesses still lack a unified system that organizes contracts. It always gets messy when trying to get documents signed by stakeholders and tracking which stage each contract is at.
So how do you track contracts effectively yet efficiently?
In this blog post, we’ll discuss why it’s important to track contracts and how to use Excel or a contract tracking platform to do it.
So anytime you’re ready, let’s start our discussion!
What is contract tracking?
Contract tracking is the process of monitoring contracts throughout the different phases of contract lifecycle. The purpose of tracking contracts is to ensure that stakeholders, such as the legal team, can easily determine the status of the legal agreement and identify potential issues early on like bottlenecks to a sales deal.
Also, it helps to follow every milestone of the document, so it’s fulfilled in time without unnecessary delays.
The different stages of contract lifecycle management include:
- Requests and intakes
- Creation and drafting
- Collaboration and negotiation
- Execution and signatures
- Amendments, addendums, renewals, and terminations
Why do we track contracts?
Simply put, we track contracts because they matter — legally binding to be more precise. That’s why knowing contracts’ progress during their lifecycle is beneficial.
Here are some good reasons for tracking contracts:
- Gives visibility to the team involved
Contract monitoring lets team members see who is currently responsible for the contract development. This is important for team communication and collaboration of documents to avoid duplicate work and unnecessary delays.
- Allows thorough review from stakeholders
Before a contract gets out, it’s important to have a detailed contract review by stakeholders to track the non-standard terms that slipped into the agreement. Contract monitoring lets them identify and mitigate any risks associated with the amendments, giving transparency and accountability between the contracting parties.
- Manage risks
Contractual provisions often contain carefully balanced risks and rewards. By tracking contracts, businesses can stay aware of changes in the relative risk levels of different clauses and take steps to protect themselves accordingly.
- Keep the team organized and on track
It can be challenging to keep track of all the contracts in a company, but tracking them can help to ensure that every contractual obligation gets done promptly and efficiently.
- Maintain compliance with regulations
Contracts often contain complex legal language. By monitoring contracts, businesses can stay up-to-date on regulatory changes and ensure that they comply with the latest rules.
- Track deadlines
Every contract has a specific start and end date, and it’s essential to keep track of these deadlines, so they don’t cost you money (penalty) or damage your reputation. Contract tracking lets you watch contracts that are close to a milestone.
How do you effectively track a contract?
There are a few different ways to track contract changes. One option is to use a software program designed specifically for this contract tracking. Another option is to create a contract tracking spreadsheet that you can share with all relevant parties.
Before we’ll go into practical steps on how to track contracts, let’s set some basic tips that are essential to follow:
- Know the whereabouts of every agreement
While it may seem like an easy task, many businesses have their contracts in multiple places — which can make organization and retrieval difficult. To avoid this issue, take the time to compile all contracts into one central location.
- Define the contract scope
It’s important to keep track of a few key things during the contract lifecycle. Tracking and monitoring records often include:
- term of the contract. When it starts and when it ends?
- scope of work. What exactly is included in the contract?
- Deliverables. What needs to be delivered, and when?>
- payment schedule. How and when will payments be made?
- Assign ownership
Assign a team member to be the primary point of contact for the contractor. This person will be responsible for maintaining communication, reviewing work progress, and addressing any issues that may arise.
- Schedule regular check-ins with the contractor
This provides an opportunity to review work as it progresses, identify any issues, and correct them if necessary. Regular check-ins also include keeping detailed records of all communications with the contractor.
- Prepare ahead of deadlines
You can ensure that all obligations are met by diligently monitoring your contracts. Always keep track of dates and deadlines, so you don’t get behind. You can therefore avoid costly or time-consuming surprises in the future.
- Be sure to document changes to the scope of work
No matter how well crafted it is, there’s no way to anticipate every eventuality in a contract. This is why a process for tracking scope changes is so crucial to ensure everyone is in the loop.
Now let’s show you two options of how you can track your contracts.
How do you keep track of contracts in Excel?
You can use Excel for tracking contracts. To keep everything contract-related organized, we recommend these first-step measures:
- Create a master list of all your contracts. This will come in handy if you need to quickly find a specific contract or see an overview of all your current agreements.
- Create a separate sheet for each contract. Keep your info organized, so it’ll make it easier to find the contract you’re looking for.
- Look at the data you can auto-calculate or manually add/update.
Here are the steps for each sheet. You can later refer to this as your contract tracking template.
Step 1: Fill in a spreadsheet with the following (but not limited to) columns:
- contract type
- contract name
- contract manager
- date signed
- expiration date
- special notes
Note: Additional columns are required if there’s a payment involved.
Step 2: Enter the relevant information for each contract into the appropriate column.
Step 3: Use the “status” column to track whether a contract is active or inactive.
Step 4: Use the “notes” column to add additional information about a contract, such as renewal dates or termination clauses.
Step 5: Sort the spreadsheet by start date, end date, or status so you can easily find the information you’re looking for.
Step 6: Save the contract tracking spreadsheet and update it regularly so that you always have the most up-to-date information.
Here’s where we should get real, though — if you only have a few contracts, chances are you’ll get away with Excel. However, the solution isn’t too efficient with more contracts in your way.
In that case, it would be better if we used contract tracking software. Avokaado is a contract lifecycle management tool that lets you track contracts automatically.
How do you track contracts automatically?
Automatic contract tracking is a way to stay on top of your numerous agreements.
Here are Avokaado contract management software features effective for tracking contracts.
- Approval workflows:
Part of contract management workflows is the approval stage. Avokaado is a document approval software that automates the approval process. It lets you specify approvers and the sequence of how a contract must go through before it is approved. Each assigned approver or signer will be notified when it is their turn to take action.
Avokaado instruction: Click on “Settings” and switch ON “Queue based approving.”
- 360° view:
The thing is, Avokaado displays your workspace contract dashboard by default. However, you may wish to see all the documents for your entire team rather than just your own. The 360° view of a contract means having all the information related to the agreement in one place. That’s a complete overview of your company’s documents at a glance — the status of the documents, access information, and last edited date.
Note: 360° view is only available with the Avokaado Premium Plan.
- Managing Folders:
To be truly organized, it may require us to store different contracts in various folders (and subfolders). In Avokaado, it’s easy to keep track of all your documents and manage them in folders. You can quickly locate any particular file by arranging them into simple groups.
Avokaado instruction: To create a sub-folder, open an existing folder and click on “New folder.”
- Automatic reminders:
Contracts are all about important dates, right? Automated alerts and reminders are ideal for tracking deadlines. Even if it’s to delegate different assignments to your document collaborators, automatic reminders are friendly alarms that also appear in your collaborator’s workspace.
Note: You can also add a personal reminder to yourself when you include your name in the queue.
Get started tracking contracts
Contract tracking is an essential step for every business’ contract management. It helps you keep your contracts organized and makes it easy to find the information you need when you need it.
Excel is a great way to track contracts only if you’re dealing with low volumes and you don’t create new ones every day. Otherwise, a CLM software with contract tracking functionality makes the process efficient. Avokaado CLM is such a solution, and you can try it right now for free.
Isn’t it time? Start tracking your contracts today! Try modern Avokaado CLM for free for 7 days