Staying up-to-date with your business contracts’ expiration dates is important. The impact of getting caught off-guard by a pending expiration or a lapsed contract can vary from insignificant to ruinous.
A few factors influence how companies keep track of the expiration dates of their contracts, SaaS licenses, trademark certificates and other legal documents. Three important ones are:
- Their line of business,
- The number of contracts they have, and
- The company size.
Businesses that deal third party contracts need systems in place to guarantee that deadlines and expiries are checked every day. Examples include lawyers and accountants. Businesses that only care about their own contracts may have a less strict process.
The number of contracts affects which contact management solution to use. With very few contracts, a spreadsheet that is checked monthly may suffice. If the number of contracts is large, a more automated system would be needed to avoid important dates passing unnoticed.
Smaller companies may get by with simpler and more generalised solutions because fewer people will be involved in contracting. Larger companies will have more people from more diverse areas involved in contracting. To keep them all up-to-date with multiple contract expiration dates requires more focused solutions.
Solutions
Below is a list of some software tools companies use to track the expiration dates of their contracts and other legal documents. The factors discussed before will influence which of these are suitable in a particular situation.
Spreadsheet
Use a spreadsheet to keep track of all the expiration dates and other relevant information.
Getting started is trivial. Setup consists only of deciding on column names. By using a shared spreadsheet team members can access all the information they need whenever they need it.
The simplicity of the spreadsheet solution does come with a few downsides. Maintaining the information integrity is a manual process and there are few barriers to prevent accidents resulting in incorrect tracking information. However, the biggest shortcoming is that there are no automated notifications for upcoming expiries. A strict system must be implemented to ensure the spreadsheet is checked frequently enough to avoid contract expirations from being forgotten.
If you don’t have many contracts to track and it is small group of people that need to have direct access to the data, then a spreadsheet may be a good start.
Calendar Reminders
An online calendar is another method that is readily available and easy to start using. A shared calendar will allow team members to browse the list of tracked contracts at will.
There are not really any setup required. Expiry dates are captured as calendar events with interested parties set as event attendees. Automated notifications may be set up to the relevant people.
Maintaining information integrity works slightly better than for spreadsheets because permissions to edit the contract entries may be limited to a small group while a larger group may have permission to see the calendar.
While automated notifications and limited edit rights are improvements over spreadsheets, one big downside is that it is difficult to get an overview of all upcoming expiration dates. It is also difficult to filter and locate specific contracts when the expiration date is not known.
If the group that needs notifications is small and relatively consistent between various contracts then a calendar may be a good solution. If you frequently need to query the list of contracts, or extract data from it, then a calendar will not work well.
Project Management Tools
Project Management (PM) tools deal with dates, deadlines and notifications as part of their core functions. They can work well for tracking contracts.
If tasks are already managed with a PM tool it should be relatively painless to set up a separate project for tracking contracts and documents. Each contract can be added as a task with the expiration date set as the due date. Setting up notifications to the correct people and dealing with permissions should also be easy enough.
On the other hand, if the business does not use a PM tool, obtaining one only for the purpose of tracking contracts is not a good idea. Setup may be complicated, it may be expensive and it will be cumbersome and awkward to use because they are really designed for a different purpose.
Client Relationship Management Software
Client Relationship Management (CRM) tools track information about clients, and sometimes about suppliers. If you are already using a CRM system it is worthwhile to check if your CRM can track contracts and send automated notifications related to the tracked contracts.
If CRM software is an option for tracking your contracts then the advantage is that there should be minimal setup required. It can most likely send automated notifications and there should be a permission system to protect the contract information from being changed inadvertently.
Some CRM systems will only send notifications to people with a user license. If contract stakeholders include people external to the company or staff that don’t have CRM access, it will be a problem.
Industry Specific Software
Many industries have industry specific software available, often driven by compliance requirements or uncommon business characteristics. If tracking contracts and legal documents is a common activity in the industry it will be accounted for in the software. Businesses in such industries should investigate these software tools first. They are usually overwhelmingly better for their intended use case than any general purpose tool will be.
A big advantage of being in such a business and using the industry software is that there will be minimal, if any, setup required. The way notifications work, how contract information is maintained and ensuring proper access permissions will all be taken care of, or be part of, normal business operations.
Contract Management Software
Contract Management (CM) software store details about contracts, such as the contract document, expiration dates, monetary values, and other information that is relevant to an agreement. CM tools only store data about the agreements, they don’t assist in the process of drafting, negotiating or executing an agreement. They provide a subset of the capabilities of Contract Lifecycle Management (CLM) tools. This makes CM tools significantly simpler than CLM tools. It also makes them more suitable if you have no need for the complex parts of CLM tools.
Since CM software are specifically built for tracking contracts, licenses, service level agreements, trademark certificates and other legal documents, there is no configuration required to make it work. Setup only involves loading your contract information and specifying the notification recipients.
Updating information in a Contract Management tool doesn’t form a natural part of business operations. To gain the most value from a CM tool some process must be put in place to ensure the data stays current.
Contract Lifecycle Management Software
Contract Lifecycle Management (CLM) systems have the ambitious aim to cover the complete contract lifecycle. Drafting, suggesting clause templates, negotiation and reworking, digital signing, monitoring obligations and execution progress, tracking expiration dates and renewal or cancellation. Many systems include AI in some of the steps.
The contracting process varies between businesses. Setting up a CLM tool for your business could be significant project. To get the full value of a CLM tool, contracts must be handled completely using the tool rather than just storing contract information there.
If you do use a CLM tool fully, maintaining the contract information is a natural side effect of normal business processes and not some additional step that needs an explicit process. The tool will deal with sending notifications to relevant people and provide the necessary access controls to avoid unintended changes.
CLM systems can be expensive and moving all your contract related activities into a single tool may not be easy, or even possible.