Nobody is hired to do contract admin. It gets absorbed into other roles a few minutes at a time, which is exactly why almost no business has any idea what it costs them.
What follows is a method for working it out with your own numbers rather than a statistic from somebody else's research. It takes about ten minutes, and the result is usually larger than people expect.
The work that never gets logged
Contract admin is not one task, which is part of why it hides. In a 20 to 100 person business it is usually some mix of the following.
- Finding a signed agreement because somebody needs a clause out of it
- Working out when a contract renews, and what notice is required to stop it
- Checking an invoice against what the agreement actually says
- Chasing the person who negotiated it, who may no longer work there
- Rebuilding a list of active contracts for a board pack, an audit or a buyer
- Deciding whether to renew, usually in less time than the decision deserves
None of it appears on a timesheet. All of it comes out of the week of whoever is closest, which in most SMEs means the operations lead or the finance manager.
Work out your own number
- Count your active contracts. Include software subscriptions, vendors, leases, insurance and anything with a recurring payment. Most businesses undercount at this step, which is informative in itself
- Multiply by the time a renewal decision takes end to end: finding the document, reading the relevant terms, checking current spend, and getting a decision from whoever owns the budget. Forty five minutes is conservative when the contract is not in a central system
- Add ad hoc lookups. Two a week at fifteen minutes each is typical for a business of this size
- Add the periodic rebuild: the hours spent reconstructing a contract list for reporting, audit or due diligence
- Multiply the total hours by a loaded hourly cost. On a salary of $90,000 that is roughly $55 an hour once employment costs are counted
A worked example for a business with 40 active contracts: 30 hours of renewal decisions, 26 hours of lookups and 12 hours of list rebuilding comes to 68 hours a year, or about $3,700. That is a fortnight and a half of one person's time spent on administration that produces nothing.
The number that makes the hours look cheap
Those 68 hours are the visible cost. The expensive part is what happens because the hours were not available in time.
A renewal decision made two days before the notice deadline is not really a decision. There is no time to get a competing quote, no time to check whether usage justifies the tier you are on, and no leverage to negotiate, because the vendor knows the alternative is an automatic rollover. One mishandled renewal on a $15,000 a year contract can cost more than an entire year of admin time.
We cover the direct version of that cost in how businesses lose thousands every year from missed contract renewals. The point here is that the two are the same problem measured in different units.
Where the time actually goes
It is worth noticing what those hours are spent on, because almost none of it is the part that needs judgement. Reading a renewal clause and deciding whether to keep a supplier takes a few minutes. The rest is retrieval: working out which folder, which inbox, which version, and whether an amendment somewhere changed the terms.
That is the half a system removes. The judgement stays with a person, because it should. The searching does not need to happen at all.
If this sounds familiar, what is contract sprawl describes how the retrieval problem builds up in the first place.
Where Miova fits
Miova is built to delete the retrieval half of the work. Signed agreements are forwarded to a private upload address, key dates, parties and values are extracted from the document rather than typed in by hand, and every contract has a named owner. When a question arrives, answering it is a search rather than an afternoon.
Renewal and termination alerts arrive with enough notice to act on them, and the monthly summary means nothing has to be remembered in between. The time saving is real, but the bigger shift is that renewal decisions start getting made early enough to be worth making.
The short version
Contract admin costs most SMEs somewhere between one and three working weeks a year, and hardly any of that is thinking. It is looking for documents. Count your contracts, multiply by the honest time each one takes, and put a dollar figure on it. Then compare that with what a single rushed renewal decision has already cost you, which is usually the larger number of the two.