A contract approval workflow is the process followed when a contract has to be approved at various steps of its lifecycle. You may hear this called "workflow,” "sign-off,” or a similar term.
Essentially, it's the workflow that specifies the sign-offs needed to move the document through your organization.
The contract approval workflow is the system that you put in place to manage the approval process for your legal agreements (your contracts). Approvals, alongside contract negotiation and renewals, account for the three main aspects of a successful contract workflow.
Contract approval workflows come with numerous benefits; they make it easy to manage contracts and keep track of what you've agreed to, they help improve compliance and minimize the risk of mistakes or oversights, and they make it easy to share documents with stakeholders, customers and outside parties.
Here, we’ll walk through what you need to set up an efficient contract approval workflow and why it matters for your business.
Why your business needs a contract approval workflow
There are three main reasons why your business needs a contract approval workflow:
- Optimize productivity: Contract approval workflows can optimize productivity by making it easier for your team to create, negotiate and approve contracts. Since many businesses are required to manage multiple contracts at once, efficient workflows are invaluable for getting things done on time.
- Increase efficiency: A contract approval workflow can also help increase staff efficiency by simplifying the agreement process.
- Ensure accuracy: Contract missteps can lead to costly mistakes; contract approval workflows help ensure accuracy during every stage of the agreement process. By standardizing procedures, you can reduce the chance of error due to missing steps or incomplete processes—helping you reduce compliance risks along the way
How to set up an efficient contract approval workflow
When your business is growing, you can't afford to be slowed down by inefficient processes. And yet, some inefficiencies are hard to avoid.
Approving a contract is a task that often involves many stakeholders and follows a complex process. In fact, it's easy for it to become the bottleneck of your sales process — unless you use an efficient contract approval workflow.
A contract approval workflow allows you to streamline your existing process and automate tedious tasks. It also helps keep track of who is responsible for what and makes sure that no detail gets overlooked.
Here are six steps you can follow to create an efficient contract approval workflow:
1. Create the sales documents
Your sales documents are the most important part of your workflow. They're what generate revenue and drive growth. If your sales team is manually entering data into a CRM, that's time not spent generating revenue. Plus, the longer your documents take to create, the less likely your clients will say yes to them.
If you want your business to grow, you need to automate as many tasks as possible.
Pro Tip: Automate what you can. Take advantage of Proposify's template library to free up time for your reps to get the sales documents created in no time.
2. Establish responsibilities
It’s important to identify the people who will be responsible for each step, and define their role in the process. The number of steps involved in your process will depend on the complexity of your organization and its structure.
It’s during this step that you determine who approves what and what is needed from each stakeholder before the document moves on to the next step of the sales process.
3. Set permissions
The roles that users play within an organization can determine what they can and cannot do with documents. By giving different levels of users different levels of access, you can ensure that the appropriate team members have access to the information they need.
When you use the user roles feature, you can designate whether users are Editors, Viewers, or Administrators. Viewers will be able to view the documents in your site, while Editors and Administrators will be able to edit those documents.
4. Create a timeline
When creating a contract workflow, it's important to identify any deadlines—specifically, due dates—that the sales documents you create will be associated with. This will help you set expectations and keep your workflows moving to prevent sales reps and managers from falling behind on their workloads.
5. Set up alerts and notifications
Sales documents can be tracked using automated alerts and notifications. You can choose when alerts are sent out (approvals, rejections, status updates, etc.) and to whom.
Be sure to check out Proposify's approval workflow enhancement features for more advanced methods of getting your proposal approved by the right person as quickly as possible.
6. Document and communicate
You can identify and address problem areas with the approval process by viewing document and user history from each step. This will allow you to constantly improve and streamline your workflow.
Why you should consider adding automations to your contract approval workflow (and why manual workflows don’t work)
The process of approving contracts can be tedious and inefficient—especially when you’re stuck using manual workflows.
Manual workflows leave a lot of room for error, as they rely on people remembering to do the next step in a contract approval process. They also rely on people having access to the right documents at the right time.
Using an automated contract workflow is an ideal solution to this issue. Tools like Proposify allow you to automate your contract approval processes, eliminating the need for people to try and remember what is due and when. Instead, everyone simply receives notifications when it’s their turn to review or approve a document, and they can easily follow up with questions if needed.
How to avoid common pitfalls and keep improving your contract approval workflow
You know the drill: a spike in sales leads to a rise in new contracts, which leads to an uptick in contract approval and negotiation requests. You’re juggling multiple incoming requests, which may or may not be well structured.
In many cases, poor contract workflows are the result of the absence of any workflow at all. But in other cases they’re the result of too many people being involved, which can lead to bottlenecks, delays, inconsistencies and oversights. Either way, you need to ensure that your contract approval process is efficient. This can be done by quarterly evaluations, receiving feedback from those who are using the workflow about what’s working and not working, and integrating automation tools like Proposify to streamline the process.
Here’s how: Start with a template
No need to start from zero—start your workflow with a contract template that covers common terms and conditions, such as payment terms and delivery dates. This way you can focus on negotiating changes based on the customer’s requirements
If you've ever been frustrated by a poor contract approval workflow, you aren't alone. Having the process in place is an important part of running your business, but sometimes these processes can become convoluted and hard to follow. By creating a fresh, new workflow and applying these best practices, you can avoid (or fix!) these common pitfalls, and turn what can be a time-consuming task into a workflow that your team will love.