Workflows

The Ultimate Guide to Contract Approval Workflow: All You Need to Know

Approval discussions include giving input on the contract, making edits to key clauses, and fixing drafting errors in bulletproof contracts. Approval can take weeks or, in some cases, even months.

A lengthy approval cycle reflects poor contract management, putting the business at risk. A World Commerce and Contracting report shows that poor contract management can cost companies up to 9% of their annual revenue.

However, with a systematic contract approval workflow, this time can be reduced from weeks to a couple of days or even hours. But what is the right contract approval workflow and how does one get there?

In this blog, we will answer all these questions. Read to understand how a systematic contract approval process can help in effective contract management. Let’s begin.

What is the contract approval workflow?

The contract approval workflow is a process through which contracts are reviewed, revised, approved, forwarded, or rejected. Each department and stakeholder reviews and approves clauses that are under their purview.

Some of the most common stakeholders/departments that review and approve contracts are the legal staff, the chief financial officer, the chief operating officer, the senior manager of relevant departments, and the signatories.

Let’s see how this process works.

Start-to-finish contract approval process in 7 steps

Each organization has a unique process for approving contracts. However, some basic steps remain the same. Here’s one example of the approval workflow of a sales contract:

1. The contract is issued by the sales team based on the requirements.

2. The first draft of the contract is passed to relevant departments for review.

3. The contract administrator reviews and approves the contract for accuracy.

4. The legal team reviews the contract and makes amendments for legal precision.

5. The finance department reviews the contract and approves it if it is under the approval amount.

6. The Chief Finance Officer (CFO) reviews the contract for due diligence of finance data.

7. The final signatories/parties to the contract review and sign the contract and push it to execution.

If a person or a department finds a part of the contract unfit during the approval process, they reject the contract or suggest rectifications. As a result, agreement approval involves a lot of to-and-fro in the entire approval process.

Consequently, the contract approval process takes a lot of time, effort, and communication, especially when done manually. There are many other problems with manual contract approval which we will discuss in the next section.

Common problems in manual contract approval processes

Manually reading, reviewing, and signing off on contracts is laborious. It not only takes a lot of productive time but also delays closures. Let’s understand more about the challenges of manual contract management.

1. Lack of contract version control

Accountability and transparency are essential in contract drafting. While redlining and editing contracts, it is important to keep a tab on changes and follow the workflow waterfalls that make sense for your organization. However, with manual contract review, it is challenging to keep track of contract versions.

Once a department or a person makes changes in the contracts, they are directly implemented in the document. There is no way to track the changes and find out who modified which part of the contract. Moreover, sometimes different departments end up working on two different versions of the same contract, resulting in confusion and potential disputes.

2. Significant delays in contract closures

A long approval workflow means that your contract will pass through many stakeholders before it is sent for signing.

Manual reviews of 20-30 page contracts for in-house legal can take anywhere between 4-6 hours. Bogged down with other requests from across the organization, the ratio of legal to sales/other departments is disproportional. This contributes to significant delays in the contract’s execution.

3. Increased time on mundane work

Spending time reviewing and editing contracts takes away a lot of productive time from different departments. This is especially the case for businesses that deal with a large volume of contracts on a day-to-day basis.

In the end, manual agreement or approval means that departments must spend more time on contractual work and less time on their personal and professional lives or strategic work.

4. Negligence in contract reviewing

Manual contract review is prone to human errors and negligence, especially when reviewers are dealing with high volumes of contracts. However, in many critical contracts, minor negligence can turn out to be a costly mistake for your organization.

Additionally, a manual contract approval workflow may also result in improper negotiation and legal negligence. A minor oversight can lead to missed negotiation opportunities, renewals, or deadlines.

Many organizations face these problems with a manual contract approval process. The solution to these challenges is to find the balance between efficiency and a thorough review. Contract approval workflow automation is one way to achieve this objective.

Tip: A World Commerce and Contracting report states that 40% of organizations don’t have clear contract responsibilities. Shifting from manual to automated contract approval workflow helps define contract-related responsibilities and moves contracts faster.

Let’s take a look at the benefits of automating agreement approval workflow.

5 Benefits of automating contract approval workflow

Automation helps streamline contract approvals and get to a yes faster. Thanks to the availability of intelligent contract automation software like HyperStart CLM, you can automate contract approval processes while also ensuring accurate reviewing and redlining. Here’s how:

1. Get real-time contract approval status

Automated workflows help streamline internal approvals with easy no-code setup. This saves up to 70% time on contract admin and accelerates contract turnaround time 5x. You can also track who has the pen at each contracting step and prompt stakeholders with automated reminders for faster closures.

2. Speed-up reviewing and redlining

HyperStart AI-redlining helps generate a first draft of the contract in less than a minute, saving about 50-60% of legal review time. Legal resources can be employed better for higher-order work without the opportunity cost.

3. Increase contract visibility

Process metrics like contract status, number of turns, and review time help optimize the efficiency of your contract management lifecycle.

The in-flight dashboard of the approval process collects this data to identify bottlenecks to help you streamline your processes.

4. Elevate contract accountability

Contract approval workflow automation has handy functionalities like audit trails, comments, and version control. This is a secure and fail-proof way to gain better visibility and control of your contracts with accountability.

5. Enable teams to self-serve contracts

Today, many CLM software solutions enable businesses to self-serve contracts. The contract initiator can create contracts from a pre-approved clause library or repeatable standard-form templates, empowering other teams to get started without legal dependencies.

Additionally, self-serving contracts work with drag-and-drop functionality. This way, your teams can create new contracts within minutes. No more writing contracts from scratch.

These were the top benefits of automating the contract approval workflow. Now, let’s discuss some of the top tools through which you can automate your contract approval workflow.

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Top 5 software to automate contract approval workflows

Here we have listed some of the top CLM tools offering contract workflow automation functionality. We have selected these tools based on factors like:

Workflow automation capabilities

G2 and Capterra reviews and ratings

User opinions

Let’s take a look at the top workflow automation software options.

1. HyperStart CLM

Contract Approval Workflow | Hyperstart

HyperStart CLM offers an end-to-end contract lifecycle management platform. Powered by HyperVerge AI, the solution powers all stages of your contract lifecycle process, including the contract approval workflow.

HyperStart CLM’s built-in contract workflow approval software helps you build no-code workflows for your approval process. With HyperStart CLM, you can accelerate contract approval, reduce contract turnaround time (TAT), and minimize business risks—all of this automatically.

HyperStart CLM’s workflow builder system helps you view all your in-flight contracts, get detailed activity logs, and track contract action items centrally. Today, HyperStart CLM is used by top brands like Khatabook and LeadSquared for its efficiency in contract workflow management.

Key features of HyperStart CLM’s workflow builder

No-code contract approval workflow builder for business-specific processes

Automated email reminders and notifications for faster approval

Centralized in-flight dashboard for ongoing contracts

Conditional approvals with an option to add ad-hoc approvers

Secure audit trail to track all changes in the contacts

70%

Less contract admin time

 

5x

Faster contract turnaround time

 

80%

Less contract admin time

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2. Juro

Contract Approval Workflowl  Juro

Another popular CLM offering contract approval workflow builder functionality is Juro. This contract management software is excellent for getting your contracts approved and signed faster. With Juro’s contract approval workflow builder, you can set granular controls and get a real-time view of approval status, hence promoting CLM efficiency and contract visibility.

Key features of Juro’s workflow builder

Template-level approvals to ensure contract security

Internal commenting and suggestions for faster redlining

Unique visual timeline to track all contract changes

3. Ironclad

Contract Approval Workflow | Ironclad

Ironclad offers a simple workflow designer that helps you build and launch contract approval processes within minutes. Ironclad’s drag-and-drop workflow-building tool comes with AI-based playbooks to help you standardize contracts for consistency. This ensures that you create a compliant contract that gets approved faster.

Key features of Ironclad’s workflow builder

Launch contracts faster through Salesforce and Slack integrations

Route contracts to the right approvers

Add approvers, signers, and conditional rules for contract clauses

4. Concord

Contract Approval Workflow | Concord

If efficiency and legal compliance are your key objectives for your contract approval workflow, Concord is another great tool you should consider. This contract management software offers a contract approval workflow builder to help you stay in control of your contract and save time. With Concord, you can standardize contracts for faster redlining, negotiation, and approval.

Key features of Concord’s workflow builder

Create a pre-defined contract approval workflow library to directly add to your contract

Create conditional approval steps based on smart fields

Automatically notify the next approver in line via email and in-app notifications

5. SpotDraft

Contract Approval Workflow | SpotDraft

SpotDraft is another contract lifecycle management software that offers excellent functionality for contract workflow automation. With SpotDraft, you can put your contract approval workflow on autopilot and also ensure great efficiency and speed in the approval process.

Key features of SpotDraft’s workflow builder

Mandate approvals from relevant stakeholders based on contract value

Assign review requests to team leads

Sign contracts with a low-risk factor for speedy approval

These are some tools you can use to automate your contract lifecycle, including contract approval. Use any of these tools to streamline your contract approval workflow and accelerate your redlining process.

Contract workflow automation tools, in combination with some best practices, ensure smooth workflow operations. Keep reading to learn about these best practices.

Best practices in contract approval workflow management

1. Redline and review with AI

AI-redlining saves up to 40% of contract review time. The AI technology automatically reviews the contracts and sends them for signing. Faulty clauses are flagged and highlighted if any are present in the contract. This allows you to spend more time on high-complexity contracts and use automation for low-complexity ones.

2. Granular controls

Examine your organization’s unique contract lifecycle management process before you streamline your workflows. Identify the key challenges in your workflow process across contract types like MSAs, NDAs, SLAs, etc. Identify key pain points that are unique to your organization and existing tech stack. Custom, personalized workflows with granular controls help you curate the user experience while maintaining the highest degree of compliance, due diligence, and security.

3. Pre-approved clauses & templates

Contract workflow management systems offer other pre-execution functionalities to make the contract creation process faster. Legal-approved conditional rules, clauses, and standard-form templates slash contracting costs by up to 33%. This ensures efficiency, accuracy, and compliance without legal dependency.

These were some best practices to help you leverage contract approval workflow tools and speed up the approval process. By now you have all the information needed to optimize your organization’s agreement approval workflow.

Wrapping Up

Contract approval processes can be laden with bottlenecks if not managed properly. A streamlined contract approval workflow ensures that your contract runs smoothly throughout the review process without delayed closures.

One of the best ways to streamline your approval process is to use automation. Automated contract approval workflow tools help reduce manual approval work and set up frictionless workflows for contracts. Choosing the right software for your organization is key.

Looking for a smart contract approval workflow automation solution?

An efficient and automated contract workflow automation solution is necessary whether you want to identify and eliminate bottlenecks in your contract approval process or increase the overall efficiency of the contract lifecycle.

HyperStart CLM offers AI-powered contract workflow automation software to help you boost contract negotiation, redlining, approval, and signing. Contact our team today to get a demo of our contract workflow automation software.

Ready to Agree Contracts Faster?

Get an end-to-end CLM solution to manage contract approvals effortlessly. Agree contracts 10x faster with HyperStart.

Book a Demo

Frequently asked questions

Bottlenecks in your workflows include long contract admin, increased back-and-forth during reviews, non-compliance risks, and delayed closures. If you’re experiencing any of these issues, it’s time to automate your contract approval workflows.
While the specific process varies across organizations the most common steps are: contract creation and assembly, approvals from internal stakeholders, and counterparty review with AI-redlining.
Contract workflows are a set of processes that contracts go through. This includes all stages of the contract lifecycle from start to finish. Contract approval is just one stage of the contract workflow and involves different parties reviewing, redlining, revising, and approving contracts.
Yes, you can only use contract management software to automate your contract workflow processes. Most CLMs, including HyperStart CLM, offer single-module functionality, and you can opt for workflow automation software. This way, you can automate your contract approval workflow without investing in an end-to-end CLM.
Contract approval workflow software is highly secure and offers granular access control functionality. You can control who accesses your contracts and even track contract versions. Therefore, using contract workflow approval software ensures CLM efficiency without compromising your contract’s security.

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