The contract approval process in an organization can be complex and time-consuming. Even more so when things are not well coordinated and located on different platforms.
Fortunately, you can surpass various obstacles with contract management software. The main cause of problems arising from the contract approval process stems from human factors. When many people are involved in the process of managing a contract, this gives rise to a high risk of errors, legal issues, and delays. But with a centralized contract management software, you can automate the process and get rid of these issues.
What Is A Contract Approval Process?
A contract approval process consists of defining procedures that people need to follow in order to make changes around the contract. An approval process allows due diligence to what gets approved and prevents rogue changes from happening. This can require checks from a range of elements in the contract, including the budget, invoices, attached documents, approved contract managers, and so on.
After all, many people are involved in finalizing a contract. For instance, vendor contracts require back-and-forths and negotiations between a supplier and its client to finalize a deal. If there is a lack of transparency within the approval process, either of the parties may end up signing a contract on unfavorable terms.
Today, most companies automate and standardize their approval process through software to mitigate human errors. At the same time, an automated approval process can help save companies precious time and energy previously spent on handling logistics.
Elements of a Contract Approval Process
Companies have different workflows for their contract approval process. But if you’re just in the process of setting up one, here is a template that you can follow and build a base upon:
- Submit contract. A contract approval process begins once a contract has been submitted into the management system.
- Complete contract details. The contract manager or primary contact involved in handling this contract should complete key details about it. These include the name, renewal dates, primary contact and so on. While an assistant can fill these out, it’s always better to have the focal point do this step, as miscommunication may arise.
- Set approval workflows. Set up an approval process once the contract has been successfully uploaded to the platform. These people have the power to reject or accept version changes of the contract.
- Establish permission levels. Among your team members, see who can view or edit contract details. Set permission levels, so that you know who has access to which contract in the organization.
- Set automatic alerts and notifications. Setting automatic alerts will help you avoid accidental renewals and not forget about key dates regarding the contract. This can be extremely useful for organizations that handle a lot of contracts and don’t have the capacity to manually track key moments.
- Assign tasks and responsibilities. Contract Hound features an activity feed that lets people chat about the contract through a dedicated feed. This serves as an effective paper trail for contract updates.
These are all the essential workflows behind every effective contract approval process. Regardless of the scope and complexity of your contract management process, using a contract management software like Contract Hound can make this process seamless through automation.
4 Tips for Improving Your Contract Approval Process
1. Fix inconsistent formatting and missing information
Different departments within your company may have their own contract templates. Moreover, not everyone may have access to the latest templates if it is stored on a single hard drive. When employees can’t find contract templates, they may attempt to recreate the template.
This hinders the overall productivity and efficiency of employees. Moreover, without adequate knowledge of legal affairs, manual contract template recreation exposes your company to compliance risks. You’d need more resources and time to spend on contract review and correction.
How can software such as Contract Hound help to resolve this issue? It provides a consolidated platform for your company to compare and store all relevant information in one place. This prevents your employees from having to spend countless hours running through hard drives and files to find what they need.
This cloud-based platform also allows your company to standardize and share necessary files and folders for your team to easily modify existing templates. Now that everyone is connected via the same platform, your employees across all departments will be able to seamlessly integrate and upload templates that can be shared and accessed easily.
2. Fix problems arising from version confusion
As parties to the contract exchange opinions and terms, updated versions of the contract will be mailed back and forth until the contract has been finalized. Having a single platform to update the contract keeps everyone on the same page.
Moreover, with one version to edit, makes it easy to track changes. Contract Hound also allows parties to review, comment and chat with the same platform on a specific document. This ensures that nothing is overwritten or inadvertently lost.
With the features available in Contract Hound, it reduces the number of misunderstandings between employees. The platform makes it easy to communicate and clarify the elements of the contract on the platform with the legal team in your company.
Your employees will have access to your legal team’s knowledge much faster and easier. This facilitates the proper understanding of agreements each party is entering into before the relevant documents are sent for approval and signing.
3. Avoid missed deadlines and overlooked renewals
Although emailing updated versions of the contract back and forth is convenient, it is slow and your files may end up in the spam folder. This means you might not be viewing the latest versions of the contracts and overlook your contract renewals or submission deadlines.
This sows confusion amongst everyone and is a waste of time having to search for that one document. If the contract was for an important partnership but wasn’t visible to your stakeholders responsible for the contract approval, the contract will never be executed. As a result, your company could potentially lose an important partnership or time-sensitive incentives like vendor discounts.
Contract Hound’s automation system can help by allowing you to set reminders and get notifications for important dates. These include contract renewal or payment dates, so employees do not have the excuse of “I forgot…” when it comes to contract management.
Furthermore, Contract Hound allows you to track and organize each contract type in folders. This makes it easy to browse and filter for contracts at a glance. This allows employees to save time having to look through each contract individually before locating the one they need.
4. Minimize time lags from communication and requesting signatures
The main modes of communication within most organizations are generally through email. However, employee inboxes are usually flooded throughout the day. Thus, emails that contain important contracts can languish as a result.
According to a study done by the USC Viterbi School of Engineering researchers, after 48 hours without a response, you are highly likely to not hear back from the recipient at all. This is where Contract Hound steps in as it allows you to set reminders for contract review, and other key tasks related to the approval process.
Moreover, the tedious job of having to collect signatures manually from the respective personnel can be very time consuming. Hence, to counter this issue, Contract Hound is also integrated with Customer Relationship Management (CRM) software such as DocuSign.
This gives the assigned parties the flexibility and convenience of being able to sign on-the-go. With DocuSign, signatures can be added electronically. Electronic signatures are both secure and legally binding under the Electronic Signatures in Global and National Commerce Act (E-Sign Act). Thus, provides all parties to the contract peace of mind.
Interested In Shortening Your Contract Approval Process?
Our centralized contract management software helps in the automation of your contract approval processes. It greatly reduces the delays within your contract approval process and is a key component in ensuring an effective contract management strategy within your company.
Reduce your compliance related risks and save time while improving overall productivity and efficiency with Contract Hound.
Feel free to drop us any questions you may have or check out our 14-day free trial here!