Without a doubt, contract approval workflows have a lot of moving parts.
Multiple stakeholders, onslaughts of feedback, and risks of miscommunications all pose a threat of setting the entire process back.
Approval processes quickly spin out of control when you’re trying to scale or need input from several stakeholders—that’s where having a reliable approval process workflow comes in handy.
In this article, we’re covering approval process workflows, the benefits of implementing one, and how to do it successfully.
What is an approval process?
An approval process is a formal series of steps to approve important work from different parts of the organization. It’s an umbrella term that refers to any process involving document approval for budgets, contracts, invoices, marketing goals, projects, and more.
It’s necessary when multiple departments or stakeholders need to review and approve a document. The process sets the guidelines for how a marketing proposal or new contract gets approved or rejected. Ideally, this process is automated, so stakeholders get pinged when it’s their turn to review and everything runs efficiently.
Also read: How Contract AI Can Revolutionize Your Workflows
What does an approval process workflow look like for contracts?
The contract approval process likely includes redlining, signing, and ensuring all stakeholders have ample opportunity to review the agreement’s contents.
Building a contract approval process workflow aims to create a smooth and efficient system that guides the contract process. You’re getting approval from the necessary parties and ensuring no inconsistent contracts slip through the cracks.
Each step of the workflow has a stakeholder assigned. This person is responsible for ensuring the contract is satisfactorily reviewed at that stage of the workflow. You’re helping streamline version control by ensuring there is one copy of the contract that everyone is reviewing. No stakeholder is spending their time redlining outdated information.
Let’s take a closer look at why automated approval process workflows could enormously impact how you work.
Also read: How to Set Up an Efficient Contract Approval Process (+Template & Examples)
What are the elements of an approval process workflow?
The exact type of workflow you use varies based on the types of approval you have on deck. There are a few key characteristics that should appear in all approval workflows. Let’s take a look:
- Assigned approvers: Without assigned stakeholder roles, you risk having too many cooks in the kitchen. Streamline the entire process by designating one or two people per stage to avoid the risk of slowing the workflow
- Stakeholder permissions: The approval requirements of each stakeholder are unique to their role. Aim to set up a workflow using a tool that allows you to give specific permissions to each person depending on their responsibilities
- Due dates: Include due dates throughout the entire process to ensure it stays on track. Doing so will also help ensure that proper stakeholders are alerted at the right time to complete their steps in the approval process
- Automated notifications: One of the greatest benefits of using a tool for your approval workflow is automating notifications. It’s a hands-off approach, saving everyone time while ensuring the approval process moves smoothly forward
- Record a log of everything: The best way to learn from past experiences is to document the workflow as you go. When you identify bottlenecks or sections of the process that could use tinkering, set aside time to iterate and address these potential setbacks. Additionally, leaning on document analysis to gather data can provide legal teams with helpful information to support their efforts
4 benefits of an automated approval process workflow
#1 Increase productivity
An automated approval process minimizes manual tasks and saves time. The basics—such as moving an agreement through its workflow or reminding stakeholders when it’s time for them to review the document—are automatically handled by a tool.
If you’re the person responsible for monitoring the workflow, you gain time back in your schedule and can rest assured the approval process is moving along. You can kick long email chains and mountains of paperwork to the curb. Every part of the approval process happens in one place, so you can run a more efficient workflow that keeps everyone on track and boosts productivity.
#2 Manage risk better
A key part of the approval process is ensuring accuracy. You want to take the proper steps to avoid risks and check all the regulatory boxes to ensure compliance. An automated workflow is your assistant in making this happen.
Let’s look specifically at contracts. An automated contract lifecycle management (CLM) tool can flag potential problem spots in your agreements and help with version control. It reduces the risk of errors slipping through into the finalized document.
“In many cases, a particular version of the contract might be approved. But the required stakeholders might not have access to that version, and they work on older versions.”
~ Igor Poroger, Director of Legal, EMEA, Vectra AI
How CLMs Empower Legal Teams in B2B SaaS Companies
Automated approval processes can help you identify and solve these problem areas before they become huge setbacks. They allow you to adjust templates or the process itself. As a result, you have a workflow that helps you avoid errors and risks.
#3 Save time and reduce costs
Managing multiple steps of just one document is already a lot to keep track of. Now try to do that for several documents simultaneously, and your entire workday becomes centered around managing these workflows.
An automated approval process helps you avoid time-consuming tasks by doing all the heavy lifting for you. Instead of shoulder-tapping stakeholders, they’ll receive an automated notification letting them know their input is needed.
By saving time on the workflow, you’ll reduce costs and be able to focus on tasks that move the business forward instead of being stuck on document housekeeping.
Also read: Contract Repository: Everything You Need to Know
#4 Gain better visibility
If you have multiple stakeholders and several levels of approval for your document management workflows, there are a lot of eyes that need to get onto a single document. You want to make sure each stakeholder has clear visibility into where the document is in the approval process. When you have a single source that automatically tracks the document, everyone can quickly track its status.
“My advice is to understand which stakeholders you’ll have maximum friction with and then adjust and lean in. Try to align the legal roadmap with their goals. In case of conflicts, make sure you’re both seeing it as a partnership. Help them understand and navigate legal risks. Also, make sure they feel educated and comfortable in making decisions (or, if they’re not the decision maker, help them resolve and get to YES).”
~Ryan Nier, General Counsel, Pinwheel
Putting Legal on the Map in a Hypergrowth Startup
It’s a good practice to pinpoint the necessary players as stakeholders to help minimize friction and setbacks. Otherwise, there’s an increased risk of too many stakeholders reviewing too many outdated documents. In turn, everyone ends up misaligned. Ensuring that only necessary people can see what’s happening with the workflow will keep everyone on the same page and the process moving along smoothly.
How do you create an approval process workflow?
#1 Examine the current process for weaknesses
The most effective way to set up a contract approval process workflow is to identify weaknesses in your current process. Deconstruct your existing workflow and find the problem areas. Where are the bottlenecks? Are you missing steps in the process that would be helpful? Would having automated software streamline the flow?
Pinpoint where your process could improve and create approval steps to solve them. Use this information to guide how you develop an approval process workflow.
Also read: How AI Contract Review Tools are Transforming Legal Workflows
#2 Document guidelines and bottlenecks
Now that you’ve found the bottlenecks and gaps in your current workflow, capture and document this information. Within this documentation, outline expectations and goals for your contract approval process. Highlight why you’re making the changes and open the door for ideas from team members.
Doing so ensures that everyone is on the same page. Each stakeholder understands their role and responsibility. If there are any questions or concerns about the process, team members can voice them.
#3 Assign stakeholders
In any successful contract approval process, having one main point of contact for each step is wise. Ideally, one person oversees the entire process while the necessary stakeholders from different departments assign one person responsible for their steps. Look for automation software that allows you to assign specific stakeholder permission levels. Doing so can make the entire approval workflow process faster and easier.
It is also helpful to outline the approval expectations for each stakeholder. When there are guidelines for each approval workflow step, the entire process is streamlined, and everyone has insight into process expectations.
#4 Choose the right approval process software
Managing an approval workflow with automated software ensures an effective process. Not only will it save your team time, but it will also ensure accuracy, mitigate risk, and remove the headache of trying to manage multiple documents at once, especially when it comes to contract management.
“Although a CLM solution might seem costly in the early stages, companies should have it in place and build workflows within the tool to process contracts better. By doing so, they can keep legal costs low in the growth stages and close deals faster. Moreover, they will have clear visibility into the contract pipeline and use their legal resources to optimise workflows better for yielding maximum results.”
~ Igor Poroger, Director of Legal, EMEA, Vectra AI
How CLMs Empower Legal Teams in B2B SaaS Companies
As you choose your platform, here are some characteristics to consider:
- Ability to manage multiple contracts simultaneously
- Integrations with the rest of your contracting tech stack
- Automated processes for everything from invoice approval to contract approval
- Email notifications sent to stakeholders for approval requests
- Repository of stored contracts and their data
- Unique insights into your process to support continuous improvement
CLM tools like SpotDraft help ensure transparency and security in contract processes. From templated contracts to streamlined agreement creation to safely storing finalized contracts, SpotDraft is the end-to-end solution.
#5 Customize your workflow
Once you’ve selected your CLM software, it’s time to configure it. There is no one-size-fits-all process for contract approvals—you want a workflow that aligns with your existing business operations and goals. Ensure you’ve set up automation to move the contract along its approval timeline and alert the correct stakeholders.
Also read: Automatic Renewal Clauses: How to Mitigate Risks and Protect Your Interests
Ready for a tool to streamline your approval process workflow? Look no further than SpotDraft
Manual approval is a thing of the past with an automated contract workflow. SpotDraft is the all-inclusive solution to guide your approval system. You can see the approval status in real time, all while gathering unique insights from your contracts to inform future decisions.
SpotDraft’s features make your contracting workflow smoother, smarter, and faster:
- Build and send new or updated contracts in minutes
- Automate the contract approval process without technical expertise
- Establish a single source of truth for all contracts
- 24/7 customer support, so you’ll get answers instantly
- Seamless integrations enable you to create, share easily, and store contracts
- Customizable workflow template to create a new agreement with just a few clicks
- Safe and secure storage of contract data for internal audits when needed
Ready to give SpotDraft a try for yourself? Sign up for a free product demo today.
