If you don’t have an effective contract approval process, you will delay every contract that needs approval. Creating a delay isn’t a good look to have with your internal stakeholders and can push Procurement and Legal teams into the realm of being avoided at all costs by the business.
Let’s prevent this problem by taking this crucial part of the contract review and signature phase seriously, with a hyper-focus on user experience."
People in Procurement and Legal talk about being user-centric, but the reality is often miles away from this idea.
The Contracts Approval phase is part of the broader Contract Review and Signature process.
Your contract review process is the end-to-end process of getting a contract in place. Too often people narrow the scope of this process to be solely focused on the “contract review” element.
This is where a Legal pro, such as a lawyer or contract manager will read the contract, redline it, send the contract to the other party and negotiate.
This is a vital step to get the contract in place but the review process is wider than that.
You need to consider how your colleagues can engage Legal to kick off the contract process, how non-compliant contract positions are dealt with, who needs to approve the agreement and how the signatures work."
Once all of that hard work has been completed you then need to consider how you create a record of this contract and store it.
The typical Contract Review process looks like this.
And we’ve not even mentioned the post-signature contract management processes here which add further complexity when it comes to contract approvals.
I’ve seen contract approvals break the contract review process.
Imagine when you need multiple approvals, you’ve sent emails to get the approvals, but no one is responding to you. All you can do is chase more and hope that the approver notices it despite the noise of their inbox."
Your colleague, who needs this contract to do their job, loses trust in the contract process. You’ve created friction between the users of the service and the Procurement and Legal teams.
We want to avoid that at all costs.
Our roles in Procurement and Legal are there to add value.
To improve the contract approval process, you should digitise the entire contract review process and the way contracts are approved.
By changing the culture around contracts in your business, you will create efficiencies and make the contract approval process easier for approvers.
If you aren’t using a standardised best practice Contract Review, Approval and Signature Process, you will have problems.
I’ve experienced the pain points below when trying to get people in the business to sign off on contracts. I’ve also experienced being the focal point for the ire of my internal stakeholders, despite doing everything I could to get the contract approved.
Let’s cover the pains you’ll likely experience if you manually manage approvals.
Contract visibility is a foundation that you need to have in your contract management processes. Without it, you’ll find contracts being agreed to with less-than-ideal clauses, auto-renewals occurring and approvers in no-man's land trying to figure out what they need to do.
Version Control Issues can blight your contract approvers.
They may struggle to:
Reviewing contracts is high-effort work regardless of your experience. When you have multiple contract reviews on the go and several internal stakeholders chasing you down for a progress update it can get stressful.
Issues arise when the contract reviewer has to stay on top of multiple contract reviews and rely on a self-built tracker to stay abreast of contract issues."
The approver then has to understand the outcome of the review and negotiation. However, this is difficult without the aid of a summary, and a complete audit trail of every contract version, often meaning that the approver has to review the reviewer’s work in more detail.
Without a Contract Repository and Contract Review Workflow that is digitised, it’s difficult to keep on top of:
The Contract Notice Date is the most important data point we want. This is the last point at which we can serve notice that we intend to terminate at the end of the initial contract term.
If we aren’t on top of this, renewals will slip through the gaps and you’ll be invoiced for services and software you do not use."
Why?
Because your approver will not have any idea that this has happened.
When we talk about control, we’re talking about the idea of having processes in place that cover every aspect of your contract. This would include the end-to-end process being built out, agreed, signed off and in use.
We’d need escalation routes in place for approvals. We’d need a contracting policy that sets out what happens for each contract or vendor type (e.g. Strategic Vendors may have more oversight on positions when it comes to contracting).
Problems can arise when you have none or only some of this in place. And let’s be honest, this is almost impossible to achieve with a reliance on Excel, email and Sharepoint."
Email Approval Requests remove context and cause delays.
The typical approval request will be found in an email chain that the GC or other approvers has to read through to gain context of what is happening. This is a bad way to carry out approvals.
It is challenging for the reviewer to summarise the positions against the contract playbook without significant effort.
We need to reconsider this approach especially when it comes to vendor requests with Procurement and Legal teams working together which can create complexities.
What do we mean when it comes to compliance of contracts?
In the context of contract approvals, it means that we can see the data we need to make those approvals.
Approvers need to be certain that what they are agreeing to can be complied with in the post-signature contract management phase when you need to ensure the vendor performs what was agreed in the contract.
Not to mention the need for evidence that we are reviewing contracts in the manner we described in our contracting policy.
Compliance is fragile for any audits which require evidence of contract reviews and approvals on vendor contracts (e.g. SOC 2, ISO27001).
The consequence of a poor contract approval process is the circumvention of that process.
People in the business engage vendors on their own, agree to terms and pricing, and get contracts signed in silos.
The circumvention is a recipe for disaster, especially for any scaling business, which leads to the following:
You don’t want to have to deal with any of this. It’s challenging to reverse and can forever tarnish a business’s procurement and contracts process.
I speak with Finance, Procurement and Legal professionals daily. Most work from Excel spreadsheets, email, Slack and shared drives to manage their end-to-end vendor and contract lifecycle. They want to perfect the manual way of working before embarking on their digital transformation."
I always suggest that they forego those efforts and do digital first. There’s a misconception that you need a defined manual process before going digital.
Of course, it helps if you understand what needs to be done to get your contracts reviewed and signed. But this should not prevent you from starting your Digital Contract journey.
Gatekeeper has a team of experienced Implementation Consultants who can advise you on getting the most out of our Platform.
Dr. Elouise Epstein notes that the way you become comfortable with digital procurement is by doing it - not reading about it.
So let’s cover how you can create value by leaving the manual working processes behind and going digital as early as possible.
Just remember, you need to get involved with this to truly learn it (and it’s incredible for you and your business when you digitise your vendor and contract processes).
When you create a digital contract review and approval process, you will benefit from the following:
Now that we’ve covered why we need an effective Contract Approval Process, I’m going to help you make one. I’m going to come at this from the lens of using Gatekeeper to build this out. We’re going to consider two options.
Option 1 is where you review the contract and, depending on its value, the vendor type and category; this will determine if any approvals are required.
Option 2 looks more complex on paper, but it’s my favourite.
In this example, we’ll build a Contracts Playbook within Gatekeeper, which states the contract positions we need.
I prefer this method because we can still incorporate everything in Option 1. Still, we can route approval requests to the appropriate owner of the contract positions when we have a non-compliant position."
For example, if we have a pushback on 30-day payment terms, the CFO may need to decide if we can agree to the vendor’s request. This approval request isn’t for Legal or the Contract Management team to decide.
Before we get started, we want to ensure the basics are covered:
The optimal phase for an approval gate is after the contract negotiation. We manage this through eNegotiate, which also deals with Version History, so I never have to worry about that file name and keep tabs on where we are.
I choose this phase for approvals due to the contract playbook. Suppose we have points that are non-compliant with the contract playbook. We need to escalate the approval to our colleague, the owner, for that specific point.
We need to consider that we may have multiple approvers at this stage. Sequential approvals can create a bottleneck
Instead, I’ll ensure I’ve set up Gatekeeper to request approvals from all approvers in the same phase. I can see who has approved and who has yet to.
I can then send that friendly reminder to them or, if I’m in the office, let them know that they need to do this to speed this up.
One key point here is to get the buy-in of all the approvers to a response time. I can then build that in as an SLA, which will be our commitment to the entire business. This furthers the trust and loyalty towards the procurement and contract teams."
It lets us be held accountable for our ability to meet the commitment and caters for better planning of activities such as vendor onboarding or vendor contract reviews.
Now that we’ve set this up, the approvers will be notified when they need to approve a position.
Say one of the approvers wants the opinion from another person on this occasion; we can add that person into this approval process by sending them a message in Gatekeeper.
This is the easiest way to create a digital contract approval process, delivering visible results and accountability to the business.
Moving your internal stakeholders away from Slack and Email Contract Review Requests can be complicated. Change management becomes critical when implementing a Vendor and Contract Lifecycle Management Platform like Gatekeeper.
Our first challenge is to ensure people use the Contract Review process. The second is to let your stakeholders know about their responsibilities regarding contract approvals. If you’ve built a contract playbook, your stakeholders will be invested in this process and understand their responsibilities."
Here are my practical steps for effective change management:
By doing this and communicating it effectively, your business will adjust quickly. I expect you’d still get people circumventing the process and emailing you a request.
I’d link them back to Gatekeeper so they could raise a request on the platform.
I’d also demonstrate the increased visibility they gain through the Employee Portal, which shows the progress bar for each contract review request. You get the added upside that they won’t need to chase you on the status of the contract request.
Once your business uses the contract review request, getting your team of approvers to utilise digital contract approvals is easy.
Every business should have a Contracting Policy. The Contracting Policy is a document that sets out:
This Contracting Policy is not for your internal stakeholders who will use the contract review process.
Instead, it’s for anyone reviewing, approving or signing any contract document.
Your stakeholders need to use the Contract Review Process and the digital process.
Ideally you’d harness Gatekeeper’s Workflow Engine which digitises Procurement and Contract processes so that your colleagues only have to raise the request and the digital process will do the heavy lifting.
Your Contract Approval Process is a critical phase in your overall Contract Review and Signature Process.
This isn’t a Legal process - it’s a business-wide process and it should be accessible and easy to use.
You shouldn’t need your business to have memorised what they need to do to approve a contract. This should be built into your Vendor and Contract Lifecycle Management platform.
If this resonates with you then get in touch so we can show you how to do this with Gatekeeper.
Ready to improve your contract & vendor management?
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Before Gatekeeper, our contracts
Anastasiia Sergeeva, Legal Operations Manager, BlaBlaCar
were everywhere and nowhere.
Gatekeeper is that friendly tap on the shoulder,
Donna Roccoforte, Paralegal, Hakkasan Group
to remind me what needs our attention.
Great System. Vetted over 25 other systems
Randall S. Wood, Associate Corporate Counsel, Cricut
and Gatekeeper rose to the top.
