Every day a potential contract sits in somebody’s inbox waiting for approval, is a day your form isn’t making money on the deal. Each day also gives your potential customer more time to question their decision to trust you.
Too often, the contract approval process is cumbersome, and functions as a bottleneck for the sales team. Salespeople are anxious to close deals to earn commissions, and management needs the sales team to be able to move on to other prospects as quickly as possible.
Contract management software can help streamline your current contract approval process.
Diagram Current Process
The first step towards creating a more efficient contract approval process is to understand how your current process works. You might think you already understand your current process. However, chances are there are many informal steps that aren’t listed in your set of standard operating procedures.
You need to diagram your current process. Ask every person in the process what they understand the approval process to be—document both the formal and informal steps.
For example, one typical informal step in a contract approval process is when a salesperson contacts the assistant for an executive with signoff authority to check on the status of the contract.
You can’t improve the process until you fully understand what is happening today.
Ask Why for Each Step
Once you know what each step in the process is, you need to ask for the reason behind each step. Sometimes the reason might be that things have always been done this way. Some steps might be to satisfy the legal department, and other steps might be because individual executives want to be kept in the loop.
Once you start asking about the “why” for each step, you will start seeing steps that you can eliminate.
Limit Approvals to One Person Per Department
Next, it’s time to start making some changes. Start with eliminating duplicative steps. There never needs to be more than one person in a department signing off on a contract. Often the reason multiple levels of people feel like they need to sign off on a contract is because of a lack of an official communication and documentation system for contracts.
Contract management software will allow you to create an audit trail that managers can quickly check. Instead of having a document in a physical inbox, you can use the software to digitally “check-out” the contract. Anyone will be able to use the software to check the status of the contract.
Create Written Procedures Covering Each Step
While you are creating a new, streamlined contract sign-off procedure, you need to meticulously document each step. Informal processes generate more opportunities for mistakes. They also result in wasted time and energy. By creating a new formal set of written procedures, you can eliminate the waste of informal procedures.
The new standard operating procedures for contract approval should be distributed to everyone involved in the process.
Use Automated Alerts and Document Tracking
Moving physical paper around is dangerous. If you use contract management software to manage the contract approval process, there is no physical paper to get lost. It also allows you to take advantage of digital document tracking and automated alerts.
Executives will receive an automatic alert when a contract is ready for review. Sales and operations will get an alert when the deal has been approved.
These alerts and tracking features eliminate the back and forth that often goes on while everyone is waiting for the contract to get approved.
You can’t afford to use an inefficient contract approval process. When you streamline this process, you will improve your cash flow, and you will create a better first impression for your new clients.