All Blog posts

Identifying and Implementing a Good Contract Approval Process

There are key components of a good contract approval process, and we'll go over how to develop and implement one for maximum efficiency.

August 13, 2023

Contracts form the basis of all business relationships. They lay out the expectations and obligations of all parties involved and establish the terms and conditions under which parties will transact with each other. As a result, having a reliable process for reviewing and approving contracts is critical to ensuring that they are legally binding and financially viable and that they meet the needs of all parties involved. A good contract approval process can assist businesses in streamlining operations, reducing legal risks, and avoiding costly errors. 

This article explores the key components of a good contract approval process providing insights into how to develop and implement one for maximum efficiency. 

What Is a Contract Approval Process?

A contract approval process is a series of steps and procedures that an organization follows to review, approve, and sign a contract. Multiple stakeholders, such as the legal, finance, and business departments, take part in this process to ensure that the contract meets the organization's requirements and adheres to its policies and regulations. 

The process usually starts with the creation of a draft contract that outlines the agreement's terms and conditions. The relevant stakeholders review the draft contract, provide feedback, and suggest changes. 

Authorized representatives of both parties sign the contract after obtaining approval from all stakeholders. The creation and management of contract records, such as tracking key milestones, monitoring compliance, and managing renewals and terminations, may also be part of the process. 

"Multiple stakeholders, such as the legal, finance, and business departments, take part in this process to ensure that the contract meets the organization's requirements and adheres to its policies and regulations." 

The Importance of a Contract Approval Process

The contract approval process is an important step in business relationship management because it ensures the reviewing, authorization, and execution of contracts in a way that protects the interests of all parties involved. 

  • Ensures legal compliance: The process ensures that all contracts meet the applicable legal and regulatory requirements. This is critical because it protects the company from legal and financial penalties for noncompliance.
  • Reduces risks: A well-managed contract approval process helps reduce risks associated with business relationships. By properly negotiating and reviewing contracts, organizations can identify and address potential risks before significant issues arise.
  • Establishes accountability: By clearly defining roles and responsibilities, the contract approval process ensures that everyone involved understands their obligations and holds them accountable for their actions, thereby establishing accountability for contract management.
  • Improves communication: Effective contract approval processes ease communication among contract parties. The process prevents misunderstandings and conflicts by setting expectations and ensuring everyone is on the same page.
  • Saves time and money: By reducing the need for extra negotiations and revisions, a streamlined contract approval process can save time and money. This is especially important in complex contracts involving many parties.

Features of a Good Contract Approval Process

A good contract approval process is critical, and the following are the key characteristics: 

  • Contract review and analysis: Conducting a thorough review and analysis of the terms and conditions is essential. This step ensures that the contract is legally binding and meets the needs of the parties involved. Reviewing and analyzing the contract can help identify potential risks, ambiguities, or inconsistencies, enabling appropriate action to be taken in advance.
  • Approval authority and delegation: A clear and defined contract approval process is crucial to ensure that authorized individuals approve contracts promptly, even if someone is unavailable. It must specify authorized individuals, their delegated authority, and steps to be taken if they're unavailable.
  • Communication: All parties must be aware of the contract's status, any changes made, and any outstanding issues.
  • Clear guidelines: There should be clear guidelines outlining the contract review, negotiation, and approval procedures. All stakeholders should have easy access to documented guidelines. Each stakeholder, including the legal department, procurement, finance, and business unit heads, should have their roles and responsibilities specified in the guidelines.
  • Risk assessment: Include a risk assessment to identify potential legal, financial, and reputational risks associated with the contract. Consider contract terms, indemnifications, warranties, and liability limitations in this assessment. Where appropriate, the legal department or an external legal counsel should carry out the assessment.
  • Document management: Put an effective document management system in place. A centralized contract repository that's accessible and searchable allows stakeholders to access the latest version and track changes.
  • Workflow automation: Automating workflows and streamlining the process can help reduce the time and effort required to review and approve contracts as well as improve overall process efficiency.
  • Regular monitoring and reporting: Monitoring and reporting can help ensure the process is meeting its objectives and identify any bottlenecks or inefficiencies.

The Process of Automating Contract Approval

Automating a contract approval process typically includes several steps, depending on the organization's specific needs. Here's a general overview: 

  • Define the contract approval process. Identify who is responsible for each step, the documents required at each stage, and the expected timeline.
  • Identify the key stakeholders involved. They typically include legal, finance, procurement, and the business unit.
  • Set up a contract repository to store all contract-related documents, including drafts, redlines, final versions, and executed contracts.
  • Use pre-approved standardized contract templates from legal and other relevant stakeholders. This will help ensure that contracts are consistent, contain all necessary clauses, and meet legal and regulatory requirements.
  • Set approval thresholds for contracts based on the contract's dollar value, complexity, and risk. This will aid in the review and approval of contracts by the appropriate stakeholders.
  • Implement electronic signatures to streamline the contract signing process and reduce the time it takes to sign and execute contracts.
  • Make sure the contract approval process adheres to legal and regulatory requirements such as anti-bribery, data privacy, and anti-trust laws.
  • Track and monitor contracts throughout their lifecycle, including key milestones like renewal, expiration dates, and deliverables.
  • Create metrics and key performance indicators (KPIs) to assess the effectiveness and efficiency of the overall process. This will help you identify areas for improvement and ensure that it's ongoing.
  • Train and support stakeholders so they understand their roles, responsibilities, and why the process matters.

Common Mistakes to Avoid

Several common errors can occur during a contract approval process. Here are some of the most critical ones to avoid: 

  • Inadequate definition of roles and responsibilities: Defining the roles and responsibilities of all involved in contract approval is crucial. This includes contract initiators, approvers, and any other stakeholders. Confusion and delays may occur if roles and responsibilities are not clearly defined.
  • Poor communication: Communication is essential. All stakeholders need to be up to date on the process and any changes. Delays, misunderstandings, and even legal disputes can result otherwise.
  • Lack of standardization: Inconsistencies in the contract approval process can happen due to a lack of standardization. Some contracts may receive quick approval, while others take longer or are rejected entirely.
  • Incomplete or incorrect information: Include all necessary details, such as the scope of work, timelines, deliverables, and payment terms, to avoid submitting incomplete or incorrect information for contract approval. Failure to provide complete and accurate information may result in delays or even legal disputes.
  • Failure to adhere to the process: Everyone involved in the contract approval process must adhere to the established procedure. Failure to follow the process can result in contract delays or rejection.
  • Lack of automation: Today's digital age offers many tools and software programs to automate the contract approval process. Failure to use these tools can lead to delays, errors, and inefficiencies.

Organizations can implement an efficient, effective, and dependable contract approval process by avoiding these common mistakes. 

Automating a Contract Approval Process 

Many organizations use automated workflows to handle their contract approval process. Traditionally, these tools might rely on email to notify a reviewer when their document is ready for approval. More users are turning to Slack as a channel for reviewing contract approvals, and that’s where Wrangle can help.

Wrangle is a workflow and ticketing tool used by organizations across the globe to streamline their business processes. Wrangle users leverage our tool to automate the contract approval process for many documents, including sales quotes, creative reviews, and legal contracts. 

To get started, Add Wrangle to your Slack workspace. You can use the app for free for up to fourteen days. 

Wrangle’s ticketing module allows for one-off requests and is often used by IT managers. Document approvals are managed within the workflow module.  When you arrive, you’ll find a list of templates you can choose from. You can also create a workflow from scratch. 

You build your workflows in Wrangle’s straightforward no-code tool, which’ll be deployed in Slack for your users to access. You’ll notice we already have a pre-built template for sales contract reviews. Let’s choose that template to build our Slack workflow.

We can assign a specific approver and even a different Slack channel at each step. Our first step is the intake form, which is where your users will fill in relevant contract details. The document can be added as an attachment. Once the user submits the request, it will be routed to the Sales Manager for approval.  

Our sales manager step is assigned to the sales lead Beverly. When the intake form is submitted, she’ll automatically be pinged in the sales contracts Slack channel. Once she approves, it moves on to legal.

Our legal team maintains a separate Slack channel for reviews. After Beverly’s approval, our legal team will be alerted automatically. From here, they can review the document, provide an approval, or request revisions. If approved, it moves onto the PO process. 

Once the finance team has legal approval, the workflow we’ve constructed will alert them and provide a task to send the contract and the PO to the customer. The beauty of Wrangle is the requests and the reminders all occur in Slack. Once we save our workflow, it’ll be available in our Slack workspace.

From inside Slack, a sales manager can choose the sales contract approval workflow we constructed. You can find workflows by visiting the Wrangle app home in Slack or by simply typing /wrangle in any Slack channel. Once selected, your workflow will direct the requestor to the intake form, where she’ll populate the relevant information. Once submitted, the first person in the approval chain will be alerted. The workflow will continue until all steps have completed. And, of course, Wrangle will remind approvers at all stages of the process to ensure no work is late or lost.

In our workflow, the sales manager is the first approver. She has all the relevant information she needs. From here, she can approve, request changes or reject the contract outright. If she approves, it moves on to legal. If she requests modifications or rejects the contract, the requestor will be alerted with instructions on what to do next.


A contract is an essential component of any business or organization because it fosters trust between parties, provides legal protection, and establishes expectations. A well-written contract can help you avoid misunderstandings and disagreements, resulting in a smooth and successful business transaction.
A Wrangle workflow can automate this process eliminating complex approval chains. To get started, try the app today and see firsthand how Wrangle can improve communication within your company. We can also provide you with a personalized demo.

This post was written by Vincent Chosen. Vincent is a web developer and technical writer. He has proficient knowledge in JavaScript, ReactJS, NextJS, React Native, Nodejs and Database. Aside from coding, Vincent loves playing chess and discussing tech related topics with other developers.

Add Wrangle
for Free
  • Free 14-day trial
  • Personalized onboarding
  • Access to all features
Add to Slack

Easy way to manage team’s productivity

Drive performance and your cross-functional collaboration with easy-to use Wrangle tools

Schedule A Demo