#contractapproval

As the COVID-19 crisis continues, many businesses are making critical changes to their operations. These allow them to continue to provide services to their customers and keep their employees working throughout social distancing measures. Your business may need to take a hard look at many aspects of how you manage your employees and your clients. This includes how you manage your contracts throughout the crisis and creating virtual office processes. One important element that you may need to change? Your contract approval processes. 

The Importance of Streamlining Your Contract Approval Processes

Now, more than ever, you need your contact approval processes to move as smoothly as possible. You do not want contracts to get "stuck" while you wait for a specific individual to approve them. Also, you don’t want important clients, vendors, or subcontractors to fall through the cracks while your business makes that critical transition to remote work. Consider these important reasons to streamline your contract approval process: 1. Your clients need fast answers and reassurance.  Many of your clients, during this time, need a fast answer to any questions they have — including questions about the contracts they have pending with your business. You may need to make fast alterations to your contracts to ensure that they meet new industry mandates or requirements, including allowing your customers and vendors alike to maintain social distancing guidelines.  2. Remote-working employees can cause your contract approval processes to take longer.  Remote employees may not all be at their desks as a contract moves to the next stage in the approval process. Many employees are working from home with kids, spouses, pets, and other challenges that prevent them from accomplishing their business days according to their usual responsibilities. As a result, a complex contract approval process may take even longer to execute than normal.  3. Your employees need streamlined processes now as never before.  Because many of your employees are juggling other responsibilities, including caring for children or elderly loved ones, alongside their usual job responsibilities, they need a streamlined contract approval process that will prevent unnecessary work added to their days. 

Revising Your Contract Approval Processes

Depending on your business model, your sales team may rely on pre-printed or pre-approved contracts to close a deal. In cases where a "normal" sale occurs, your team members might even be permitted to skip the sales approval process. But even in the most permissive business environments, there are always customers who don't fit into the nice, convenient box as an "average customer." They might want to adjust financial or legal terms in a contract or adjust the length of the contract. Going outside your standard terms can get you more business. Building out these processes ahead of time can simplify the work and ensure the deal is still a net win for your company. In fact, standardizing your negotiation process is one of the most important steps in our comprehensive guide to reducing contract processing time from sale to signature. Below we present some of the common risk factors associated with dealing with customers who have special requests. We also suggest some actionable steps you can take to streamline the process.

Don’t Let Individual Inconsistencies Become Unmanageable

When salespeople must deal with special requests outside of standard contract terms, they risk creating inconsistencies. "Special treatment" can help create customer loyalty and ensure contract renewal, but too much variation can hurt your business. Abnormal terms create abnormal risks, and one-off allowances can become impossible to monitor. This is especially important when salespeople are not assigned a specific area or customers interact with more than one salesperson. You never want to hear the comment, "The last time we signed a contract, they adjusted X, Y, and Z for us. Why won't you do it?"  Contract management software can eliminate inconsistencies in two key ways.  First, those responsible for approving changes to standard terms can create a document or guide outlining permissible changes. The document should outline what can change and by how much it can change. These pre-approved modifications allow salespeople to act without waiting for confirmation.  You can even automate complex approval trees in your contract management system. For example, you can set your contract software to request approval for any discount of over 10%, unless the dollar amount exceeds a certain threshold. Then even complicated deals that follow the rules can be immediately approved by the system. Pricing parameters and other guidelines should be part of your system. Second, contract management software saves all previous contracts. You don’t have to rely on word of mouth or memories to make sure you’re giving a long-term customer consistent terms. This allows the sales team to easily research the terms of a previous contract before approaching or discussing a renewal with a customer. Even better, this helps salespeople avoid offending a customer or appearing incompetent because of inconsistencies.

Safeguard Against Cross-System Inaccuracies

Changing standard contract terms for a customer sometimes leads to inaccuracy within the contract. Changes can spill over into invoices, too. These types of mistakes can reduce a customer's confidence in a company and negatively impact your company’s reputation. In the worst cases, inaccuracies might kill a new deal or make you lose a contract renewal. This risk is especially apparent with handwritten "fill-in-the-blank" contracts. But it can also occur in documents generated in any word processing program.  When your company uses contract management software for the sales approval process, you have more safeguards. Users can lock documents, so accidental changes or mistakes do not occur. Smart templates can also auto-populate information so it stays consistent, even if it appears multiple times. Additionally, changes are tracked with each contract. Once decision-makers view the contract for signature, they can see any changes and who made them. Locking documents and monitoring changes leads to a higher level of accuracy. Companies can ensure that customers receive accurate final copies of the contract and accurate invoices after the sale has been approved. 

Add Transparency to Offset the Slowed Sales Cycle

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