Contract approvals can be complex, varying by contract value, type, parties, term, and more. Contract management software can help.
Contract approvals can get complex! The requirement to get approvals for your contracts prior to execution may vary depending on:
To address varying requirements within your organization, it is important to articulate - and enforce - the parameters for each type of contract approval. Understanding why those rules exist can be helpful to ensuring they are followed. And using a contract management approval process through your contract software will ensure it happens every time.
The most common driver of contract approval workflows is value. Whether your contract incurs a cost (capital or operational) or drives revenue (single or recurring), the value of the contract can determine whether it requires manager, director, executive or Board approval. On both sides of the ledger, this gives your senior leadership team the real-time visibility they require to control costs, hit strategic goals and manage risk.
It can be important to ensure that long term contractual obligations - on both the revenue and the costs side - are approved by the appropriate stakeholders within your business. This will ensure that as strategic decisions are being made, there is full visibility about your organization's long term obligations to both customers and from your suppliers and other stakeholders.
Contracts are not all about the money. For particular types of contracts, it is critical that approvals are established to keep key stakeholders in the loop, and the acceptance of risk is within organizational thresholds. For example, licensing of certain IP rights may be a company-critical decision that must be approved by the CEO.
There may be particular parties with whom your organization has a history, who are quasi-competitors or long-term targets and contracts should be brought to the attention of specific internal stakeholders. By identifying these parties and including them in your approval workflows you will ensure visibility for the appropriate stakeholders.
Contract management is a wide church, but the involvement of your stakeholders in the contract approval process is critical. Using simple, powerful and affordable contract management software will aid your in-house legal team to ensure that the process is efficient and consistently applied.
Xakia contract management software allows you to set rules for contract approvals on contract value and contract terms. Further contract approval dependencies will be added in the future.
Click here for a demo, or sign up for Xakia contracts free-for-five users here.
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