Contract Approval: Benefits and Workflow Explained (2026)

February 25, 2026

6 min read

Contract cycle times are one of the most accurate predictors of organizational agility. However, the business continues to take more than three weeks to go through one approval.

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Quick Read

Summary generated by AI, reviewed for accuracy.

In this guide, we will explain how contract approval works in CLM 365, including how contracts are automatically routed to the right stakeholders, how approval workflows improve visibility and control, and how organizations can benefit from faster approvals.

A lot of time and opportunities are wasted as many businesses await approvals of contracts.

Contracts can be signed without due diligence, and this exposes the business to financial, legal, and compliance risks.

Through an organized contract approval process, organizations can channel contracts to the correct team members and at the correct time so that every contract is scrutinized by the relevant stakeholders.

What Is Contract Approval?

Contract approval refers to the process of reviewing, verifying and giving a formal approval of a contract prior to it being legally binding. In the process, the agreement is reviewed by the key stakeholders like legal, finance, and business leaders to make sure that the terms are correct, in accordance with the regulations, and in accordance with financial and organizational goals.

An contract approval workflow that is well defined will make sure that contracts pass through the appropriate reviewers without any unnecessary delays. It enhances the coordination of the teams, accountability, and that all agreements are well verified before being signed.

Importance of Clear Contract Approval Workflow in Business

Inefficiencies in contract management processes can cost organizations up to 8.6% of the total contract value, leading to financial loss, delays, and missed business opportunities. This enhances control, saves time and assists businesses to manage contracts in a better way.

1. Faster Contract Approvals

Contracts are delivered to the appropriate stakeholders within the shortest time possible when approval roles and steps are well defined. The workflow will automatically route agreements in specified sequence to the right individual rather than manually sending emails. This assists in saving time on waiting and unnecessary hold-ups are avoided. The expedited approvals assist companies in closing deals on time, initiating projects earlier and ensuring that there is good relationship with clients.

2. Better Accountability

An effective contract approval allocates accountability to every stakeholder in the process. Each member of the team is aware of the time when they should review a contract and what steps they should take. This brings about transparency and enhances ownership. It also assists businesses to keep a record of the review of the contract.

3. Improved Compliance and Control

Contracts are usually filled with legal, financial and business terms. These words should be in line with corporate guidelines and external laws. An organized approval process enables the legal and finance departments to scrutinize contracts to ensure they are approved. It is also useful in risk identification at an early stage and enables the teams to make the appropriate decisions before the contract is signed.

4. Improved Team Collaboration

The process of contract approval typically incorporates several departments including legal, finance, procurement contract management. An effective workflow assists such teams to collaborate in an organized manner, depending on their roles and expertise.
This enhances communication and assists teams to make sound decisions. It also minimizes wastages due to ambiguous roles.

5. Better Visibility and Tracking

A clear contract approval workflow provides the business with a clear understanding of the status of the contract approval. The teams can easily view the status of the contract under review, approved or awaiting action. It also assists the managers to monitor contracts and detect delays in case they arise.

How Contract Approval Works in SharePoint CLM 365?

This section describes the workflow of contract approval in CLM 365 based on Microsoft 365 and SharePoint. The contracts are stored in SharePoint and sent to the appropriate stakeholders to be reviewed and approved. All the approvals are monitored, and all activities are documented in SharePoint to ensure complete visibility and control.

1. Business Approval Stage

The first level of contract review is the business approval stage where business stakeholders review the contract based on business and operational needs. This phase is entirely adjustable according to the approval structure of the organization.

Key capabilities include:

Assign one or multiple approvers based on business roles
Display approver name, user role, approval status, and approved by details
Configure approval from any assigned approver or require approval from all approvers
Automatically route contracts based on predefined business conditions
Allow approvers to review and take action directly within SharePoint
Record every approval action with approver name, role, and timestamp
Provide full visibility into approval progress and approval history

2. Legal Review Stage

During the legal review phase, the legal department will be examining the contract to ensure that the terms, the clause requirements are in order. Legal reviewers can review the contract and undertake measures like accepting the or seeking contract changes.

CLM 365 provides full visibility into:

Legal reviewer name and role
Review status
Acceptance actions and remarks

3. Draft Approval Stage

The stage of review and approval of the contract draft is known as the Draft Approval stage and then proceeds to the stage of execution. This phase assists in ensuring that the content of the contract is complete and is ready to be approved. Organizations can designate a single or multiple draft approver and establish whether any or all approver is necessary.

4. Execution Approval Stage

The last internal approval is the executive approval before signing the contract. The contract is looked at by the business leaders or authorized stakeholders who then approve the contract to be executed.

CLM 365 tracks:

Approver name and role
Approval status
Approval timeline

This assists organizations to ensure that the contract is prepared to be formally executed.

5. E-Sign Stage

After approval of the contract, it proceeds to the E-Sign stage. At this phase, the contract may be signed electronically by authorized parties through integrated e-signatures. This enables the signing of contracts without having to do manual paperwork and enables the process to be quickened.

6. Publish Stage

Once the contract is signed, it passes to the publish stage. At this phase, the contract is saved in the SharePoint and is made accessible to authorized users. The contract is published to ensure that the contract has a central and accessible repository of the contract in the future.

Key Features of Contract Approval in SharePoint

Microsoft SharePoint provides a structured system for contract approval within the Microsoft 365 environment. It enables organizations to place contracts in a central place, designate approvers according to their positions, and control approval phases with complete visibility.

1. Role-Based Contract Approval Assignment

SharePoint enables companies to delegate the contract approval tasks depending on the user roles, departments or job functions. As an example, commercial contracts can be reviewed by business teams, contract clauses can be reviewed by legal teams and final approval can be given by the management. Every approver is distinctly named and assigned his or her role, which assists organizations in defining approval responsibility.

2. Multi-Stage Contract Approval Workflow

SharePoint has been used to facilitate multi-stage contract approval processes where contracts pass through various approval processes including business review, legal review, and final approval. All the stages are steps in the process of contract approval. This is a step-by-step approval process that assists organizations to have a structured review of contracts.

3. Flexible Contract Approval Options

SharePoint enables the organization to designate one or more approvers on each stage of contract approval. The approval settings may be set according to the business requirements. Organizations may permit any approver assigned to approve contracts or they may mandate all approvers assigned to approve contracts. Such flexibility assists organizations to deal with the approval of contracts according to their internal approval framework.

4. Automatic Routing of Contract Approval Tasks

SharePoint will automatically direct contract approval activities to designated approvers depending on workflow settings. The contract automation feature routes to the relevant stakeholders when a contract is submitted. This is an automatic routing that assists in passing contracts through the contract approval without being manually assigned.

5. Real-Time Contract Approval Status Tracking

SharePoint gives instant access to the status of contract approval. Users can see the status of a contract as pending approval, approved, or under review. This assists teams to keep track of the progress of contract approvals and those that are awaiting approval. The approval of contracts can be tracked by managers and stakeholders directly in SharePoint.

6. Contract Approval Notifications in Microsoft 365

SharePoint is an integrates with Microsoft 365 like outlook and Microsoft Teams to deliver notifications of contract approval. Approvers are alerted when a contract needs to be reviewed or approved. These alerts assist approvers to remain updated and act on matters concerning contract approval in time.

7. Contract Approval Audit Trail and History

SharePoint records all the contract approval activities such as the approver name, position, date of approval and approval status. This will give a complete history of contract approval. This audit trail assists organizations to monitor approval activity and keep approval records to be used internally.

8. Secure Contract Storage and Access Control

SharePoint keeps the records of contracts and contract approval in a secure central location. The permissions of access may be set according to the role of the user, and only authorized users to approve contracts. This assists organizations to control the contract approval safely and ensure that they have appropriate control.

Benefits of Automating Contract Approval Workflow

Automating the contract approval workflow helps organizations move contracts through review and approval stages without manual follow-ups. The system sends contracts to the right approvers, records approval actions, and shows the approval status in real time. This helps teams approve contracts faster, track progress easily, and manage agreements with better control.

1. Faster Turnaround Time

When a contract is created or submitted, it is sent to the approver assigned through automation. In Microsoft Teams or Outlook, approvers get notifications and could check the contract right away. This assists in minimizing the time taken to approve the contracts and enables the businesses to sign contracts more quickly. Quick contract approval assists sales teams to make deals on time and project teams to start work immediately.

2. Reduced Risk of Errors

Automated contract approval is based on predefined approval steps. The system routes the contracts to the appropriate approvers according to their position, e.g. legal reviewer, finance manager or business head. This minimizes chances of risks in approval stages or assigning the wrong approver. It is also useful in keeping the right records of approval of each contract.

3. Creates Clear Visibility Across Teams

The contract approval status is displayed in SharePoint directly by automation. Users may find out the status of the contract, whether it is pending approval, approved or under review. Approver names, approval stages and approval dates can also be viewed by teams. Contract visibility managers to monitor the progress of the contract and the approvals that are pending in a short time.

4. Strengthens Security and Compliance

This enables organizations to regulate the persons who can view and approve contract. Each approval action is logged by the system with the name of the approver, position, date and choice. This provides a full approval history, which is used to support audits and contract compliance requirements.

5. Frees Up Time for High-Value Work

Automation removes manual tasks like emailing, monitoring the status of approval and following up on approvers. Contract routing and approval tracking is done automatically in the system. This enables the legal teams, business teams and managers to spend time on planning rather than approving agreements.

Challenges Faced While Managing Contract Approval

Managing contract approval without a structured system can create delays, reduce visibility, and increase manual work. When contract approval steps are not clearly defined, it becomes difficult to track progress and assign responsibility. Below are the common challenges organizations face during the contract approval process.

1. Delays in Contract Approval Process

Delay due to lack of clarity in approval procedures is one of the most prevalent issues. In cases where the contract approval process requires manual emails or follow-ups, the contracts can take a long time to be approved. Such delays have an impact on the business operations, delay deal closures, and teams are unable to commence projects in time.

2. Lack of Visibility into Contract Approval Status

In the absence of a proper system, it is not easy to view the status of contract approval by teams. They might not be aware of whether the contract is under scrutiny, passed or pending. This invisibility renders it hard to monitor the contract approval process and detect approvals pending.

3. Difficulty in Assigning the Right Contract Approvers

Various stakeholders like legal, finance and business teams must review the contract approval. Contracts can be routed to the wrong individual or fail to get the necessary approvals without predefined roles. This brings about contract approval delays and raises the time needed to approve the contract.

4. Limited Contract Approval Tracking and Approval History

In many organizations, contract approval actions are not recorded in a central system. This complicates the process of tracing the person who gave the contract, the time of approval and what was done. Maintaining contract version history helps organizations support audits and compliance by providing clear records of changes.

5. High Manual Effort in Managing Contract Approval

The manual process makes teams to submit contracts, monitor approval status and remind approvers. This adds pressure to legal teams, managers and business users.
Spending too much time on manual contract approval tasks reduces productivity and takes focus away from important business activities.

Best Practices for Sett-Up Approval Workflow for your Contracts?

A clear process assists organizations in directing contracts to the appropriate approvers, monitoring approval status and documenting activities. It can be managed in a systematic and dependable manner by establishing explicit rules, roles, and approval steps in businesses.

1. Identify Gaps in Your Contract Approval Process

Knowing your current contract approval process will assist in enhancing efficiency and control. Examination of the steps that have been approved assists in detecting delays and approvals that are not taken.

Examine your existing contract approval procedures and find out where the delays are
Enquire whether contracts are going to the right approvers at every level
Identify missing approval records or missing contract approval tracking

2. Define Clear Approval Rules

Defined approval policies assist organizations in directing contracts depending on the type of contract, contract value, and organization business policies. Approval rules are set in advance and the contracts automatically go to the right approvers. This will ensure that there is proper approval order and the teams will be able to work within the requirements.

Set approval rules based on contract type, value, or department
Define when additional contract approval is required from legal or management
Use predefined conditions to route contracts to the appropriate approvers

3. Assign Clear Approval Responsibilities

Assigning contract approval positions assists organizations to establish the persons who will review, approve, and manage contracts. Contracts are delivered to the appropriate stakeholders in time when the duties of approval are well delegated.

Assign contract approval roles to legal, finance, and business teams
Clearly define who can review, approve, or reject contracts
Track approver name, role, and approval action for each contract

4. Use Automation for Contract Approval

Automation assists organizations to take contracts through approval processes automatically according to defined workflows. The system sends the contracts to the designated approvers instead of sending them manually, and logs their activity.

Automatically forward contracts to designated approvers
Send approval of contracts using Microsoft Teams and Outlook
Approving actions and approval status in SharePoint

5. Customize Approval Stages Based on Your Needs

The contract approval stages can be tailored to the needs of the organization depending on the business structure contract requirements. This assists in determining the flow of the contracts through their approval stages.

Create approval steps according to your business approval model
Assign one or more approvers on each stage of contract approval
Establish approval flow according to your business and contract needs

Steps to Create Contract Approval Workflow in CLM 365

Follow these steps to implement workflow in CLM 365 using SharePoint and Microsoft 365.

Step 1: Create or Upload the Contract

Create a new contract or upload an existing contract into CLM 365. The contract is stored in SharePoint, where it becomes available for contract approval and tracking.

Step 2: Configure the Approval Stage Before Contract Creation

During contract creation, select the approval stage and enable contract approval workflow. This allows the contract to move through defined approval stages.

Step 3: Add Contract Approval Stages

Define approval stages such as business approval, legal review, draft approval, execution approval, e-sign, and publish. Each stage represents a step in the contract approval process.

Step 4: Assign Approvers and Define User Roles

Select users as approvers for each contract approval stage. CLM 365 displays approver name, role, and approval status, helping track approval responsibility.

Step 5: Configure Approval Type for Each Stage
Choose whether contract approval requires approval from any assigned approver or all assigned approvers. This controls how approval is completed at each stage.

Step 6: Set Condition-Based Approval Routing
Configure conditions to route contracts automatically based on business rules. This helps move contracts to the correct approvers without manual assignment.

Step 7: Enable E-Sign and Publish After Final Approval
After contract approval is completed, send the contract for electronic signature. Once signed, publish the contract in SharePoint for secure storage and future access.

Step 8: Track Contract Approval Status and Approval History
View contract approval status directly in CLM 365 and SharePoint. Track approval stages, approver details, approval actions, and approval history in one place.

Conclusion

A clear contract approval process helps businesses review and approve contracts in an organized way. When approval stages and approvers are clearly defined, contracts move faster and reach the right people on time. This helps teams track approval status, record approval actions, and maintain proper contract records.

Start your 14-day free trial of CLM 365 today and see how you can automate contract approval, track approvals in real time, and manage all your contracts from SharePoint.