Contract approval process flowchart (approve, sign, execute)
A contract approval process flowchart for the stage after review: delegation of authority check, approver tiers, e-signature, execution and register filing.
How it works
Open the template and rename the lanes
Open the contract approval process template as a new chart, then replace Business owner, Legal, Finance, Approval authority and Counterparty with the roles you actually have. Small organisations often merge Legal and Finance, or use an external adviser; merge the lanes rather than leaving one empty, and split the Approval authority lane if your tiers sit with genuinely different bodies such as a managing director and a board committee.
Write your real thresholds onto the authority decision
Replace the example figures on 'Within delegated authority?' with the limits from your written delegation of authority, and state the currency. Each tier needs a named role rather than a person, so the routing survives someone leaving, and the schedule needs a documented deputy for absence, otherwise the escalation branch stalls whenever the director is on leave.
Define what total contract value means
Agree one basis and record it on 'Calculate total contract value': initial term plus any renewal or extension options, plus known variable or usage-based spend, and say whether the figure excludes tax. For open-ended or framework agreements, decide the assumed term you will use, otherwise every party will pick the one that keeps the contract inside their own limit.
List the escalation triggers that are not about money
Add the terms that escalate a contract regardless of value: uncapped or unusual liability, indemnities, personal data processing, exclusivity, auto-renewal beyond a set period, non-standard governing law or jurisdiction. Put them in the note on the authority decision so the approver knows why a small contract landed with them.
Name the signatories and the signing order
State who is authorised to sign on your side at each tier, and whether your side signs first or second. Confirm with your legal counsel which of your documents can be signed electronically and which carry extra formalities, such as deeds and certain property or notarised documents, and add a separate branch for those instead of forcing them through the e-signature step.
Decide the register fields and the reminder lead time
Fill in the contract register fields on the filing step, then set the reminder against the notice deadline rather than the renewal date. A contract that renews automatically unless cancelled ninety days beforehand is effectively decided three months before it expires, so the reminder has to fire earlier than that to leave time for a decision. Walk the finished chart through with legal, finance and a budget holder, then keep the agreed version under version control so later edits are tracked.
Frequently asked questions
What are the steps in a contract approval process?
A workable sequence is: submit the reviewed contract with an approval pack covering the counterparty, scope, term, value and any non-standard terms; confirm review is genuinely closed; calculate the total contract value and confirm budget cover; test the contract against the delegation of authority schedule; route it to the approver at that tier or escalate it to a director or the board; obtain approval, conditional approval or rejection; issue the approved version for signature; have your authorised signatory sign and the counterparty counter-sign; check that nothing changed in the returned document; confirm the execution and effective dates; file it in the contract register with the key dates; and set renewal and notice reminders.
How does a delegation of authority work for contracts?
A delegation of authority schedule states which role may commit the organisation to what, usually as value bands with a named role at each tier, and it is what turns approval from a judgement call into a routing rule. Three things make it work in practice. It has to define the value basis, normally whole-life value rather than the annual charge. It has to name roles and deputies rather than individuals, so absence does not stall the escalation path. And it needs non-monetary triggers, because uncapped liability, indemnities, data processing terms and unusual governing law carry risk that has nothing to do with contract size. Amended contracts should be re-tested against the schedule, since a change in term or value can move the contract into a higher tier.
What is the difference between contract review and contract approval?
Contract review asks whether the wording is acceptable: it covers drafting, redlines, negotiating clauses such as liability, indemnities, termination and data protection, and it ends when both sides agree the text. Contract approval asks a different question, whether the organisation is willing and authorised to commit to that agreed text, and it ends with an executed contract on file. Running them as one undifferentiated flow is why approvals get reopened. The chart keeps them separate with a 'Contract review complete?' gate that returns anything with open drafting points to negotiation rather than letting an approver arbitrate wording.
Who signs a contract, and what does counter-signature mean?
The signatory is the person authorised to bind the organisation at the relevant tier, which is not always the approver and is rarely the person who negotiated the deal. Counter-signature simply means the second party signs the same document after the first, which is why signing order matters in an e-signature workflow: whoever signs second effectively confirms the final text. That is also where a common failure sits. If the counterparty returns a document with a clause altered, the approval you obtained no longer covers what was signed, so the returned document needs an explicit check against the version that was issued before anyone treats it as executed.
Are electronic signatures valid for contracts?
In most commercial situations, yes. In the EU, eIDAS gives electronic signatures legal effect and sets out simple, advanced and qualified types with different evidential weight. In the UK, electronic signatures can validly execute documents in ordinary commercial contracts, and in the United States the federal ESIGN Act and state adoptions of UETA have similar effect. The qualifications matter more than the general rule: specific document types are excluded or carry extra formalities depending on the jurisdiction, deeds and certain property, probate and notarised documents being the usual examples, and some counterparties or funders simply require wet ink. Confirm with your legal counsel which of your document types can be signed electronically, and route the exceptions down their own branch.
What should the contract register record?
Enough to answer questions later without reopening the PDF: counterparty, contract type, internal owner, execution date, effective date, initial term, renewal or expiry date, notice period and the resulting notice deadline, total value and the basis used, governing law, and a link to the signed file with its signature certificate. The notice deadline is the field most often missing and the one that costs money, because an automatic renewal is decided at the notice deadline rather than at the renewal date. Set the reminder against that deadline, with enough lead time for someone to review performance and decide, rather than against the date the contract rolls over.