Contract approval workflow for sales and legal teams

Why sales and legal need a shared approval flow

Contracts stall most often in the handoff between sales and legal. Sales is trying to keep momentum with the customer. Legal is trying to reduce risk and keep terms consistent. Without a shared contract approval workflow, the handoff turns into a guessing game: who owns the next step, what changed, and what “approved” actually means.

The real damage is rarely the negotiation itself. It’s what gets lost along the way: the latest version, the exact wording of a redline, the reason a clause was accepted, and who made the call. When that history is scattered across email threads and file names like “v7-final-FINAL,” teams waste time re-reading, re-sending, and re-arguing decisions that were already made.

A few symptoms show up fast:

• Duplicate files floating around with slightly different edits
• Unclear ownership when legal is waiting on sales (or the other way around)
• Surprise changes late in the cycle that reopen old debates
• “Approved” meaning different things to different people

A good shared flow looks boring in the best way. There’s one place to check the current status, the current version, and the next required action. Anyone should be able to answer three questions in 10 seconds: What stage are we in? Who’s responsible right now? What’s blocking signature?

If a customer asks for an exception to your standard payment terms, sales shouldn’t be forwarding a new attachment and hoping legal notices the one changed sentence. The request should create a clear task, route the redlines to the right reviewer, and record the decision. Many teams handle this with a simple internal tool so both sides work from the same record.

People and responsibilities (who does what)

A contract approval workflow works best when everyone knows two things: what they own, and what they’re allowed to change. If roles are fuzzy, you get surprise edits, lost redlines, and approvals that never really happened.

Start by naming the core roles and their “power level” in the process. Editing is different from approving, and both are different from signing.

Typical roles and clear ownership

Most teams end up with a similar set of owners:

• Sales rep: creates the request, drafts commercial terms, and answers business questions
• Sales manager: approves discounts, non-standard terms, and deal risk before legal spends time
• Legal counsel: edits contract language, handles redlines, and decides which clauses are negotiable
• Finance: approves payment terms, billing details, taxes, revenue recognition flags, and credit risk
• Authorized signatory: signs only after all required approvals are complete

Make one rule explicit: only legal edits legal language. Sales can propose changes (in comments or an intake form), but they shouldn’t rewrite clauses directly. Likewise, legal shouldn’t change pricing or scope without looping sales back in.

What sales must provide up front

Legal review goes faster when sales submits a complete packet: customer legal name, deal amount and term, product scope, pricing and discount, SLA expectations, special security requirements, and any “must-have” customer clauses. Missing basics is the most common reason a contract bounces back.

Agree on response times and escalation. For example, legal responds within 1 business day for standard paper and 3 days for non-standard terms. If the clock runs out, the escalation path should be clear (legal lead, then sales manager, then the signatory).

When you set this up in a contract approval workflow tool, map responsibilities to permissions so the process enforces the rules automatically. Teams sometimes build this sort of internal app in AppMaster, where you can set roles, permissions, and approvals without hand-coding the whole system.

Define a simple status model from draft to signed

A contract approval workflow works best when everyone can answer one question in seconds: “What status is this contract in right now, and what happens next?” Keep the model simple, and make each status mean one clear thing.

Here’s a practical status flow you can use:

Make entry and exit rules visible inside the workflow, not just “tribal knowledge.” For example, “Approved” should mean pricing, term length, liability, and data terms passed your internal checks, not just “legal looked at it.”

Also include a few reality states so delays don’t hide in comments:

• Blocked (needs internal info or a decision)
• Waiting on customer (sent, no response yet)
• Paused (deal on hold)

If you implement this in a tool, model status as a single field with strict allowed values, and require a reason when moving into Blocked or Paused. That small guardrail prevents “mystery stuck” contracts and keeps sales and legal aligned.

Versioning rules that prevent “which file is final?”

A contract approval workflow breaks down fast if people can’t tell which document is current. The simplest fix is to pick one source of truth and treat everything else as a copy. That source can be a contract record where the latest file, status, and comments live.

Make one rule non-negotiable: only one “Current” version exists at a time. When a new revision is created, the previous one is archived and locked. People can still view it, but they can’t edit it or resend it.

A consistent naming rule helps even when files are emailed or downloaded. Keep it predictable:

• Deal or customer name (short)
• Contract type (MSA, NDA, Order Form)
• Version number (v01, v02, v03)
• Date (YYYY-MM-DD)
• State tag (Clean or Redline)

Customer redlines are where confusion usually starts. Keep two files for each revision: a redlined copy showing edits and a clean copy reflecting the same changes accepted so far. Sales can read the clean terms quickly, and legal can see exactly what moved.

Add a short change note on every revision, written for humans. One sentence is enough: “Updated liability cap to 12 months fees per customer request.” This prevents repeat debates and makes handoffs easier when someone is out.

Example: Sales sends “Acme MSA v01 2026-01-25 Clean.” The customer returns edits saved as “Acme MSA v02 2026-01-27 Redline,” and legal produces “Acme MSA v02 2026-01-27 Clean” plus a change note. From there, v03 starts only if something new changes.

What to collect before legal review starts

Legal review goes faster when it starts with a complete packet, not a half-filled email and three “latest” attachments. Before you send anything to legal, gather the same inputs every time. It reduces back-and-forth and keeps your contract approval workflow predictable.

Start with deal basics that influence risk and language:

• Customer legal name and signing entity (plus country/state)
• Deal value and pricing shape (one-time vs recurring, discounts)
• Term length, renewal/auto-renewal, and termination notice period
• Delivery dates or start date, plus any service levels promised
• Special clauses requested (security, liability, data, IP, exclusivity)

Next, attach the actual documents as a single review bundle: the main agreement plus every addendum, exhibit, order form, and the customer’s redlines if they already exist. Keep the bundle tied to the same contract record as the status and version history.

Then make approval needs explicit before legal reads a word. Define simple triggers so sales knows what will require extra sign-off:

• Deal value over a set threshold
• Non-standard payment terms (net 60/90, milestone billing, refunds)
• Liability caps changed, indemnities expanded, or unusual warranties
• Data processing or security terms outside your standard position
• Any clause marked “customer required” that’s not pre-approved

Finally, give legal a place to reuse known-good language. Even a small approved clause library reduces re-writing the same paragraphs each time.

Example: A $45k annual contract with auto-renewal and a requested unlimited liability clause should be submitted with the full redlined file, the renewal details, and the pre-identified need for finance and leadership approval. Legal can then focus on decisions, not scavenger hunts.

Step by step: a practical contract approval workflow

A good contract approval workflow is predictable. Everyone should know what happens next, who owns the next step, and what “done” looks like.

Draft to legal review

Sales starts the draft using the right template and fills the required deal details (account name, pricing, term, start date, products, and the requested close date). If anything is missing, the contract shouldn’t move forward.

Before legal sees it, run a few automatic checks. Keep them simple so people trust them:

• Missing required fields
• Wrong template or outdated clauses
• Deal value or term triggers extra approval
• Non-standard payment terms
• Data privacy or security addendum required

If the draft passes checks, route it to legal with a clear request, like “review only” vs “approve redlines,” plus a short note on what the customer is pushing for.

Redlines to signed

Legal reviews and returns redlines. Sales negotiates with the customer, but every customer-facing send should be tracked as a new revision. Use one place for comments so decisions don’t get buried in email.

A repeatable revision pattern helps:

• Create a new version for each customer-facing send
• Record who changed it and why
• Keep redlines attached to that version
• Update status immediately after sending
• Set a due date for the next response

When the customer agrees, send the final version for internal approvals (finance, security, executive signatory) based on your thresholds. The signatory should review the final terms and the approval history, not a messy thread.

Then move the contract to signing (e-sign or manual). Once signed, lock the record, store the executed copy, and mark it as signed so reporting stays accurate.

Approval rules, thresholds, and exception handling

A contract approval workflow works best when approval isn’t based on who shouts loudest. Put simple rules in writing so sales can predict the path, and legal can focus on risk instead of chasing people.

Start with a small set of thresholds that are easy to remember. Tie them to deal size, risk, and policy changes, not personal preferences. As a rule of thumb: legal approves language, finance approves changes that affect how money moves, and security/IT approves changes that affect data and systems.

Define the triggers that require approvals, such as:

• Finance approval: non-standard payment terms, discounts above a set percent, refunds, credits, or new billing schedules
• Leadership approval: liability caps below your minimum, uncapped indemnity, unusual termination rights, or public reference clauses
• Security or IT approval: new data types, new sub-processors, or customer security questionnaires
• Sales leadership approval: committing to delivery dates outside your normal capacity
• Legal approval: changes to governing law, confidentiality, IP, or limitation of liability

Exceptions are where teams lose time. Decide upfront how you handle urgent deals, customer-provided paper, and non-standard clauses. You can allow an expedited path, but require tighter escalation and a written risk note. Speed should never remove accountability.

Define what “approved with conditions” means. It shouldn’t be a vague thumbs up. It means the contract can move forward only if specific conditions are met and tracked, like “customer accepts our DPA addendum” or “finance confirms prepay invoice schedule.” Store each condition as a checklist item with an owner and due date.

Set clear escalation triggers so work doesn’t stall:

• No response after 2 business days for standard reviews
• High-risk clause flagged (for example, uncapped liability) with same-day escalation
• Deal close date within 72 hours and review not started
• More than 2 redline rounds without progress

Audit trail, comments, and notifications that work

If people can’t see what happened and why, a contract approval workflow turns into side chats, screenshots, and re-sending files. The fix is simple: capture decisions where the contract lives.

An audit trail should answer three questions without anyone asking around: what changed, who did it, and when. Log status moves (Draft to In legal review), approvals or rejections, and key actions like “redlines uploaded” or “sent to customer.” Keep it automatic so it doesn’t get skipped on busy days.

Comments are useful, but only when they record decisions. Use them to explain the “why,” not to hide important terms. If the renewal date, discount, or liability cap matters, store it in structured fields (or a short summary area) so it’s searchable and reportable.

A simple comment rule set keeps threads readable:

• Write the decision and the reason (approve, reject, request changes)
• Tag the clause or section (for example, “Payment terms, Section 3”)
• Avoid pasting full contract text into comments
• Put negotiated terms in tracked fields, not in chat
• Close the loop with the next owner (“Back to Sales for customer response”)

Notifications should be loud only when action is needed: when the contract changes hands, a redline arrives, an approval is requested, or a deadline is at risk. Everything else can be a daily summary (for example, “3 contracts waiting on Sales” or “2 waiting on Legal”). Too many pings train people to ignore them.

Finally, keep related items attached to the record: key emails, call notes, and negotiation points. When someone new joins mid-deal, they should understand the history in five minutes.

Example: one contract moving from draft to signed

A sales rep is closing a mid-market deal for $85k ARR. The customer asks for a 12% discount and wants the liability cap changed from 12 months of fees to 24 months. This is a common case where sales, legal, and the customer all touch the same document.

The team uses a simple contract approval workflow with clear statuses and one place to track the current file.

Here’s how this contract moves:

• Draft (Sales): Sales starts from the latest template, fills deal terms, and uploads it as v01. Status stays Draft until all required fields are complete.
• In legal review: Sales submits the draft with context. Legal redlines and adds comments, then uploads v02.
• In negotiation: Sales sends v02 to the customer. The customer returns a marked-up copy asking for the liability cap change. Sales uploads it as v03 (customer redline).
• Approved: Legal accepts the discount language but rejects the 24-month cap and proposes a compromise. Once the fallback terms are agreed internally, legal marks the contract Approved and v04 becomes the approved clean copy.

Now the tricky moment: after it’s marked Approved, the customer sends a “minor” redline (they tweak termination notice). The rule is simple: any new redline reopens review. Sales uploads v05 (customer redline after approval) and status moves back to In legal review, with the prior approval recorded but no longer current.

To confirm the final version being signed, the team locks one file as Final for Signature, notes its version ID (for example, v06), and requires the signature packet to use that exact file. If the signed copy returns with any mismatch, status changes to Blocked (or Exception, if you use that label) until the team resolves it before countersigning.

Common mistakes that slow down contract approvals

The fastest way to stall a contract approval workflow is to let the work escape the workflow. If redlines live in email threads, someone will miss a change, reply to the wrong message, or forward an outdated attachment. Even with good intentions, “email-only” edits create invisible work and unclear decisions.

Another common blocker is starting legal review with missing basics. If key deal details are scattered across chat, CRM notes, and a draft PDF, legal ends up doing detective work. That adds back-and-forth and makes sales feel like legal is “slow,” when the draft was simply not ready.

A few repeat offenders show up in most teams:

• Changes are made outside the agreed tool or process, so nobody can see what changed or why.
• Required details are left blank (customer entity, term, pricing model, data handling), so legal has to chase them.
• A deal gets “approved” without confirming the exact file/version that was reviewed and accepted.
• Status labels multiply (“Legal Review,” “Legal Reviewing,” “Review - Legal,” “Pending”), so people stop trusting the status.
• No clear owner is assigned for the next action, so the contract sits even though everyone thinks someone else is handling it.

Over-complicated statuses are especially sneaky. If the status list is longer than the steps people actually take, it becomes a guessing game. Keep labels simple and action-based, and make sure each status has an obvious next move.

Finally, watch for ownerless handoffs. Example: Sales sends a revised draft at 6 pm, marks it as “updated,” and assumes legal will pick it up. Legal assumes sales is still collecting missing info. Nothing happens until the customer asks for an update.

Tools help only if they enforce the basics: one current version, required fields before submission, and a visible next owner.

Quick checklist and next steps to implement the flow

A contract approval workflow works when anyone can answer four questions in seconds: what version is current, who owns it, what happens next, and what counts as “done”.

Quick checks (any time you open a contract)

• Current version is clearly labeled and matches the latest redlines
• Current owner is named (one person, not a team)
• Next step is explicit (legal review, finance approval, customer signature)
• Required approvals are visible (based on deal size, term, risk)
• Signing method is confirmed (e-sign, wet ink, or both)

Before sending anything to the customer, do a fast truth check. Confirm prices, discounts, and payment terms match the quote. Re-check dates (start date, renewal, notice periods) and any non-standard terms. Validate legal names and addresses for both parties, and make sure every referenced attachment is included (order form, DPA, SOW, security addendum).

Before marking a contract as signed, confirm you have the final executed PDF (not a draft screenshot). Make sure the signature page is complete, names match the signers, and any required initials are present. Store it in the agreed system of record and capture the storage location in the deal record so it’s easy to find later.

Next steps to implement this flow

Define your status names and exit criteria, create one intake form for sales to submit a complete package, and write down approval thresholds (term length, discount percent, liability caps). Then build a lightweight internal workflow app that includes a contract table, status fields, a “current owner” assignment, and a required checklist for submissions.

If you want a no-code option that still produces production-ready applications, AppMaster (appmaster.io) is often used for internal workflows like this: you can model the data, set up approvals, and route tasks between sales, legal, and finance without relying on long email threads.