Once the deal is done and the documents are ready for signature, what happens in your organization? Do the contracts efficiently move from the negotiator to the approver to signature to the other side for their signature and then back to the contract manager(s) of both organizations? Or, like most places, do the documents get stuck at various points along the way? Let’s see if we can work through some ways to grease the skids.
As listed above, there are five key steps to the complete execution of any given document.
1. Ready for Signature. The contract must reach its final stage and be “clean” and ready for signature. This, of course, is the longest stage, as the negotiation leading up to this point can take a long time. To get to readiness, at least one negotiator must take the reins and actually want to complete the document by a certain time (aka, a deadline). If you find yourself in an organization that does not have the discipline to meet deadlines, you will need to take it upon yourself to drive the documents to completion. Phone calls, e-mails, even in-person visits can be useful methods to encourage finalization of the documents.
2. Approved for Signature. At most organizations, someone other than the negotiator must approve the final contract in its “ready for signature” form. Usually this is a business owner or manager who has business authority over the subject matter of the agreement. Generally speaking, this person usually does not block or hinder the signature process as they are the person who desires the completed agreement. In the event that they do not have this vested interest, it is usually a good idea for the negotiator (or the person who has interest in closing the deal) to hand-deliver two originals of the documents for approval and wait for such approval to then hand-deliver the documents again to the person who can really sign.
3. First Signature. Assuming that neither the negotiator nor the business owner have the authority to sign, another individual will need to actually place their signature on the document. The signatory usually needs to see the authorization (many companies have moved to a written “approval” document to show this authorization) and the documents, too.
It’s not unusual for a signatory to have questions about the documents and the negotiator and/or business owner should be prepared to answer questions regarding the document, the deal and even the negotiation process itself. A lack of readiness to answer these questions can hold up signature.
Additionally, in companies of this size, the signatory is also usually senior management. This means that the availability of the signatory could also be an issue. Planning ahead (calling the manager’s administrative assistant for an appointment, etc) is essential to keep the process moving.
4. Second Signature. While this is technically a compound process (since the other side is probably repeating the first three steps on their side of the fence, too), from your vantage point, it’s a single step. Time is always a factor, so remember that your process timeline could be doubled if your counterparts have a similar methodology. It is a mistake to believe that your counterparts will simply sign and return the documents. If, however, you are the other side, you can plan ahead and print your own version of the document for approval, such that you can be ready to take the partially-signed documents to your signatory immediately upon receipt.
You can also help speed the return of the fully-executed contracts by at least providing your name and mailing address (perhaps on a business card) with the packet of paper you send to your counterpart. Sending via a trackable mail service (UPS or FedEx) is also recommended for documents of significant importance, size, uniqueness (such as those with architectural drawings, etc) as it not only allows you to know that the documents arrived safely but also offers insurance for lost documents. Some companies like to always be the second signatory. This helps with the fifth step in the process, discussed in a minute.
5. Contract Return and Management. While this would seem to be quite unlikely, many contracts never actually find their way into the hands of the two parties. Similar to the sock that always disappears in the dryer, contracts seem to go “poof” after they have been signed and sent. To make sure that your organization has a complete contract file, diligence on the part of the contract manager (or whomever is responsible for tracking the contract) is required to ensure a safe return of the fully executed contract to the first-signing party.
As stated above, providing a return address is a necessity. If you want to increase your chances of a quick turnaround, you might also try sending along pre-paid envelopes or airbills, too. E-mails and phonecalls to your counterpart are also recommended. The trick is to realize that you haven’t received the document back as quickly as possible.
The reason for the quick turn is that most people have a very short attention span when it comes to document management. It’s just human nature. As we have other things demanding our attention, jobs that have been marked “completed” are easily forgotten. For that reason, if you have a contract management system, make sure you have a way to track the physical location of the documents in this process.
By following these five steps and managing this process, you can avoid the embarrassing situation of having to explain why you don’t know where a document is, long after it was supposedly signed.