Internal Approvals: Managing Seller-Side Deal Governance

A sales VP analyzed deal cycle time across her organization. Customer-side activities—discovery, demos, technical validation, stakeholder alignment—took an average of 52 days. Internal approvals on the seller side added another 18 days. Nearly 25% of total cycle time was consumed by their own approval processes: discount approvals, legal reviews, custom terms evaluations, contract exceptions.

She was frustrated. "We're slowing ourselves down more than customers are slowing us down." But when she proposed eliminating approval gates, finance and legal pushed back. Those controls existed for good reasons—margin protection, risk management, strategic alignment. The answer wasn't elimination. It was optimization.

They redesigned approval processes around clear thresholds, streamlined workflows, better request documentation, and stronger deal desk support. Internal approval time dropped from 18 days to 9 days on average. Deal velocity improved without sacrificing governance. Margin leakage actually decreased because approval requests became more strategic and better justified.

Internal approvals are necessary friction in complex selling organizations. But friction can be productive (ensuring quality decisions and protecting company interests) or wasteful (creating delays without adding value). Most sales organizations tolerate wasteful approval friction because they've never actually analyzed and optimized these internal processes.

Why Internal Approvals Exist

Internal approval processes serve legitimate business purposes. Understanding these purposes helps sales teams work with them rather than resent them as obstacles:

Margin Protection

Discounting directly impacts profitability. Without approval governance, individual sales reps might give away margin unnecessarily to close deals quickly or meet quotas, optimizing for their commission while harming company profitability.

Approval processes make sure discount decisions are made with complete business context: strategic value of the customer, competitive dynamics, long-term relationship potential, precedent-setting implications. Leaders with broader perspective make better margin trade-off decisions than individual reps focused on single deals.

Risk Management

Non-standard terms can create operational, financial, legal, or reputational risk. Extended payment terms create cash flow risk. Custom SLAs create operational risk. Unique data handling requirements create legal risk. Reference commitments create reputational risk.

Approval processes surface risk implications to stakeholders who can evaluate whether the risk is acceptable given deal value and strategic importance. Not every risk should be avoided, but risks should be understood and consciously accepted rather than accidentally incurred.

Strategic Alignment

Large or strategic deals need leadership attention beyond individual sales reps. C-suite should know when major customers are being acquired, when competitive displacement deals are closing, when new market segments are being entered, or when deals set important precedents.

Approval processes create visibility that drives strategic guidance: "This customer opens adjacent market opportunities—don't optimize for initial deal size, optimize for land-and-expand potential." Strategic context improves deal structure decisions.

Resource Allocation

Some deals require significant company resources: custom development, extended professional services, executive sponsorship, dedicated support. Approval processes make sure resource commitments are intentional and coordinated across the organization.

Without approval visibility, multiple sales reps might commit resources that don't exist or conflict with strategic priorities. Centralized review drives intelligent resource allocation.

Certain deal structures, customer types, or contract terms trigger legal or compliance review requirements. Publicly traded companies have additional governance requirements. Regulated industries have specific contract provisions. International deals have export controls or data sovereignty considerations.

Approval processes make sure legal and compliance teams review deals with potential issues before commitments are made that create liability or regulatory risk.

Common Approval Triggers

Different deal characteristics trigger different approval requirements:

Discount Thresholds

Most sales organizations have tiered discount authority:

Rep-level authority: Up to 10-15% discount without approval Manager approval: 15-25% discount requires manager approval Director/VP approval: 25-35% discount requires senior sales leadership Executive approval: 35%+ discount requires C-level approval Board approval: In some organizations, extreme discounts require board-level review

These thresholds vary by industry, business model, and margin structure. SaaS companies with 80% gross margins have different tolerances than professional services companies with 40% gross margins.

Non-Standard Terms

Deviations from standard contract terms trigger legal and deal desk review:

  • Payment terms beyond standard (net-60 or net-90 instead of net-30)
  • Custom service level agreements
  • Non-standard data handling or privacy provisions
  • Unique intellectual property or licensing terms
  • Special termination or renewal provisions
  • Commitments beyond product scope (custom development, integrations)

Any "red-line" to standard contracts typically requires approval from legal, finance, or deal desk depending on the nature of changes requested.

Deal Size or Strategic Importance

Large deals measured by annual contract value (ACV) or total contract value (TCV) often require senior leadership visibility regardless of discount level:

  • Deals above $250K ACV might require VP approval
  • Deals above $500K might require C-level approval
  • Deals above $1M might require board visibility

Strategic deals also trigger elevated review: major brand name customers, competitive displacement wins, first customers in new market segments, or deals that set important precedents.

New Customer Segments

First deals in new industries, company sizes, or geographies often require strategic review: "Are we confident this segment is viable? Do we have proper support capabilities? Is pricing appropriate? What precedents does this set?"

Early deals in new segments are learning opportunities that merit extra scrutiny. Lessons from these deals inform whether to pursue the segment aggressively or adjust positioning and pricing.

Competitive Displacement Pricing

Deals requiring aggressive pricing to displace entrenched competitors often require approval even at lower discount levels because they set precedents and have strategic implications: "If we price at this level for competitive displacement, are we prepared to defend that pricing with other prospects in similar situations?"

Approval Authority Structures

Sales organizations structure approval authority at different levels:

Rep-Level Authority

Individual sales reps have limited approval authority within defined parameters: standard pricing, standard terms, deals below certain size thresholds, discounts within acceptable ranges.

Rep-level authority enables speed for straightforward deals while ensuring non-standard situations get appropriate review.

Manager Approval

Front-line sales managers approve deals requiring moderate discounts, slightly non-standard terms, or deals of moderate strategic importance. Managers have broader context than individual reps and can make margin trade-off decisions more effectively.

Manager approval adds 1-3 days to deal cycle in well-run organizations, more in organizations with limited manager availability or unclear approval criteria.

Director/VP Approval

Senior sales leadership approves deals with significant discounts, important strategic implications, or material non-standard terms. Directors and VPs have regional or organizational visibility and can assess precedent-setting implications.

Director/VP approval adds 3-7 days in responsive organizations, potentially weeks in organizations where senior leaders are overloaded with approval requests.

Executive/C-Level Approval

CEO, CFO, or COO approval for the largest deals, extreme discounts, or situations with significant business implications. Executive approval adds strategic perspective but also adds cycle time.

Executive approval should be reserved for truly exceptional situations. When every deal requires C-level approval, executives become bottlenecks and approval processes break down.

Legal reviews non-standard contract terms. Finance reviews unusual payment terms, revenue recognition implications, or situations with financial risk. These functional approvals happen in parallel with sales leadership approvals.

Legal review timelines vary dramatically: 2-3 days in organizations with dedicated deal support counsel, 2-3 weeks in organizations where legal team is overwhelmed with competing priorities.

The Approval Process

Understanding the typical approval workflow helps sales teams navigate more effectively:

Request Submission

Sales rep submits approval request through CRM, deal desk system, or approval workflow tool. Complete request packages include: deal summary, customer overview, business justification, competitive context, discount rationale, non-standard terms explanation, and risk assessment.

Incomplete requests get rejected and recycled, adding days to approval time. Complete initial submissions accelerate approval dramatically.

Documentation Requirements

Approval requests require specific documentation:

Deal summary: Customer name, opportunity size, products/services, contract term, pricing structure, total contract value, annual contract value.

Business justification: Why this deal is strategically important, what value it creates for the company beyond near-term revenue.

Competitive context: Who we're competing against, why discount or special terms are required to win, what happens if we don't win.

Discount rationale: What discount is being requested, how it compares to standard pricing, why it's justified, what precedent it sets.

Risk assessment: What risks does this deal create (margin, operational, legal, reputational), how are risks mitigated.

Customer profile: Company size, industry, strategic value, expansion potential, reference value.

Review and Evaluation

Approval authorities review requests against established criteria:

Margin impact: What's the net margin on this deal? Is it acceptable given strategic value? What's the opportunity cost?

Strategic value: Does this customer open new markets? Create important references? Enable competitive wins? Build strategic capabilities?

Precedent implications: If we approve this pricing or these terms, what precedent does it set? Will other customers demand similar treatment?

Risk assessment: Are proposed risks acceptable? Are mitigation strategies credible? Do we have capacity to manage these risks?

Competitive necessity: Is the requested discount or term truly required to win, or could we win with less concession?

Negotiation or Modification

Approval authorities often don't simply approve or reject—they negotiate modifications: "We'll approve 25% discount instead of requested 30%," or "We'll approve extended payment terms if customer agrees to longer contract term."

This negotiation can add cycle time but often produces better deal structures than initial requests.

Final Approval or Rejection

Requests are approved (proceed with deal as structured), approved with modifications (proceed with adjusted terms), or rejected (restructure deal or walk away).

Rejections should include clear rationale so sales reps understand what would make deal approvable: "At current discount level, margin doesn't justify resource investment. If deal size increases by 30% or if customer commits to multi-year contract, resubmit for approval."

Building Strong Approval Requests

The quality of approval requests dramatically impacts approval speed and likelihood:

Business Justification

Don't just ask for discount—explain why it creates business value. "This is a Fortune 500 company that will become important reference customer. Their brand value justifies margin trade-off to land the account."

Strong justifications connect discount to business outcomes beyond near-term revenue: strategic market entry, competitive displacement, reference value, expansion potential, partnership opportunity.

Competitive Context

Explain competitive dynamics clearly: "We're competing against [incumbent] who has quoted $450K versus our standard $550K. Customer has indicated that price parity gets us the win based on superior capabilities. This is strategic displacement opportunity in financial services sector where we want to build presence."

Competitive context helps approval authorities understand that discount is necessary to win, not just convenient to close faster.

Strategic Value

Articulate what this customer means beyond immediate deal: "This is our first healthcare provider customer and represents entry into $200M market segment we've been targeting. Success here creates case study and references that enable broader healthcare expansion."

Strategic value justifies margin trade-offs that pure financial analysis wouldn't support.

Risk Mitigation

Don't hide risks or hope they go unnoticed. Surface risks proactively and explain mitigation strategies: "Customer requested net-90 payment terms which creates cash flow risk. We've mitigated by requiring 50% payment at contract signing and 50% at implementation completion, limiting exposure."

Proactive risk identification with credible mitigation demonstrates sophistication and increases approval likelihood.

Customer Profile

Provide context on customer quality: company size, revenue, growth trajectory, financial stability, industry position, strategic importance, expansion potential, reference value.

"Fortune 500 company, $10B revenue, stable and growing, excellent brand name, strong expansion potential across business units" presents very differently than "Small regional company, financial uncertainty, limited growth prospects, unclear expansion potential."

Accelerating Internal Approvals

Sales teams can dramatically improve approval speed through strategic approaches:

Early Stakeholder Engagement

Don't wait until deal is ready to close to engage approval authorities. Bring senior leaders and approval stakeholders into deals early: "I have an opportunity developing that will likely require approval. Can I brief you on the situation so there are no surprises when approval request comes through?"

Early engagement enables feedback that shapes deal structure proactively rather than corrections during approval process.

Complete Documentation

Submit complete approval packages on first submission. Incomplete requests that get rejected and resubmitted waste days. Invest 30 minutes in comprehensive initial submission rather than multiple rounds of back-and-forth.

Use approval request templates that ensure all required information is included. Many organizations provide these templates through deal desk or sales operations.

Clear Justification

Write approval requests that make it easy to say yes. Explain context clearly, justify discount or non-standard terms compellingly, address obvious questions preemptively, provide all information decision-makers need.

Put yourself in approval authority's position: "If I were reviewing this request with limited context, what would I need to know to feel confident approving?"

Executive Sponsorship

For strategic deals, engage executive sponsors early who can provide strategic context during approval reviews: "Our Chief Revenue Officer is briefed on this opportunity and supports the strategic importance."

Executive sponsorship signals deal importance and provides political cover for approval authorities to approve non-standard requests.

Relationship Building

Invest in relationships with approval authorities outside of deal context. Sales leaders who know their VP of Finance, General Counsel, and deal desk leader personally can navigate approval processes more effectively than those who only interact during approval requests.

Relationship building creates trust that enables faster approvals: "I know this rep is thoughtful about margin and only requests discounts when truly necessary. If they're asking for approval, there's good reason."

Approval Request Documentation

Effective approval requests follow structured formats:

Executive Summary: 2-3 sentence deal overview highlighting key points.

Customer Overview:

  • Company name and industry
  • Company size and revenue
  • Strategic importance
  • Expansion potential

Opportunity Details:

  • Products/services being sold
  • Contract term and structure
  • Total contract value and ACV
  • Expected close date

Pricing and Discount:

  • Standard pricing
  • Proposed pricing
  • Discount amount and percentage
  • Justification for discount

Competitive Situation:

  • Competitors being evaluated
  • Competitive pricing (if known)
  • Competitive advantages we offer
  • Why discount is necessary to win

Strategic Value:

  • Why this customer matters beyond immediate revenue
  • Market entry, reference value, or competitive implications
  • Long-term relationship potential

Non-Standard Terms:

  • Any deviations from standard contract
  • Why non-standard terms are requested
  • Risk implications and mitigation

Risk Assessment:

  • Financial, operational, legal, or reputational risks
  • Probability and impact
  • Mitigation strategies

Recommendation:

  • Clear request: approve discount, approve terms, approve exception
  • Next steps if approved
  • Impact if not approved

When Approvals Are Denied

Approval denial doesn't necessarily mean deal is dead. It means current deal structure isn't acceptable:

Understanding Rejection Rationale

When approvals are denied, understand why: "What specifically was the concern? What would make this approvable? Is there alternative structure that would work?"

Rejection rationale guides restructuring: "At 35% discount, margin is too low. But at 25% discount with two-year commitment instead of one-year, deal would be approvable."

Restructuring Options

Common restructuring approaches after denial:

Increase deal size: If discount percentage is too high, increase deal size to improve absolute margin dollars while maintaining higher percentage discount.

Extend contract term: Multi-year commitments justify higher discounts because they reduce future sales costs and provide predictable revenue.

Remove expensive deliverables: If margin is too low, reduce scope of professional services or custom development that consume margin.

Add valuable components: Include components that have high value to customer but low cost to you, improving perceived value without margin impact.

Adjust payment terms: If customer can prepay annually instead of monthly, that cash flow benefit might justify additional discount.

Escalation Paths

If initial approval authority denies request, understand escalation options: "Can I appeal to VP level? Would executive sponsor involvement change the evaluation?"

Escalation should be used strategically for truly important deals, not routinely for every denial. Escalation exhausts political capital and should be reserved for situations where business case is compelling but initial reviewer didn't fully appreciate strategic context.

Walking Away Strategically

Sometimes approvals are denied because deal genuinely isn't good business: margin is too low, risk is too high, precedent is too dangerous, strategic value doesn't exist.

In these situations, skilled sales reps walk away professionally rather than pushing bad deals through approval processes. Walking away from bad deals preserves credibility and earns trust from approval authorities: "This rep respects margin discipline and only brings us deals worth doing."

Streamlining Approval Processes

Sales organizations can optimize approval processes organizationally:

Clear Approval Thresholds

Document explicit thresholds that trigger different approval levels: "Discounts up to 15% require manager approval, 15-25% require director approval, 25%+ require VP approval."

Clear thresholds eliminate ambiguity about when approvals are required and what level of authority is needed.

Defined Review Timelines

Commit to service level agreements for approval turnaround: "Manager approvals within 2 business days, director approvals within 5 business days, VP approvals within 7 business days."

Defined timelines create accountability and enable accurate deal forecasting: "We submitted for approval on Monday, director approval timeline is 5 days, so we expect decision by Friday."

Deal Desk Support

Mature sales operations teams establish deal desk functions that support approval process: reviewing requests for completeness, coordinating multi-stakeholder approvals, providing approval status visibility, escalating at-risk approvals.

Deal desk support dramatically improves approval efficiency by professionalizing the process and removing administrative burden from sales leaders.

Exception Documentation

Track approval exceptions and patterns: what types of deals get approved despite being outside normal parameters, what justifications succeed, what strategic rationales resonate.

This exception documentation informs future requests and gradually evolves organizational norms: "We've approved this pricing structure for similar customers three times. Perhaps it should become standard for this customer segment."

Continuous Process Improvement

Review approval processes regularly: where are bottlenecks? What approval steps add value versus administrative burden? How can we maintain necessary governance while reducing cycle time?

Sales operations, finance, legal, and sales leadership should collaborate quarterly on approval process optimization.

Conclusion

Internal approvals are permanent reality in complex selling organizations. The goal isn't to eliminate approval processes—it's to make them efficient, consistent, and value-adding rather than bureaucratic obstacles.

Sales teams that view approvals as adversarial relationships struggle with delays, rejections, and frustration. Sales teams that view approvals as necessary governance and invest in working effectively within approval systems navigate approvals efficiently and build credibility with approval authorities.

The capability that matters is strategic approval request development. Sales reps who submit complete requests with compelling business justification, clear competitive context, honest risk assessment, and strong strategic rationale get approved faster and more often than reps who submit lazy requests hoping for rubber-stamp approval.

Invest in understanding your organization's approval processes, thresholds, authorities, and timelines. Build relationships with approval stakeholders. Engage them early in complex deals. Submit complete, well-justified approval requests. Learn from approvals that succeed and fail. Become sophisticated at navigating internal processes as you are at navigating customer organizations.

The best sales reps view internal approvals not as obstacles to overcome but as quality gates that protect company interests and improve their own deal discipline. They appreciate that approval processes force them to think strategically about margin, risk, precedent, and customer value rather than optimizing purely for near-term commission.

Organizations should regularly evaluate whether approval processes are well-calibrated: clear thresholds, responsive timelines, consistent criteria, efficient workflows, and continuous improvement. Approval processes that protect margin and manage risk while enabling deal velocity create competitive advantage. Approval processes that add bureaucracy without governance value should be redesigned or eliminated.

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