An approval workflow creates problems at either extreme. Either it doesn't exist at all and spending grows uncontrolled, or everything gets stuck in approvals and work stops.
The second scenario is a more common mistake. In businesses with excessive approval layers, the team eventually bypasses the process; even buying a pen requires asking the boss, and no one takes it seriously.
In this article, we explained how to set up a working approval workflow, how to determine thresholds, and how to manage exceptions.
Table of Contents
The real purpose of approval
The approval mechanism arises not from mistrust, but from the distribution of responsibility. The goal is to ensure decisions are made at the right level.
It has three functions. First, budget control: is the spending within planned limits? Second, need validation: is this purchase truly necessary?
The third and most neglected is condition control: are the price and payment terms appropriate? This control becomes meaningless after the purchase is made.
Approval must be at the beginning of the process. Approval done after the invoice arrives is merely a formality.
Determining amount thresholds
The fundamental question when setting thresholds is: how much does misspending this amount affect the business?
Low-amount and routine purchases should pass without approval. If the cost of approval is higher than the purchase itself, the process loses its meaning.
Mid-level purchases remain with the department manager. High-amount purchases go up to senior management.
The number of thresholds should be small. Two or three levels are sufficient; a five-level workflow gets clogged in practice.
Thresholds should be reviewed periodically. In an inflationary environment, a threshold that remains fixed will eventually pull every purchase into approval.
Who should approve what?
The approver must be the person responsible for the outcome of that expense. It makes no sense for someone without a budget to give approval.
The second principle is that the requester and the approver must be different. A structure that approves its own request produces no control.
Some purchases also require technical approval. A finance manager cannot evaluate whether a machine part is correct; this is a separate approval step.
Role definitions should be tied to positions, not individuals; when personnel changes, the workflow is not disrupted.Role-based authorization we explained this approach in the article.
Keeping the workflow fast
The biggest enemy of an approval workflow is delay. If the approver does not notice, the request waits for days.
This is why the notification mechanism is part of the workflow. A record awaiting approval must reach the relevant person instantly;notifications ensure this.
Delegation definitions are also necessary. The process must not stop when the approver is on leave.
Mobile approval capability significantly speeds up the workflow. The manager should be able to give approval without being at their desk.
The list of pending approvals should be monitored regularly; the average approval time is an indicator of the health of the process.
Emergencies and exceptions
When production stops or a critical breakdown occurs, waiting for approval may not be possible. This scenario must be defined in advance.
A common solution is retroactive approval: the purchase is made, and approval is obtained afterward. However, this exception must be closely monitored.
If the rate of retroactive approval is increasing, it means the process has remained only on paper. This rate should be reported regularly.
The frequency of invoices arriving without orders gives the same signal; we touched upon this in theincoming invoice inbox management article.
Audit trail
The value of an approval workflow comes from its backward traceability. Who approved what amount, and when?
This record is used both for internal audits and in case of disputes. Verbal approvals do not serve this function.
Rejection decisions must also be recorded. A request that was rejected later passing through a different route indicates a process loophole.
We covered the log and audit trail structure in the audit trail management article. The approval workflow is defined in the purchasing module; permissions are established through authorization.
Setting up the workflow for the first time
Setting up the process in a business that previously had no approval workflow is more of a habit change than a technical configuration. Therefore, it is necessary to proceed gradually.
In the first stage, only high-value purchases are subjected to approval. Daily consumable purchases are left unrestricted; thus, the team does not see the process as an obstacle.
In the second stage, the threshold is gradually lowered. At this point, the team is already accustomed to the workflow, and additional steps do not generate friction.
In the third stage, department-based special rules are added. Some items may require approval at any amount; others may require none at all.
This phased approach is also valid for other module transitions; we discussed this method in the pilot project selection article.
Managing team resistance
The most resistance to the approval workflow comes from people who could previously make purchases freely. This resistance usually stems from a perception of distrust.
The way it is explained is decisive here. Approval should be framed not as a tool of distrust toward individuals, but as a means of sharing responsibility.
Showing a tangible benefit also helps. An approval record protects the requester later on when the question "who requested this purchase" arises.
A fast-moving workflow is the most convincing argument. If approvals are turned around within hours, resistance disappears quickly; requests that wait for days discredit the process.
Therefore, notification setup is the most critical part of the workflow; we discussed delivering the right signal to the right person in the notification management article.
Frequently asked questions
Is an approval workflow necessary for a small business?
Even single-person approvals generate value when recorded. It doesn't need to be complex.
What happens if the price changes after approval?
Changes above a certain tolerance should require re-approval.
Can budget control be tied to approval?
Cost center-based tracking supports this; cost center tracking check out the article.
How is approval separated in a multi-company structure?
It is defined based on scope; multi-company model protects company boundaries.
A good approval workflow provides control without slowing down business. The secret is setting the threshold in the right place and not neglecting notifications.
After setting up the workflow, we recommend monitoring three metrics: average approval time, ex-post approval rate, and orderless invoice rate.
If the approval time is getting longer, proxy definitions or notification setups are missing. If the ex-post approval rate is rising, thresholds are unrealistic; the team is bypassing the process because it hinders daily operations.
The orderless invoice rate shows whether the process is being completely circumvented. If all three indicators remain low, it means the workflow is both functioning and being adopted.
By talking to the EQLEM team, you can configure your approval thresholds and role definitions.