The success of your company—whether you’re a small startup or a decades-old conglomerate—can often depend on sensible and proactive financial management. This includes having an efficient financial approval workflow. Whether it’s for expenses, revenue forecasting or budget review, your financial approval process keeps your expenses manageable and helps you spend your profits wisely. When it comes to approval workflows, one size does not fit all. Ideally, your financial approval process is custom designed to fit your company’s needs and is also scalable in a way that will accommodate for growth.
And if it isn’t? To put it bluntly, an ineffective workflow will result in serious problems. If your approvals process can’t accommodate growth, then keeping track of approvals—whether budgets, invoices or unexpected expenses—will turn into detective work.
- Is the approval on the right person’s desk?
- Does anyone else need to sign off on it?
- How long will it take to be fully approved?
Can’t you already feel the headache?
The time you spend chasing down paperwork, playing phone tag to get answers and clarifying miscommunication leads to an approval bottleneck and innumerable operational inefficiencies!
There are many reasons for these bottlenecks, but one of the main causes, surprisingly (or unsurprisingly), is people. Whether it’s holidays, sick leave or even staff turnover, having a financial approval workflow that depends entirely on certain employees is a surefire way to create inefficiency and traffic jams. If those employees aren’t around or are overloaded with work, your approval process grinds to a halt.
Since the human element is the “X factor” of the business world, managers often compensate by constantly monitoring the approval workflow. The result is more work, more manual labor, more stress—and a likelihood that inefficiency and mistakes will still occur.
We understand creating a financial approval process that’s transparent, simple to use and foolproof isn’t easy. The good news is having a standardized process capable of handling future or unexpected changes is possible. You just have to keep in mind that people are at the heart of this crucial business workflow.
Signs of an inefficient approvals workflow
An inefficient workflow for your financial approvals could result in unnecessary busywork—sharing paperwork and spreadsheets, endless phone and email tag with coworkers and inevitable miscommunication about important details. This can happen because of a few reasons.
One is many companies let each department come up with unique approval processes that don’t fit in with how other departments work. The result is new problems in situations requiring interdepartmental approvals.
Another problem is when the rules and procedures that make up your financial approval process have grown from something localized and simple to a larger process requiring input from many departments. The end result is to make sure important financial approvals get a signature from the right authority figures and all incorrect approvals or mistakes are caught. Every approval process not only depends on the people involved, but affects them as well.
Streamlining can solve common approval process mistakes
Some company owners mistakenly think the answer is to create firm, precise approvals procedures that are set in stone and can’t be changed. In fact, the opposite is true: a flexible workflow is the best way to deal with the human element.
Another mistake is thinking a streamlined process means as little detail or guidance as possible. While simplicity is crucial to a good approval workflow—and usually the fewer steps for the approver, the better—it’s important to be organized and detailed enough so there’s little confusion, at least from a process documentation standpoint.
Finally, another common mistake is not automating elements of your financial approvals process. An approval workflow that is managed manually—either by requiring approvals to be in paper format or forcing your employees to manually deal with issues as they arise (or are discovered) will almost certainly result in repeated bottlenecks.
The best approvals workflow is streamlined, involving only people who absolutely need to be involved. It will also have a specific roadmap for possible contingencies (and ideally these are programmed into some sort of a process management system).
Every approval should have a clearly delineated role, with a clear task list, access to resources, guidelines for when to grant permission and when to reject the expense or item, and an allotted timeline to complete the process. Whether your company is small or extremely large, every employee should know who the approver for financial requests are.
To neutralize problems that might come from absent employee or company-wide personnel changes, there’s no substitute for a “super-approver.” A super-approver can step in whenever a regular approver is unavailable. He or she should also be able to handle particularly urgent or special requests. It’s important this is considered in your initial workflow so the role of approver is automatically and effectively delegated as necessary.
A standardized financial approvals process is crucial for your company to run effectively. It can help you manage and control spending, help create and modify budgets, minimize unnecessary expenses, ensure timely billing and invoicing, and provide real-time data on cash-flow and minimize costly mistakes that waste time and money. Most importantly, the right workflow can account for the human element of approvals. Because having a strong financial approvals process works with and around the people involved, removing one of the biggest obstacles to your company’s efficiency and future growth.