Article
Approvals

Creating a great approval process: the four elements you'll need

Regardless of how large or small your company is, approval workflows are likely a crucial element of your business, particularly for your accounting department. After all, most financial processes—whether involving payroll, purchases, expenses, reimbursements or advances—require some kind of approval and authorization.

Neeraja Viswanathan
4 min read
December 19, 2022

Regardless of how large or small your company is, approval workflows are likely a crucial element of your business, particularly for your accounting department. After all, most financial processes—whether involving payroll, purchases, expenses, reimbursements or advances—require some kind of approval and authorization. A delay at the wrong time can stop your employees in their tracks—or, even worse, create an approval bottleneck that results in long-term problems and a noticeable lack of productivity.

But keeping track of approvals and identifying problems in your procedures can be challenging. 

So how do you design an approval workflow to work for you and not against you? 

Here are the four elements every great approval process needs to have:

Standardization

Most businesses need predefined policies that actually work and are adhered to when they are put into place. This often requires real-world testing. A process might look good on paper but fail to work in real life. There might be too many variables—different employees, departments or other conflicting procedures—you don’t notice until you put an approval process into place. Rather than acquiring solutions and trying to tailor them, it’s important to see what works in the real world. 

In a standardized process, the steps required in each approval are easy to find and understand. All people necessary to the approval process are involved and understand their responsibilities as well as deadline expectations. A standardized process means you’re able to monitor and analyze the workflow to prevent bottlenecks and clearly identify problems so they can be fixed quickly. It also means fewer rejected requests and revisions. 

Ideally, if your process is streamlined properly, you’ll get approvals before the deadlines so projects can be delivered faster. You’ll also be able to encourage better collaboration and reduce wasted time, unnecessary communication and manual labor, all while staying within budget and reducing efforts to track down necessary information. 

Visibility

One characteristic of the best financial approval processes is visibility. It’s vital the internal approval is transparent and easily understood. 

For example, if multiple approvals are pending in the workflow, managers should immediately be able to see which will end up on their desks. Employees should be able to track their approvals to see where they are in the process, and what the timeframe of approval might be. They should also know who to send their requests to for necessary approvals—especially in cases when more than one approval is needed, or if the correct approver varies depending on certain criteria (such as region, dollar amount or department). 

Having an approval matrix, where the workflow automatically submits requests to the right approver, can help with this situation. And, of course, this kind of visibility is crucial for audits. If your approval process already provides this kind of transparency, that’s one less task to prepare for the year-end close or for external auditors. 

Simplicity 

Your financial approval process likely affects nearly every employee in your organization. It’s important to set up a workflow that benefits not only your customers but your employees as well. That’s why simplicity is important from the very beginning when you’re first designing your approval process.

To start, pare down the request form so it only asks for what you need to know: the vendor name; the cost; whether the expense is a one-time or recurring purchase; the expense account (if known); and any invoice or other supporting documentation. A workflow with the fewest possible steps and can be used by the most number of departments or people is your goal here.

Some questions you might ask yourself are:

  • Do you have all the necessary people involved in your approval process?
  • Conversely, are there any people involved in the process who aren’t really necessary? Can you simplify the list of people who are involved?
  • Can the approval sequence be mapped out like a flowchart? Is it easy to follow?
  • If your approval process has multiple steps, are requests being routed to the right approvers in the correct order? Can any steps be skipped?
  • Does the level of approval and length of the approval process vary according to the urgency of the request?
  • Does everyone have the same information and instructions?

The Right Technology

Optimizing your financial approvals process requires the right technology—one that provides more control, consistency and visibility of the workflow. Outdated software or antiquated methods won’t be able to generate detailed reports or automatically capture data. And that could mean an overhaul of more technology beyond just digitizing your financial approvals workflow. 

Because while it might seem fine to require approvals to be sent via email or through a particular system, is that still the most efficient approach, given how much time we all spend on our phones? Wouldn’t it be better if the approval you’re waiting for could be sent on a smartphone rather than requiring a manager to get to a computer? 

Another issue is miscommunication. If your approval workflow is centered around a communication platform you’ll likely encounter quicker approvals and fewer mistakes if most communication is done by email. Communication is also improved when visibility is improved. With a system that makes all the data available and keeps a clear audit trail, you’ll be able to quickly and easily find all the necessary information for internal and external reviews. 

Conclusion

The benefits of efficient approval policies can’t be overstated: 

  • Greater cost control 
  • Reduced spending 
  • Faster approval times
  • Reduced employee frustration
  • Fewer wasted resources (time, labor, money)
  • Enhanced collaboration between departments
  • Improved ownership and accountability
  • Better data collection and insights
  • Superior financial forecasting
  • Improved customer satisfaction

Smooth and transparent financial processing is the key to better business outcomes. Mapping out an automated workflow with the above elements will also reduce frustration, unnecessary delays and the chaos inherent in a multi-step approval process. 

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