Bill approval routing

Designing approval policy that actually catches things: thresholds, separation of preparer and approver, delegation, and how routing rules are evaluated.

How-toFor Business owners, Firm staff, Bookkeepers

What approval is for

Approval exists so that no single person can both create an obligation and settle it. That is the control. Everything else — thresholds, categories, delegation — is tuning.

Designing the policy

1
Set a threshold below which bills post without approval.
Pick an amount where the cost of reviewing exceeds the risk of not reviewing. For many small businesses this is somewhere between $500 and $2,500.
2
Add a second tier for genuinely large amounts.
Above some figure, an owner or a second approver should see it regardless of who prepared it.
3
Add category rules where amount is the wrong test.
Professional fees, anything to a related party, and any new vendor's first bill deserve review at any amount.
4
Name approvers and their backups.
An approval chain with one person in it stops when that person takes a holiday, and the workaround is always to bypass the control.
5
Test it with a real bill before you rely on it.

Approving in practice

Approvals is one queue for every prepared bill, invoice, and journal entry. Each item shows what it is, who prepared it, the coding, and the attached source document, so a decision can be made without opening five screens.

What an approver should actually check:

That the goods or services were genuinely received.
That the amount agrees with the document and with whatever was agreed.
That the coding is sensible — particularly asset versus expense.
That the vendor is one you recognise, especially for a first payment.

Common questions

Can the person who entered a bill approve it?

Policy can allow it, but it defeats the purpose. Configure the matrix so preparer and approver must differ for anything above your threshold — if your team is too small for that, have the owner approve, which is the honest answer for a small business.

What happens to an approved bill?

It posts to the ledger and becomes payable. Approval is authorization to owe; paying it is a separate step with its own controls.