If your business has an expense policy, you also need to consider the process for approving expenses. Having an employee’s direct manager approve everything is simple, but it can lead to “rubber stamp” reviews, wasteful spending, and inconsistency across teams and departments. It can also silo expenses and result in unnecessary or duplicate purchases. Your approval process should align with your business needs. Larger companies tend to have complex, multi-level approval processes, while smaller companies tend to be simpler. Here are a few considerations to keep in mind as you finalize your expense approval process.
1. Auto-approve expenses where it makes sense.
When time-strapped managers have to review a large volume of expenses, the tendency to rubber-stamp them increases. Auto-approving certain expenses reduces the noise and ensures that managers can focus their attention on the ones that actually need a close review. Some companies decide to automatically approve expenses under a certain dollar amount, or certain types of expenses, like office supplies or travel purchased using a centralized booking tool. Be sure to choose expense management software that can be easily customized and that can automatically route expenses based on the rules you specify. You’ll also want automatic auditing to flag possible issues.
2. Customize approval flows to your business needs.
If you’re using modern expense management software, you can also customize your approval flows. You might require multi-level or executive approval for expenses over a certain dollar amount, especially if cash flow is an issue. As your team grows, it might make sense to have certain types of expenses, like software subscriptions or hardware purchases, routed to a central approver to weed out unnecessary duplicates and ensure compliance with policy and preferred vendors. And if you have project managers with budgets that span departments, you’ll need to keep them in the loop to make sure they have the information they need to keep budgets on track.
3. Review and update your approval process regularly.
Be sure to revisit your approval process whenever you have significant organizational changes, or at least twice a year. Are expenses getting approved in a timely manner? Where are the bottlenecks, and what can you do to reduce them? Are approvers seeing the expenses they need to see, but not the ones they don’t? Are they getting all the information they need to make decisions? Have any new issues bubbled up that need to be addressed?
To the point
Top performers ensure that approvers see the expenses they need to review—no more and no less. The goal here is to empower approvers to focus on the expenses that matter to them so transactions don’t get lost in the clutter. Your expense management system should automatically flag anomalies or potential issues to approvers, like missing receipts or expenses that exceed policy limits. It should also make it easy for the approver to request more information.
Choosing a tool that automatically routes individual expenses to different reviewers ensures that each approver sees only the expenses that are relevant to them. It also supports mobile approvals, which streamlines the process and prevents delays.
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