Like many growing businesses, you might be making purchasing decisions reactively when you could be using an approval process to enable smarter choices. The purchase approval process functions as a structured framework that sits between "we need this" and "money's out the door." This control determines whether spending aligns with your budget, protects cash reserves, and prevents unauthorized expenses from draining working capital.
You might worry about adding "one more process" to your already busy day. But here's the thing: when properly implemented, approval workflows actually help eliminate chaos. You'll no longer have to chase email approvals while vendor discounts expire or watch cash disappear without oversight. Continue reading to learn how to build an efficient purchase approval process.
What is the purchase approval process?
The purchase approval process serves as your checkpoint between identifying a need and money leaving your account. It provides a systematic way to review and authorize spending before cash flows out. This control mechanism keeps every purchase aligned with your budget and cash strategy.
Without this system, requests bounce around email threads, details vanish into Slack conversations, and you discover the spend only when invoices show up. Manual processes create these visibility gaps that leave cash flow vulnerable to surprise hits.
The purchase approval process framework centers on three key roles working together:
The requestor identifies the need and submits the purchase request with supporting details
The approver(s) review the request against budget availability, necessity, and timing
The approval rules determine routing. Your manager might handle anything under $1,000 while the CFO signs off on amounts above that threshold
Think of these thresholds like financial quality control. They establish risk-based controls that match spending authority to budget responsibility. The same rigor you apply to product checks now guards your cash, preventing unauthorized expenses and keeping every dollar working toward your business goals.
Key steps of the purchase approval workflow
Your approval workflow controls every dollar leaving your accounts, from the moment someone says "we need this" to when payment hits the vendor. The basic sequence remains consistent across all businesses: submit, review, approve, record.
You'll customize that flow based on your risk tolerance and decision speed requirements, but every solid system ensures requests remain visible, decisions traceable, and data flows back to finance.
The 3 approval workflow types
Most approval workflows fall into three categories, each designed for different business needs and risk profiles.
Linear workflows route requests through approvers one after another. This works well for high-value purchases that deserve layered scrutiny. Your CFO reviews after the department head signs off. The downside exists when one approver goes out of office, causing everything to stall.
Parallel workflows send the same request to multiple reviewers simultaneously. Finance, IT, and Legal can all weigh in at once, cutting days off the approval cycle without sacrificing oversight. This approach works particularly well for routine purchases that need cross-functional input but don't require sequential escalation.
Conditional workflows use rules to decide who sees what. A $300 office supply order might stop at the team lead, while a $7,500 software contract jumps straight to the CFO. This keeps friction low for everyday purchases while tightening control when dollars or risk increase. Most growing businesses find conditional routing gives them the best balance of speed and control.
The P2P final check: three-way matching
Once a purchase gets approved and the vendor invoice arrives, close the loop with three-way matching. Compare the purchase order you approved, the goods receipt you logged, and the supplier's invoice. When quantity, price, and terms align, you pay. When they don't, the mismatch flags duplicate invoices, price changes, or short shipments before cash leaves your account. This final checkpoint turns an efficient workflow into bulletproof spend control.
The benefits of automation
When you swap email chains and spreadsheets for an automated workflow, you're not just upgrading software. You're giving your cash complete line of sight. The transformation touches every part of your spending control.
Automated systems check budget availability and flag out-of-policy requests before anyone clicks "buy." Instead of discovering overruns at month-end, you see potential problems in real time. This shift from reactive cleanup to proactive cash management means finance actually controls spending instead of just tracking it after the fact.
Every approval gets time-stamped, documented, and stored in one place. That complete record satisfies internal reviews and makes the audit season far less painful. Dashboards update the moment someone submits, approves, or holds a request. This allows you to spot budget pressure points, monitor vendor commitments, and course-correct before cash flow gets tight.
Automation routes each request to the right approver instantly, shaving days off cycle times. The result provides the same oversight with zero gridlock.
How to design the approval matrix
Think of the approval matrix as your business's spending traffic-light system. It tells everyone when to stop, when to yield, and when to cruise through without slowing down. Without it, requests bounce around inboxes or the CFO gets dragged into $200 office-supply buys. The goal is to give every purchase the right level of scrutiny and keep cash moving where it creates value.
Set clear rules and thresholds
Start by mapping authority to both the size of the spend and the risk it carries. A common model puts routine purchases under $500 with the department manager, while mid-range requests between $500 and $5,000 escalate to a director. Anything above that lands on the CFO's desk.
Dollar limits aren't the only trigger. A new SaaS subscription might always route through IT, while a legal contract goes straight to your attorney, regardless of price. Conditional rules like these are easy to formalize in an approval matrix and prevent one-size-fits-all bottlenecks.
Bake in service-level agreements too. If a manager hasn't responded within 24 hours, the request auto-escalates.
Standardization and documentation
Great rules fail when information arrives in five different formats. Require every request to use the same digital form with description, amount, budget code, supporting quote, and desired delivery date.
Templates help too. If your team reorders packaging every month, pre-fill the vendor details and default cost center. Repeatable controls like these cut data-entry errors and strengthen audit trails.
Document the finished matrix where everyone can find it. Tools designed for approvals store the rules alongside the workflow so requestors always know exactly who needs to sign off and why. When your policy lives where the work happens, compliance turns from a guessing game into a habit.
Automate your approval workflow today
Manual approval processes drain hours, hide context, and let unauthorized spending slip through. When requests sit in inboxes, projects wait and vendors wonder. Most growing businesses know this reality too well. Without clear approval workflows, you're left guessing at your true cash position while committed expenses remain invisible until they hit your account.
Automating approvals transforms this uncertainty into clarity. Rules check budgets upfront, alerts keep decisions moving, and dashboards show exactly what you've committed versus what remains available. Integrated platforms like Relay combine approvals, payments, and multi-account banking into one place, giving you real-time visibility into your complete financial position.
Ready to control spending without slowing down your team? Put your approval matrix into action with a tool designed specifically for growing businesses where control and speed work together, not against each other. Try Relay today.
Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.
