How to easily automate expense approval process?

The more complicated your process is, the harder it will be to complete. Keep it simple, design the request form such that it only requires the information that you need, e.g. the cost; the name of supplier; expense account (if known); purchase frequency (recurring or one-time); and any supporting documentation, like invoices.

Next, once the information has been acquired, the purchase request should reach the concerned approvers automatically. At this point, your employees should also be able to know who the request needs to be approved by, even if there are multiple approvals required. To make this process even easier you can adopt the use of virtual cards. These make the system almost entirely automated and provide an extra layer of visibility and security.

For your approval workflow process to flow seamlessly it’s obvious that you need to ensure the stages of approval and their particular approvers must be clearly defined. Without this clarity, it will become difficult for you and your employees to determine who is responsible for what and at which stage. You might then have to manually vet every expense request and process individual requisitions without the help of a blueprint to help direct this process.

Clear directions are especially important in cases where there are multiple approvals required. These approval workflows can easily hit roadblocks if even one of the approvers is unavailable, uninformed, or takes time to process the request. Ensure the stages and approvers are all clearly defined and informed at all times.

You can adopt an automated approval system that has in-built tools and features to help you keep track of all expense requests and approvals in real-time. These systems come pre-equipped with facilities that notify you or the required personnel when a request is submitted in real-time via a push notification.

It also helps you maintain constant visibility over who owns which transaction, what it’s for, who approved it and what the supporting documents are, without having to verify the same through the end of the month reports.

To ensure that expense requests always reach the correct approver you can establish an approval matrix. This involves establishing an automated framework that directs spend requests to the responsible approvers based on the employee making the purchase, spend limits, designations, and reporting flow.

To make it even more flexible, you can design specific approval policies for every department. For instance, you could program a parameter that requires any marketing expense to go through both the marketing head and the CEO, while ancillary expenses can only require approval from the general manager.

As your business grows, you could also introduce finance personnel into your approval workflow. In case you want your CFO or controller to approve any particular expense requests you can program it into your approval matrix as well.

The level of customization that modern approval workflow systems provide can do wonders for you if you’re trying to make your system more efficient. The organizational structure of companies is not universal and therefore neither is the flow of expense requisitions and approvals. Different companies structure their teams and departments differently.

With the help of customization, you can program particular approval workflows depending on exactly how you want the process to play out within your company’s system. You can set inter-departmental approvers for particular spend types and workflows that fall into particular categories. For example, you could include a finance person as an approver for your marketing department’s ad expenditure when it is to be made in the domain of Google or social media ads.

This is arguably the most obvious box you’ll need to tick if you’re trying to make your multi-level pre-approval process more efficient. You must ensure that spend requests are as easy to approve or deny as they are to make. The more you complicate the process the harder it will be for your employees to complete it with speed and perfection.

It becomes especially easy if you’re using a spend management system that automates this process. These platforms send notifications or emails in real-time and only require a few clicks to approve, deny or forward the approval as required.

You can preset certain approvals for subscriptions or recurring payments. For example, if you have a subscription payment owed monthly to a vendor who supplies raw materials regularly. You can specify the amount, renewal frequency, payee, and payment time from before and set it as a recurring payment. The expense approval system will automatically make the payments as per your specified parameters. 

This not only saves time and effort that you would have otherwise had to give on a monthly basis, but it also ensures the workflow is uninterrupted. You can also use virtual cards to be blocked before a particular date to prevent auto-renewal of said subscriptions.

Establishing audit trails with paper-based, traditional approval workflows was labor-intensive given the amount of digging that could have been required. Instead, you can boost efficiency with multi-level approvals with spend management tools that make document collection and storage easy. 

These systems make it easy to access information needed to conduct internal and external reviews. They keep your company prepared and equipped in the face of reviews by establishing clear and solid audit trails.

How well you define your workflow will determine how easy it is to navigate. Your expense approval process should have clearly defined categories for workflow types. You can customize your workflow as much as you want but keep in mind that you should have clearly stated policies and guidelines that help your employees navigate the system. These policies should include definitive guidelines in cases of:

- Multiple stages: You should have definitive stages that explain what needs to be done at which point in the approval cycle, who to approach when etc. It’s important to have clearly defined stages to avoid confusion regarding the direction of the approval workflow.

- Multiple approvers: Employees submitting a requisition, as well as the approval gatekeepers, need to be aware of who needs to approve what. Expenses that require multiple approvals can be easily delayed. To prevent this, clearly define who the approver at each stage is.

- Hierarchy in case of multiple approvers: Again, the need for multiple approvers can also be marred by confusion regarding approver hierarchy. You must designate approvers at each level of expense, determine whose sanction is needed to approve which kinds of expense and who holds veto powers.

- Process types; linear and nonlinear: Not all approval workflows work the same way. Some processes, for example, budget approvals, require a nonlinear process wherein multiple steps or tasks have to be completed before a budget can be approved. Linear workflows, for example, expense reimbursements, are much more straightforward, a reimbursement request is submitted which is then either approved or not, depending on company policy. If you approve workflows, clearly define which processes are linear and which aren’t.

- Submission and approvals: Lastly, clearly outline which processes in the company need approvals in the first place. Once you’ve determined which processes need to be approved also define what supporting documents, e.g. forms, invoices, receipts, etc., need to be submitted for that approval workflow to initiate.