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How to establish a Delegation of Authority policy and stick to it effortlessly

September 8, 2021

Many companies and organisations have a Delegation of Authority policy in place. In terms of accounts payable it specifies who approves what: amount thresholds, expenses by departments, and so on. Depending on the size of the organisation and its budget, delegation of authority can entail quite complex approval procedures, especially for large amounts that have to be approved at all levels: from a line manager to the CEO.

Implementing this policy and organising it appropriately can be quite time-consuming, but it does reduce risks in the long run.

How to establish delegation of authority for expenditure approval

Here are a few tips to get you started with your Delegation of Authority matrix:

  • Define all the authorisation levels your organisation has (e.g. line managers, department heads, CFO, CEO)
  • Define amount thresholds for each level (e.g. all invoices under 200 only need the line manager’s approval; invoices up to 500 are to be approved by the line manager, the department head and the CFO, etc.)
  • Define what kind of expenses get approved by which department
  • Define what kind of expenses (if any) need more than one person’s approval at any level (e.g. if several departments are in charge of expenses related to one particular project)
  • Document everything in a table or a flow chart
  • Communicate the newly introduced policy to all involved employees

How to implement your Delegation of Authority policy efficiently

When your Delegation of Authority policy is ready and all approvers are aware of it, you need to find a way to make it work properly and efficiently. It’s one thing to make sure everyone knows what they have to approve in which order, it’s quite another to  organise this process properly.

When you rely on paper documents, things can only progress if the responsible approvers are actually in the office. Plus, papers get lost easily, nobody likes carrying them around, and for a company with distributed offices or in WFH scenarios a paper-based process is simply not feasible.

Although email approvals do have their advantages over paper, someone still needs to route the documents according to the approval matrix, chase approvers, and take care of sorting and filing throughout the process.

Get an approval automation tool

Consequently, the best solution for organising the authorisation process is to opt for an approval automation tool such as ApprovalMax. If you’re using Xero or QuickBooks Online, you only need to connect to ApprovalMax and set up an approval matrix there that’s in accordance with your Delegation of Authority policy to have everything run like clockwork without manual interventions.

Approvers get automated notifications when there’s a document waiting for their decision, and they can even use a mobile app to approve while on the go.

In ApprovalMax, you can set up a multi-level multi-role process based on criteria from the general ledger. It’s surprisingly easy to tailor an approval workflow of any complexity with multiple approval levels and multiple roles at each one to suit your requirements. Of course you can also set up a simpler workflow – whatever your Delegation of Authority policy calls for.

ApprovalMax easily automates your Delegation of Authority policy, no matter how complex it is. It also enables advanced spend control with the possibility to match bills to purchase orders and monitor spend in progress with budget checking and accrual reports.

Why leave it there?

To start your free 30-day ApprovalMax trial

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