How to create a financial approval workflow – even if you know nothing about finance
Workflows make the world go round and your financial approval workflow plays a crucial part in keeping the wheels of your business spinning. How fast those wheels turn – and how many times they grind to a halt – will partly depend on whether your payment workflow is fit for purpose.
If you’ve been living the ad-hoc life of many startups and small businesses, this might all be new to you. Or if your organisation has been around a while, you might have a financial approval workflow but it might well make you tear your hair out and shout, “Surely there’s a better way.” We’ve got good news for you: there surely is.
What are approval workflows?
Payment approval workflow is a process by which you can authorize or reject payments. This is done based on the rules that are set up for each employee and the number of times they can approve a particular type of payment.
A payment approval workflow is an automated process that’s built into your accounting software to ensure that all invoices are reviewed by your finance team before they get paid. This ensures that only the right people are able to approve invoices and there’s no risk of making duplicate payments or paying out too much money on an invoice.
Payment approval process flowchart
Here’s how to create a financial approval workflow that keeps your business moving forward – and your sanity in check.
1/Lock in the approval workflow basics
First, the obvious: you’ll want to determine who needs to approve payments in your business. This might be different from the person or department who is actually going to validate and make the payment.
You’ll also need to settle on what levels of approval are required for different kinds of purchases. The invoice for your restaurant’s daily order of bread, for instance, might not need the same checks as the invoice for your construction work on a new premises.
It’s also worth deciding up front what is justifiable criteria for rejection. Be as clear as possible about this to avoid lengthy back-and-forths later, when you might not be able to afford a delay. You don’t want your construction workers to set down their tools for two weeks because an invoice hasn't been cleared.
Most of the time, those approving will be checking for accuracy and problems should be quick to fix – if you have an effective workflow.
How much are you (actually) paying in accounts payable?
Calculate your invoice processing costs with our simulator and discover how much you could be gaining with Libeo.Calculate
2/ Forget the manual payment workflow
It’s exhausting to rely on manual payment workflows for long. You need to check for invoices coming in, sometimes hunting for them in a sea of admin, and send everything across to the relevant stakeholders – and then sit tight, hoping they’ll get back to you in time.
There are often delays, even at the calmest of times. And when one department has an issue with the invoice, and you seek to resolve the problem with the supplier, the process can get chaotic.
Even with accounting software, it’s laborious at best. Your workflow might include a number of helpful tools – reconciliation functions, approval workflow solutions, and a payment hub – but you need to manually push the invoice through the pipeline at each stage. At the end of it all you still end up chasing people for approval, and by the time you’re marking an invoice as paid, damage might already have been done.
Your unautomated system might have carried you this far. But as you grow, you’re risking admin problems, invoices left behind or unmarked, and the seams in your loss prevention system tearing open.
3/ Remove the approvals bottlenecks, the Libeo way
Automation – true automation – can save you a lot of time and heartache. And this kind of financial approval workflow is hardbaked into Libeo.
You can tell Libeo to set a specific payment workflow in place whenever a new supplier comes in. And you only need to do this once.
Then whenever an invoice comes in, it’s automatically sent to those who need to approve it. If Paula in your Manchester HQ needs to approve key invoices only once Alex in your Leeds branch has first taken a look, that can be automated too.
They’ll be notified to click on a link, see the latest invoices to be approved, and they can approve or comment. It’s swift, seamless, and it stops anyone from saying, “I never knew about this.”
It makes it easier and faster to resolve issues if any crop up, so people can have the control they want without feeling the need to micromanage. And if everything is as it should be, Paula can just hit approve and won’t have to worry about it anymore.
This is all part of Libeo’s MO – letting you collate, verify and pay your invoices in one click. All that admin becomes one less thing to worry about, and you can focus your energy on controlling your cash flow, launching a new product or setting up a new premises.
To learn more about invoice payment management, check out what every restaurant owner needs to knowor see why your invoice payment system is more complicated than it should be.
FOLLOW THE PROGRESS OF YOUR CASH COLLECTION
Libeo isn’t only a better way to pay your suppliers, it’s also the best way for you to get paid by your customersGet a demo