How to Design an Approval Matrix for Invoices and Purchase Requisitions
Who should approve what, up to which amount? A practical guide to designing an approval matrix that is strict where it matters, fast where it doesn't, and leaves an audit trail.
An approval matrix is a simple idea that is surprisingly easy to get wrong. Make it too loose and anyone can commit the company’s money. Make it too tight and every ₹2,000 invoice waits three days for a director. The goal is a matrix that is strict where the risk is, and fast where it isn’t.
What an Approval Matrix Is
An approval matrix is the rulebook that decides, for every request, who has to approve it and in what order. It is usually built from a few ingredients:
- Amount: the higher the value, the more senior the approver.
- Type of spend: purchase requisitions, invoices, employee claims and petty cash can each follow different paths.
- Department or cost centre: a department head approves their own team’s spend.
- Category: some categories (capital items, services, new vendors) deserve extra scrutiny.
Principles for a Matrix That Works
1. Tie limits to risk, not to hierarchy. A common mistake is to copy the org chart. Instead, ask what a wrong decision costs at each level and set the limits accordingly.
2. Keep the number of levels small. Every extra approver adds days. Most spend should need one approval; only genuinely large or unusual spend should climb higher.
3. Separate who requests from who approves. The person who raises a requisition shouldn’t be the one who approves it, and the person who approves an invoice shouldn’t be the one who releases payment.
4. Check the budget before approval, not after. An approver who can see that a request exceeds the budget makes a better decision than one who finds out at month-end.
5. Let trusted, low-risk invoices through. When an invoice already matches its purchase order and goods receipt, the checks have effectively been done. Auto-approving clean, matched invoices frees approvers for the exceptions that need judgement.
6. Plan for absence. Every approver needs a delegate or backup. Otherwise one leave of absence freezes a whole stream of invoices.
7. Keep a trail. For every decision you should be able to say who approved, what and when. That record is what makes an audit easy and an investigation possible.
Common Mistakes
- Approvals handled by email, with no visibility of what’s pending or with whom.
- Limits that haven’t been revisited since the company was a third of its size.
- One approver for everything, which creates a bottleneck and a single point of failure.
- Different rules for requisitions and invoices, so a purchase is approved at one level and its invoice at another with no link between them.
- Exceptions handled informally (“just send it to me directly”), which is how the matrix is quietly bypassed.
A Simple Starting Structure
You don’t need to design it perfectly on day one. A sensible starting point:
- Low-value, routine spend: approved by the department manager (or auto-approved if matched against a PO and receipt).
- Mid-value spend: department head, plus finance review.
- High-value or unusual spend: finance lead and a senior approver.
- Exceptions (no PO, price difference, new vendor): always routed for review, whatever the value.
Then review the thresholds after a month or two, using real data on where requests are waiting.
How Billacle Handles Approvals
Billacle routes each item by the approval matrix you set up, and trusted invoices can auto-approve. The same matrix covers purchase requisitions, invoices, employee claim reimbursements and petty cash requests. For requisitions and RFQs the budget is checked upfront, and every action is recorded in a full audit trail showing who did what and when. Teams typically start in days, not months: connect the mailbox and ERP, set the matrix and start processing. For more, see our page on approvals and workflow.
Stop Approvals Sitting in Inboxes
A good matrix only works if people can see what’s waiting for them.
Book a free, 30-day pilot and set up your approval matrix on real invoices.
Get in Touch
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