GuideHow to design an invoice approval workflow
A good invoice approval workflow pays the right suppliers the right amount, on time, with a clear record of who agreed. This guide covers how to set approval limits and routes, separate duties, match invoices to orders and deliveries, and handle the exceptions.
What an invoice approval workflow must achieve
An invoice approval workflow is the set of steps an invoice goes through between arriving and being released for payment. Whatever tools you use, it has four jobs:
- Confirm the invoice is genuine: from a known supplier, not a duplicate, with the right bank details.
- Confirm you owe the money: the goods or services were ordered and received.
- Get the right person to agree: someone with the authority to commit that amount for that budget.
- Leave evidence: a record an auditor can follow without asking anyone.
Before drawing any routes, map how invoices arrive today (post, e-mail, supplier portals), who touches them and where they wait. The waiting points are usually where the design needs most work.
Approval limits and routes
Approval limits say who may approve how much. They normally come from your financial delegation policy, so start there rather than inventing new levels for the workflow. Set the actual values with your finance director; they depend on your organisation's size and risk appetite.
Build a delegation matrix
A simple table answers most routing questions. List each approval level down the side and the factors that change the route across the top:
- Value: the invoice total, or the order total it relates to.
- Cost centre or budget: who owns the spend.
- Category: some spend, such as IT, property or legal, may need a specialist reviewer.
- Supplier status: a new supplier, or one with recently changed bank details, may need an extra check.
- Order status: an invoice matched to an approved order needs less than one with no order.
Route to roles, not people
Assign each step to a role such as "budget holder, marketing" rather than a named person. When someone is away or leaves, you change who holds the role, not the workflow. Decide in advance who covers absences, and whether a deputy may approve at the same level.
Keep the number of steps small
Every extra approver adds delay and spreads responsibility thin. If an invoice already matches an order that was properly approved, the order approval may be enough, with finance checking the match. Reserve extra steps for higher values, unusual categories and exceptions.
Segregation of duties
Segregation of duties means no single person can complete a payment from start to finish on their own. It reduces the chance of fraud and of honest mistakes going unnoticed. In an invoice workflow, keep these tasks with different people:
- Setting up a supplier or changing its bank details
- Raising the purchase order
- Confirming the goods or services were received
- Approving the invoice
- Releasing the payment run
In a small team you may not be able to separate every pair. Where one person does two of these tasks, add a review by someone else, for example a second check on any change to supplier bank details. Our page on supplier onboarding and bank detail change control describes one way to do that.
The workflow should stop the same user approving an invoice they raised, rather than relying on people to notice.
Matching to purchase orders and goods received
Matching compares the invoice with the documents that prove you owe the money. There are three common levels:
| Match type | What is compared | Typical use |
|---|---|---|
| No order | The invoice on its own, approved by the budget holder | Utilities, subscriptions, one-off services |
| Two-way match | Invoice against the purchase order: supplier, items, prices, quantities | Services where there is no delivery to record |
| Three-way match | Invoice against the purchase order and the goods received or delivery note | Physical goods and stock |
Decide which level applies to which spend, and write down your tolerances: how far the invoice may differ from the order before it becomes an exception. Agree these values with finance, and consider separate tolerances for price and quantity. Make sure the person who records goods received is not the person who approves the invoice.
Invoices with no order
Some spend will never have an order. Give these invoices their own route to the budget holder, and review regularly which suppliers appear there. A supplier that is invoiced every month without an order may be a candidate for a standing order or contract.
Handling exceptions
Most of the effort in accounts payable goes into the invoices that do not fit. Design the exception routes as carefully as the main route.
Name each exception
Price difference, quantity difference, no matching order, possible duplicate, unknown supplier, changed bank details, missing goods received note.
Give each one an owner
Price differences may go to the buyer, missing receipts to the person who ordered, bank detail changes to a finance controller.
Put the documents in front of them
The invoice, order and delivery note should be on the same screen, so nobody has to search.
Record the outcome
Approve with a reason, request a credit note, reject back to the supplier or put on hold. Each choice should leave a note.
Watch the age
Set reminders and escalation so exceptions do not sit until the supplier chases.
The audit trail
An auditor, or a finance manager investigating a query, should be able to open any invoice and see its whole story without asking anyone. Record:
- When and how the invoice arrived, and the original image or file
- Any changes to the data read from it, with who made them
- The order and delivery documents it was matched to
- Every approval, rejection and exception decision, with the person, time and comment
- When it was exported for payment
Keep the trail with the invoice for as long as you keep the invoice itself. Our guide on creating a document retention schedule explains how to set that period.
Common mistakes
- Copying the paper process. Moving a slow route onto screens keeps it slow. Remove steps that add no check.
- Approvals by e-mail. "Looks fine" in an inbox is hard to find later and easy to forge. Keep decisions inside the workflow.
- Named approvers. Routes break when people go on leave or change jobs.
- No duplicate check. The same invoice can arrive by post and e-mail. Check supplier, invoice number and amount before approval.
- Bank details changed on request. Treat any change as an exception that needs independent verification.
- No tolerance rules. Without them, either every penny becomes an exception or real differences slip through.
- No owner for the process. Somebody should review exceptions and delays regularly and adjust the routes.
How DocView can run your invoice approval workflow
Dev Soft UK designs and builds invoice approval workflows with our own products. DocView Capture scans or imports invoices, reads the fields and line items, checks every value with rules and lookups, and shows operators only the uncertain or invalid values, with an audit trail of every field change.
DocView Web then runs the approval. Its workflow designer lets you draw routes on a drag-and-drop canvas, with decision points such as sending orders above a set value to a director, and steps assigned to a user or role with Approve, Reject or your own actions. Purchase orders go through first and second approval, invoices are matched against orders and delivery notes, and differences become tasks for the right person with the document open on the same screen. New suppliers can have an approval step before they are used, and each document keeps a history of what happened to it.
We configure the routes, limits and exception owners from your delegation matrix, and where your process needs a step the products do not cover, we build it.
Invoice approval workflow: questions
What is an invoice approval workflow?
It is the series of checks and approvals a supplier invoice passes through before it is paid: confirming it is genuine, matching it to what was ordered and received, getting agreement from someone with authority, and recording each decision.
What approval limits should we set?
That depends on your organisation, so take the levels from your financial delegation policy and agree the values with your finance director. The workflow should apply whatever limits you set, and make them easy to change.
What is the difference between two-way and three-way matching?
Two-way matching compares the invoice with the purchase order. Three-way matching also compares it with the record of goods received, so you only pay for what actually arrived.
How do we handle invoices without a purchase order?
Give them their own route to the budget holder for the cost centre, record the reason, and review regularly which suppliers invoice without orders.
Is DocView an off-the-shelf invoice approval product?
No. DocView Capture and DocView Web provide capture, workflow, purchase orders and invoice verification, and Dev Soft UK configures them for your routes and limits, building extra steps where your process needs them.
Talk to us about your invoice approvals
Send us your current approval route and delegation limits. We will show you how it could run in DocView.