In a company of ten or thirty people, invoice approval usually grows by habit. The managing director signs everything, or nobody is quite sure who signs what, and invoices travel by email until someone remembers them. It works until the director goes on holiday, and then a supplier calls about a payment that is three weeks late.
This article describes a light setup that a small company can introduce in about a week, with no new software: signing limits, stand-ins and one number to track.
What goes wrong without rules
The usual problems are simple:
- One bottleneck. Every invoice waits for the same person, so the queue grows exactly when that person is busy or away.
- Unclear ownership. The invoice arrives at a general mailbox, and each person assumes someone else has it.
- No stand-in. During a holiday or illness approvals stop, or someone signs on behalf of a colleague informally.
- The same person orders and approves. This is convenient, but it removes the one check that would catch a mistake or a duplicate.
- Nobody knows how long it takes. Without a measurement, "we are slow with invoices" stays a feeling.
Step 1: write the signing limits on one page
Make a table with three columns: the amount range, who approves, and who covers in their absence. The ranges depend on your company, so treat the example below as an illustration only.
| Amount per invoice | Approves | Stand-in |
|---|---|---|
| Up to a small limit | Budget owner (the manager of the team that ordered) | Another team manager |
| Medium | Head of operations or finance | Managing director |
| Above that | Managing director | Second director or owner |
Three details matter more than the numbers:
- Limits apply to the invoice and to the total of one supplier in a month. Otherwise a large order can be split into small invoices that each stay under the limit.
- Recurring invoices such as rent or subscriptions can be approved once for a period, with a check only when the amount changes.
- Everyone named in the table has agreed to it. A limit that the approver does not know about is not a rule.
Step 2: name a stand-in for every approver
Each approver has exactly one named stand-in, and the stand-in has the same rights for the period of absence. Write down how the handover happens: the absent person tells finance, finance routes invoices to the stand-in, and that is all. Avoid the arrangement where the stand-in is "whoever is around", because then nobody feels responsible.
Check the table once against the holiday calendar. If two people in the same row are away in August, you have found a gap before it costs you anything.
Step 3: separate ordering from approving
For small amounts the person who ordered the goods can approve the invoice. For larger amounts, a second person should look at it: does the invoice match the order, was the work delivered, is this the first time we are seeing it? This does not need to be a formal audit. It is one question asked by someone who did not place the order.
If your team is too small to separate the roles everywhere, do it at least above the highest limit, and let the owner or director see a monthly list of invoices that were ordered and approved by the same person.
Step 4: give every invoice one place to wait
Choose one entry point, for example a single invoices mailbox, and one list with these columns: supplier, amount, date received, approver, status and date approved. A shared spreadsheet is enough to begin with. Rules for the list:
- Finance registers every invoice on the day it arrives.
- The approver is filled in at once, according to the table from step 1.
- An invoice that has no status change after three working days is raised by finance with the approver.
For more on how to make a decision when several people are involved, see decision rules for choices where several people sign off.
Step 5: measure one number
Count the calendar days between "received" and "approved". Once a month, take the median and the longest wait from the list. Do not build a dashboard; write two numbers in a note.
How to read them:
- Median is high. The process is slow in general. Look at the limits: too many invoices may be going to too senior a person.
- Median is fine but the longest wait is long. The cause is usually absences or an invoice that nobody owned. Check the stand-in table.
- Numbers jump around. Registration is irregular. Go back to step 4.
Compare the number with your payment terms. If suppliers are paid in 14 days and approval alone takes ten, you have almost no room left.
What to avoid
- Complicated multi-level approval for small amounts. It slows everything and teaches people to find ways around it.
- Informal signing "on behalf of". If a stand-in is needed, name one.
- Changing the table without telling anyone. Send the new version to everyone in it.
- Treating speed as the only goal. A fast approval of a wrong invoice is still a loss; the aim is both short waiting and one real check.
If you are thinking about automating part of this later, the rules above are what an automated tool would need first. The article on approval limits and segregation of duties for an AI agent in accounts payable builds on the same ideas.
Summary
A small company can bring invoice approval under control with a one-page table of limits, a named stand-in for each approver, a second look at larger amounts and one place where invoices wait. Track the days from receipt to approval once a month and review the table twice a year. Start with the table; it takes an hour and shows most of the gaps.
Sources
- Our related articles linked above.
- The limits, the three-day reminder and the monthly measurement are a working practice, not a standard; adapt them to your company, payment terms and legal requirements. Examples are illustrative. No client results or market figures are claimed in this article.
