What is an approval matrix? A guide

Published on May 16, 2022

Strict workplace hierarchies are on their way out. Long gone are the days where a single manager holds the power to force employees to work overtime or manipulate company finances.

Instead, the corporate world has shifted towards flat team structures and employee empowerment.

While it’s led to a boost in worker morale, senior leaders now realize that they may need to set clearer expectations and help employees make the right decisions. And there are still plenty of cases where hierarchies prove necessary.

One helpful tool to make this decision process simpler is a good approval matrix. So in this post, you’ll learn where approval matrices fit in your business, and how to overcome the most common challenges in implementing an approval authority matrix.

What is an approval matrix?

An approval matrix sets out the key authorities in any decision-making process, and the bases on which they make decisions. It typically follows an “if x then y” structure in order to create clear rules.

This removes the emotional decision making that often occurs in times of stress, reduces mistakes, and creates responsibility and ownership within the organization.

Why use an approval matrix?

You want team members to feel empowered and move quickly through business challenges. But typically, mutiple personnel are assigned to decision making, based on category and scale.

For example, the CFO may be personally required to approve any transaction over $10,000. There may be a different approver for purchases between $1,000-$10,000, and a different authority still for those less valuable.

Examples of approval matrices

An approval matrix can theoretically be applied at every level of an organization, and at every level. Here are some examples of approval matrices:

Corporate purchasing
Project approvals
Expense claims
Business travel
Content process
Contract documents

Corporate purchasing

A corporate purchasing approval matrix refers to decisions made around vendors, the procurement process, and purchase orders. When your product team needs to purchase key supplies, they should know who approves the transaction and what documentation is required.

Project approvals

A project approval matrix will set a hierarchy, as well as rules, to help determine the business strategy. Encompassing the big picture and long term plan, a project approvals matrix can aid a supervisor in making decisions that align with the overall direction of the business.

Expense claims

Expense claims are part of every business. But these days, employees are increasingly getting away with errors and maverick spend. With an approval matrix, there's a lower chance of unexplained expenses being approved, and employees can access company purchasing cards to reduce the time it takes to reimburse personal spending.

Business travel

Business travel for events and conferences incurs costs, and leaders need to justify these expenses. An approval matrix may also be used to determine the necessity of attendance, based on potential business gain.

T&E expenses may also be cleaned up by undergoing an approval matrix. Clearly show employees how and when to claim costs, and you reduce wasted time and money.

Content process

Marketing teams may benefit from creating an approval matrix for content systems. First, determine the stages of the process such as ideation, briefing, creation, editing, publishing. Then create rules around which stages require approval, as well as the person who should take on on each role.

Contract documents

The legal team may also benefit from an approval matrix, especially when involved with contract signing and documentation. It ensures that due process occurs and can condense the timeline, since documentation such as a vendor contract can move through the matrix easily.

Moreover, other employees won't be familiar with legal processes and principles. So a public approval matrix helps them work with suppliers and partners more effectively.

Spend approval authority

Let’s say your company creates an approval matrix for business purchases and expenses. Who is responsible for approving each request?

Typically, this can depend on the category of expense, as well as the amount. For example, expenses below a specified amount may not require approval and are automatically authorized. Expenses higher than that amount, but lower than another threshold, may require their green light from their manager.

Passing a higher threshold may require a department head's consent, while more excessive expenses require the direct approval of a CFO or CMO.

Approval matrix challenges

There are several common challenges for companies to implement approval matrices. First, without transparency around the decision-making authority, the process can become slow and arduous. This often makes employees frustrated with the process, and has the potential to drive maverick spend (as well as unhappy stakeholders).

Requests can easily get lost when approval matrices lack a central location. They get buried in email threads, or lead to awkward conversations.

A scattered flow of information makes the finance department's work so much slower than it needs to be.

Scaling your approval matrix

While businesses can find ways to get around these other issues, they often find that approvals tend to become a bottleneck in times of growth. During scaling periods, the designated approver can become so overwhelmed that they may end up passing the work on to an additional approval person, lengthening the process.

For scaling companies, ensure that every system and business process is properly set up prior to periods of growth. This creates a smooth environment and reduces hurdles to company growth.

How to automate approvals

Fortunately, the solution towards the bottleneck is simple: streamline the process using automation tools. By building these tools into your current systems, the learning curve is finite and new staff can onboard quickly.

With Spendesk, every employee has their own matrix built in. Customizable spending controls (down to the time of day) mean that approvals are tailor-made for each and every member of staff. For those who require it, this means much faster approvals and quicker reactions to any disputes that occur.

As soon as the purchase request is made, the designated manager (or team) is notified and can choose to approve, deny or request further information. An automated expense approval matrix removes the need for long email chains or awkward conversations entirely.

Empower your financial department to control company spending without looking over the shoulders of your employees.

Spend management

Spendesk Team

Spendesk has one goal: to remove the hassle of spending at work.

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Close the books 4x faster, collect over 95% of receipts on time, and get 100% visibility over company spending.

Business spending includes different types of spend:

Strategic spend is usually centralized and managed by C-level executives with dedicated spenders. It can be managed through invoices, wire transfers and purchase orders.
Discretionary and operational spend is also centralized, but spending is done by managers and employees during their daily professional lives. It includes card purchases, subscription payments, digital ads, events, office orders, and business travel.
Expenses, unlike strategic spend, represent a significant amount of small purchases that can be difficult to track. These include card payments, expense claims, team perks, and travel expenses.

Spend management is the process through which companies manage business spending. It takes into account the end-to-end process when someone needs to spend: getting purchase approvals, providing payment methods, submitting and processing invoices, submitting and reimbursing expense claims, chasing receipts and invoices for reconciliation, and assigning the right analytical codes, expense accounts, and VAT rates to all those expenses for bookkeeping.

Spend management tools become necessary when the number of employees increases and the need for clear processes, better visibility and control starts to grow for finance teams.

Employees need flexible, user-friendly tools, in order to spend easily and be empowered to do their job.

That’s when Spendesk can be a good fit.

Spendesk provides payment methods for modern businesses, and a powerful platform for finance teams to manage spending. This includes debit cards to replace old-fashioned company credit cards, virtual cards for online purchases, and automated expense reports for unexpected payments.

For employees
Employees no longer need to spend out-of-pocket. They request funds for a particular purchase, and can use their Spendesk card or virtual card to execute the payment.

If for any reason the employee can’t use their Spendesk card, they snap a picture of the receipt via the Spendesk mobile app and create an expense claim on the spot. This is sent directly to their manager for validation, and on to the finance team.

For finance teams
Each employee has their own Spendesk profile and debit expense card. So unlike the company credit card, you always know who’s spending company money.

The platform lets controllers create spending limits and pre-approvals. C-Level executives or managers will have a different level of pre-approved spend from other staff. Should a team member need to go over their pre-approved budget, they can make a request to their manager via the mobile app or the platform online.

When an expense is made with a Spendesk card, the employee simply snaps a picture of the receipt at the time of purchase. Which means no more lost receipts.

Finance teams can see real-time company spend and follow up on missing receipts or invoices by sending reminders to employees via the platform.

Reviewing expenses is also easier as finance teams can group expenses and assign them the right VAT rates and expense accounts before exporting everything easily to their accounting tools.

Spendesk streamlines the whole business spending process, making spend management intuitive, simple and efficient.