In this guide 6 sections
An approval matrix is a table that says who may approve which request, up to what amount, in which category and branch. Add a substitute for every approver, a time limit for each pending request and a rule for rejections. Fill it in on one page before configuring any software.
What the matrix must say
A good matrix answers one question: who signs this request? It names a role and not a person, so it survives resignations, transfers and the long leave that nobody planned for. Add a version number and an effective date in the header, so nobody quotes last year’s limits to a vendor or a branch accountant.
Write one row per combination that matters. Travel claims, vendor payments, purchase orders and leave applications carry different risks. One limit cannot cover them.
Keep it to a single page. Three pages of footnotes mean the rules are not agreed.
- Request type, such as purchase order or expense claim
- Amount band from and to
- Approver role at each band
- Branch or department it applies to
- Substitute role when the approver is away
Set limits by role and category
Start with category, then amount. A branch manager may approve stationery up to a modest sum but not a vendor advance of the same size, because risk differs even when the number is equal.
Choose bands that match real spending. Pull last year’s requests, sort them by value and look for the natural breaks in the list, where one cluster of spending ends and the next begins. Bands that nobody ever reaches add steps without adding control. A sales head who approves discounts, a plant manager who approves spares and a finance head who releases payments will each need their own column of limits.
Decide whether limits apply per request or cumulatively. Splitting one purchase into three smaller ones is a familiar workaround, so many firms add a monthly cap per vendor.
Branches, substitutes and leave
Each branch needs its own first approver but may share the next level up, so mark which rows stay local and which go straight to head office. Do not forget shared services. A single accounts team may process invoices for six branches, but the approver should still belong to the branch that ordered the goods.
Name a substitute for every approver. When the finance head is on leave, the request moves to the deputy at the same limit. Record the dates of the substitution.
Forbid self approval. If the approver is also the requester, the request jumps to the next role. This one rule closes a surprising number of gaps.
Rejections and requests nobody opens
A rejection needs a written reason. The requester then edits and resubmits, or withdraws. Decide whether a resubmission returns to the same approver or restarts the chain. A clear reason lets the requester fix the file in one go.
Unopened requests are the silent failure. Put a clock on each stage, such as two working days, send a reminder, and after that escalate to the next approver or the approver’s manager.
Write the escalation rule beside each row. Without it, a purchase order waits in someone’s inbox for a week. Auto-return stops dead requests from cluttering the dashboard and tells the requester to resubmit with fresh quotes if prices have moved.
- Reminder after one working day
- Escalation after two working days
- Auto-return to requester after ten days
- Reason mandatory on every rejection
Test the matrix before you automate it
Take ten real requests from last month and walk each through the table on paper. Does every one land on exactly one approver, with a substitute named for the day it was raised? If two roles could sign, tighten the bands.
Show the draft to the approvers themselves, including the plant manager, the sales head and the branch accountant who will live with the limits every week. They will spot limits that are too low to be practical. Ask each one to find the row where they would be stuck.
Get the director’s signature and date. Store it where the workflow tool’s administrator can read it.
Approval matrix template
A single page table whose columns are request type, branch, amount from, amount to, first approver role, second approver role, substitute, reminder days and escalation days. Below it sit three small blocks for self approval, rejection rules and the director’s signature.
Open a blank worksheet to printQuestions owners ask
Should the matrix name people or roles?
Roles. People change jobs. Names go stale. Keep a separate list that maps each role to the current holder and the substitute. The role list should be reviewed whenever someone joins, leaves or changes branch.
How many approval levels are too many?
More than three levels for ordinary spending usually slows work without adding control. Reserve extra levels for large or unusual requests such as capital purchases.
What if the director is the requester?
Route it to another director or to the board member named in your rules. The matrix should never leave the top requester with no one to approve.
Can the matrix change mid year?
Yes, with a dated revision and a signature. Keep old versions so you can show which rule applied to any request raised under it.