Short answer: an invoice approval workflow is the fixed route a supplier invoice takes before it is booked and paid: who must agree to it, in what order, and what happens if they say no. For a small business, two or three rules usually cover it: the budget holder approves everything, a second person approves anything above a set amount, and nobody approves an invoice they entered themselves or will pay. Approvals should happen where the invoice sits, so there is a record of who approved what and when.
What an approval workflow is for
Approval answers one question: do we agree to pay this? It is different from invoice verification, which asks whether the invoice is correct and genuine. Verification comes first, so the approver sees the result of the checks before saying yes.
Without a defined workflow, approval tends to happen by habit. The owner glances at a pile of PDFs, someone forwards an invoice with "ok to pay?", and a reply of "yes" in a long email thread is the only evidence. That works until an invoice is paid twice, a supplier's bank details are changed by a fraudster, or the auditor asks who signed off a large bill.
A workflow fixes three things in advance:
- Who approves, based on facts on the invoice rather than on who is in the office.
- In what order, if more than one person has to agree.
- What happens on a no: the invoice goes back with a reason, and nothing is booked or paid in the meantime.
The building blocks
Approvers, levels and approval groups
An approver is a person allowed to say yes. A level is one step in the route: level one must approve before level two can. An approval group is a set of people who can act at the same level, for example any of three directors, so that one person on holiday does not stop every invoice.
Some accounting software lets you require more than one member of a group. QuickBooks Online Advanced, for example, lets you choose one or more approvers, set their order and specify the minimum number of approvers needed before a transaction can proceed.
Rules that decide the route
The route should follow from what is on the invoice. The usual triggers:
| Rule | Example | Why |
|---|---|---|
| Amount | Over 2,000 needs a second approver | Larger amounts get a second pair of eyes |
| Supplier | Any new supplier needs the finance lead | New suppliers are where fake invoices and wrong bank details appear |
| Cost centre or project | Site costs go to the site manager first | The person who ordered knows whether it arrived |
| Account | Capital items go to a director | Coding and budget decisions belong to one person |
| Who entered it | The person who entered it cannot approve it | Keeps entering and approving separate |
Start with amount and new supplier. Every extra rule is another place for an invoice to wait.
Separation of duties
The core control is simple: the person who enters an invoice, the person who approves it and the person who releases the payment should not all be the same person. In a firm with two or three people in finance that is achievable. In a business with one bookkeeper and an owner, the practical version is: the bookkeeper enters and prepares payments, the owner approves the invoices and releases the payment run, and changes to a supplier's bank details are confirmed by phone on a number already on file before anyone pays.
How to set one up, step by step
- List who can spend money. Owners, managers, anyone who orders from suppliers. These are your candidate approvers.
- Pick your thresholds. Look at last year's bills. If most are under 500 and a few are over 5,000, a single threshold around 2,000 to 5,000 often catches the invoices that matter without slowing the rest.
- Decide the levels. One level for most small businesses. Two where the person who ordered is not the person who controls the budget. Three only for larger organisations with departments.
- Name a back-up for every approver, or use an approval group. An invoice should never wait for one specific person.
- Set a response time. For example, two working days. Anything older is chased, so suppliers are not paid late because an approval sat in someone's inbox.
- Define the "no". A rejection needs a reason, goes back to the person who entered it, and is either corrected, queried with the supplier or cancelled.
- Write it down on one page and review it yearly.
What an approver needs to see
Approvers decide faster, and more carefully, with everything in one place:
- the original invoice next to the data that was read from it
- the coding (account, tax code, cost centre) the bill will be booked with
- the result of the checks: duplicate warning, new supplier, bank details different from last time
- comments and questions from colleagues, attached to the invoice, not in a separate email thread
- for anything ordered, a note from the person who confirmed delivery (see three-way matching if you use purchase orders)
A worked example
A small building contractor receives about 120 supplier invoices a month. Its rules:
| Invoice | Level 1 | Level 2 |
|---|---|---|
| Site materials, any amount | Site manager (confirms delivery) | Finance lead, if over 3,000 |
| Office and overheads, up to 3,000 | Office manager | None |
| Anything over 3,000 not for a site | Finance lead | Managing director |
| New supplier, any amount | Finance lead | Normal route after that |
A materials invoice for 4,850 arrives. The site manager confirms that the 40 bags of cement and the steel mesh were delivered, then approves at level one. Because it is over 3,000, it moves to the finance lead, who sees the original invoice, the coding to the project and a note that the supplier and bank details match the last invoice. She approves, the bill is registered, and both approvals are recorded with name and time.
An invoice for 380 from a supplier nobody has used before goes to the finance lead first. She checks the VAT number and calls the supplier on the number on its website before approving. A day later, an invoice for 1,200 arrives with the same number and amount as one already booked. It is flagged as a possible duplicate before anyone approves it (see how to detect and prevent duplicate invoices).
How accounting software handles approvals
Built-in approval features vary by product and plan, so check yours:
- Zoho Books offers approvals per module, including bills: simple approval with one step, multi-level approval with up to 10 levels, and custom approval where criteria decide the approvers.
- QuickBooks Online Advanced has bill approval workflows where you set conditions, choose one or more approvers and their order, and the minimum number of approvals required.
- Xero said in September 2026 that it is building a customisable bill approval workflow with routing by amount, supplier, account code and submitter. Check the current status before you plan around it.
Many firms also approve before the invoice reaches the accounting software at all, in the capture tool, so the ledger only receives bills that have been signed off. For firms running this across many clients, see the multi-client invoice workflow guide.
Common mistakes
- Too many levels. Three approvals on a 60 stationery bill teach people to click approve without looking.
- Approving by email. No reliable record, and easy to fake.
- No back-up approver. Invoices pile up during holidays and suppliers are paid late.
- Approving before checking. The approver should see the duplicate and bank details checks, not run them.
- One rule for every client. A one-person consultancy and a 40-person manufacturer need different routes.
Where Invoreg fits
Invoreg reads every line of a supplier invoice, whether it is a PDF, scan, phone photo or XML e-invoice, suggests coding from the client's history and flags possible duplicates against the workspace and the bills already in the accounting software. Purchase approvals can be switched on per organisation with up to three levels; register stays locked until every level has approved, and each approval is saved in the audit log. Comments, @-tagging and permissions keep questions on the invoice itself. See how to set up approval levels.
Invoreg does not hold purchase orders or goods receipts, so delivery confirmation comes from the approver, and bank details changes still need a phone call. Try it on your own invoices: the first 20 invoices are free.