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Streamlining Your Payment Process: An Introduction to Payment Approval Workflows

Carissa Tan
Carissa Tan
January 10, 2023
Streamlining Your Payment Process: An Introduction to Payment Approval Workflows

Streamlining Your Payment Process: An Introduction to Payment Approval Workflows

Payment approval workflows are processes that organisations use to ensure payments made to vendors or employees are properly authorised and comply with company policies. These workflows typically involve several steps, including:

  1. Initiating a payment request: The first step in a payment approval workflow is to initiate a request for payment. This may be done by an employee or vendor who has provided goods or services to the organisation.
  1. Reviewing and approving the request: The payment request is then reviewed by one or more authorised individuals within the organisation, such as a manager or an accounts payable clerk. They will ensure that the payment is in accordance with company policies and that all required documentation is included.
  1. Processing the payment: Once the payment request has been approved, it is processed by the organisation's finance department. This may involve generating an invoice, or initiating an electronic payment.
  1. Reconciling the payment: After the payment has been made, it is important to reconcile the payment to ensure that it was made correctly and that all necessary documentation is properly filed.

To use payment approval workflows effectively, it is important to establish clear policies and procedures for initiating and approving payment requests. It is also important to ensure that all employees and vendors involved in the process are properly trained on your selected process and have access to the necessary resources and tools.  

Here is an example of a payment approval policy that an organisation might use:

  1. All Payment requests must be uploaded into the company’s online portal
  1. Payment requests must include the vendor’s name, amount being requested and reason for payment
  1. Payment requests must be reviewed and approved by the employer’s manager and the accounts payable department
  1. Any payment request over $1,000 must be reviewed and approved by the CFO

By following a well-defined payment approval workflow, organisations can ensure that payments are made accurately and in a timely manner, helping to maintain a healthy cashflow whilst fostering good relationships with vendors and employees.

Important scenarios to plan for when building your payment approval workflows:

Now that you’re familiar with what payment approval workflows are, it’s important to also remember to implement a plan for scenarios such as:

  • Team members going on leave: This can cause delays in the approval process, and businesses should have a plan in place for how to handle approvals in the absence of a team member. This can include assigning a temporary replacement, redirecting approvals to another team member or having more than one team member overseeing approvals.

  • Emergency one-off cases that might require expedited approvals: Businesses should have a process in place for handling unexpected or urgent payment approvals that fall outside of the normal workflow. This can include establishing an emergency approval stream or giving certain team members the authority to approve payments outside of the usual process.

  • Conflicting requests: It is possible that different team members or departments may request payment for the same item or service. Businesses should have a clear process in place for resolving these conflicts and determining which payment request should be approved.

  • Fraud Detection: Payment workflows should include mechanism to detect fraud in payment requests and prevent it. Such as ABN and GST validation checks and anti-fraud mechanisms to detect tampering of invoices.  

  • Auditing and Compliance: Businesses should also consider compliance regulations and auditing requirements when building payment approval workflows, to make sure that all transactions are tracked, recorded and auditable.

Where do payment approval workflows live?

You can build payment approval workflows using a dedicated workflow management software, within an ERP system or in an expense management software. Ideally, because they directly relate to business spend, you’d want it to live in the same platform as your accounts payables process.

Bring the A to Zs of your AP process all under one roof with Paytron

Paytron is a powerful payable automation and spend management platform simplifying the way accountants and businesses manage transactions from bill/receipt capture to local and international payments, employee expenses and more.

In one platform, you can manage all bills and receipts, set up approval workflows, execute bill payments, and have an entire view of your business’ cash flow. When you're a Paytron user, you can set up approval policies within Paytron to run automatically so that you don’t have to do the legwork manually. Simply determine the triggers, outline the approval pathways, add in relevant approvers and you’re all set!  

Not a Paytron user yet? Start your free trial today.

Streamlining Your Payment Process: An Introduction to Payment Approval Workflows
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Carissa Tan
January 10, 2023

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