What is an approval workflow?

An approval workflow defines the sequence of authorizations required before transactions are processed, specifying who approves what at which dollar levels. For professional service firms, approval workflows ensure appropriate oversight of spending, billing, and other financial transactions while enabling efficient processing.

Key characteristics

• Defines required authorizations

• Specifies approval levels by amount

• Ensures appropriate oversight

• Enables efficient processing

• Part of internal controls

• Should be documented and enforced

Why it matters for professional service firms

Approval workflows prevent unauthorized transactions and ensure appropriate oversight without creating bottlenecks. Professional service firms should define approval workflows for expenses, vendor payments, billing adjustments, and other significant transactions. Good workflows balance control with efficiency.

Real-world example

Brian's firm had no defined approvals; anyone could submit expenses or approve invoices. Implementing an approval workflow: expenses under $500 require manager approval; $500 to $2500 require director approval; over $2500 require partner approval. Vendor invoices: under $5K, controller; over $5K, CFO. Billing adjustments: Any credit requires partner approval. Workflow configured in the accounting system with automatic routing. Result: unauthorized expense submission caught (employee submitted a personal expense, flagged by the new workflow), processing time improved through clear routing, and audit noted strengthened controls.