Questions to Ask Before Developing a PO Approval Process
For the finance, accounts payable or operations lead who has to design a purchase order approval workflow and wants to interview the controller, the department heads and the buyers before drawing a single box. The six groups follow the order the design gets decided: what the process is for and which purchases it covers, where the dollar limits sit, who signs at each one, what happens on a rush job or when a signer is away, how an order ties to the budget, the receiving record and the invoice, and how it all gets launched. Some questions are for the people across the table, and some are for you to answer from last year's invoices.
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The questions
Each question, and why to ask it
Scope
What problem is the approval process supposed to fix?
Why ask it
Budgets that get overspent, invoices nobody recognizes, an audit comment and a fraud scare each lead to a different design. Put the question to the controller and to two department heads separately. If they name different problems, settle which one comes first before you draw a single step.
How does a purchase get approved today, and where is that written down?
Why ask it
Ask people to describe the last thing they bought from start to finish, including the email that said 'go ahead' and the yes given in a hallway. That unwritten routine is what the new process replaces, and its speed is what yours will be compared with.
Which purchases will need a purchase order, and which can go without one?
Why ask it
Expect every department to argue for an exemption, so collect the candidates first: rent, utilities, travel, small card purchases, renewals. A short written list of what is exempt holds up better than a general rule about 'routine' spending. Whatever is not on the list needs an order.
How many purchases does the company make in a typical month, and what do most of them cost?
Why ask it
Pull a year of paid invoices and sort them by amount before anyone suggests a limit. If the bulk of them are small, a design that sends every one through three people will be buried within a week of launch.
Does the order have to be approved before the purchase is made, or only before the invoice is paid?
Why ask it
Everything else hangs on this rule. If approval can come after the goods are ordered, what you have built is invoice approval with an extra form. State the rule in one sentence and get the controller to agree to it out loud.
Will services, subscriptions and contracts follow the same steps as physical goods?
Why ask it
A consultant's work never arrives at a loading dock, and software renews without anyone placing an order. Decide how each gets an order and what stands in for a delivery record. A workflow drawn only around boxes arriving will miss this kind of spend.
Where do company cards and expense reports fit, and what keeps them from becoming the way around a PO?
Why ask it
People take the fastest route, so a card with a high limit quietly replaces a slow approval. Find out what the card limits are now and who reviews the statements. Then decide which purchases a card may be used for and say so in the same document as the PO rules.
Will repeat purchases from one vendor run on a blanket order?
Why ask it
A standing order with a ceiling and an end date saves dozens of small approvals for things like cleaning or packaging. The catch is the balance, which someone has to watch as invoices draw it down. With no named owner and no expiry, it turns into an open tab.
Who is allowed to raise a request in the first place?
Why ask it
Letting every employee submit requests spreads the work and multiplies the training. A few designated requesters per department are easier to coach, but the department stalls when one of them is out. Let each department head pick, and expect a ten-person office and a plant on three shifts to pick differently.
Thresholds
At what dollar amounts should the level of approval step up?
Why ask it
Have the controller name the figures they would be comfortable defending, then run last year's purchases through them to count how many orders fall in each band. Three or four bands are easier to remember than seven. No figure is right everywhere, since it depends on the size of the organization and what it buys.
Should the limits be the same for every department, or vary with the kind of spend?
Why ask it
One table for everyone is simple to explain and to audit. A plant that buys raw material every day may still need a higher first band than an office buying toner. If you allow differences, hold them to two or three named categories.
Do capital purchases take a different path from everyday operating spend?
Why ask it
Equipment that will sit on the balance sheet often gets a finance review that a box of supplies does not. Where the line between the two falls is set by the organization's own accounting policy, so ask the controller for the current definition instead of guessing.
Is the limit measured against a single order, or against the full value of a contract over its term?
Why ask it
A three-year agreement billed monthly can slide under every band if only the monthly figure is tested. Testing the total commitment closes that gap. Renewals and extensions need the same rule, or the gap reopens a year later.
What will stop someone from splitting one purchase into several orders to stay under a limit?
Why ask it
No workflow blocks this outright, so the answer is usually a report: orders to the same vendor from the same requester within a few days of each other. Decide who reads it and how often. Telling people the report exists does much of the work.
Below what amount is an approval step not worth anyone's time?
Why ask it
Every approval takes minutes from two people, and at some point that costs more than the risk it covers. A floor, with the spending under it looked at in a monthly review, frees approvers for the orders that matter. Bring the invoice count to the controller, because seeing how many approvals each candidate floor removes makes the figure easier to agree on.
How far can an order change after approval before it has to be approved again?
Why ask it
Quantities grow, freight gets added, and a quote expires and comes back higher. One common rule is a percentage or a dollar amount, whichever is smaller, with anything beyond it going around again. Buyers can tell you how often orders move today, and a tolerance tighter than that will trip every day.
Is there an existing signing authority or delegation document that these limits must agree with?
Why ask it
Board resolutions, bank mandates, grant conditions and parent-company policies sometimes already say who may commit the organization and for how much. Ask the controller, or whoever keeps the corporate records, where those documents are. A workflow that contradicts them will have to be redone.
Approvers
Who approves at each level: the requester's manager, the owner of the budget, or both?
Why ask it
They are often the same person. Where they are not, the budget owner is the one who feels the cost, so find out from each department head who holds which lines. Routing by cost center instead of by org chart avoids a redraw every time someone changes teams.
What should be attached to a request so an approver can decide without sending it back?
Why ask it
A quote, a sentence on why the purchase is needed and the budget line it will hit are a usual minimum. Have two approvers list what they most often return a request for. Each return is a round trip that the requester will blame on the process.
What is each approver confirming when they approve?
Why ask it
That the purchase is needed, that the price is fair, that there is money in the budget and that the vendor is acceptable are four separate checks. Write beside each step which of them it covers. Otherwise every approver assumes someone else looked.
At what point does finance or the controller need to see an order before it goes out?
Why ask it
Finance on every order makes finance the bottleneck, and finance on none means its first look comes at the invoice. One middle course is to bring finance in above a set amount and for anything capital or multi-year. Ask the controller which orders they would be unhappy to learn about afterwards.
Can anyone approve a purchase they requested themselves, and who signs for the most senior person?
Why ask it
The rule is easy for staff and awkward at the top, where the owner or chief executive has nobody above them. Decide whether those requests go to a peer, the controller or a board member. In a very small company, a second person reviewing after the fact may be the practical answer.
How many approvals in a row can one order need before the process is too slow to be useful?
Why ask it
Add up the realistic wait at each step for the largest band, not the best case. If the total runs past a week, people will order first and file later. Two steps that check different things, such as the budget and an IT review, can often run side by side instead of one after the other.
Does anyone outside the reporting line need to sign off on certain purchases, such as IT, legal or facilities?
Why ask it
Software that touches company data, contracts with unusual terms and anything bolted to the building are the usual candidates. Keep it to a named list of categories with one named reviewer each. An open-ended 'IT reviews technology' brings every keyboard to their queue.
Who approves a new vendor, and does that happen before the first order or with it?
Why ask it
Setting up a vendor and choosing to buy from one are safer in different hands, because a made-up supplier is an old way for money to leave a company. Ask who will collect the tax and bank details and who checks them. Then decide whether a request can even be submitted against a vendor that is not set up yet.
Once a request is approved, who places the order with the vendor?
Why ask it
In some companies the requester sends it and in others a buyer does, and that choice settles who negotiates the price and who the vendor calls with questions. If requesters place their own orders, check that the vendor receives the PO number and the approved amount in writing. Settle too whether a verbal order ahead of the paperwork is ever allowed.
Should the person who approves an order also be allowed to confirm it arrived?
Why ask it
Requesting, approving, receiving and paying are the four jobs to keep apart where staffing allows. A team of three cannot separate all of them, so ask the controller which pairing worries them most and split that one first.
Exceptions
What counts as a rush order, and who decides that it is one?
Why ask it
Left undefined, every late request is urgent. Ask buyers for the last three real rushes and what made them so: a customer deadline, a breakdown, a price that was about to expire. Build the definition from those cases and name one person who can grant the fast lane.
What is the path for a real emergency when no approver can be reached?
Why ask it
A burst pipe on a Sunday will be fixed with or without a PO. Say who may commit money in that case, up to what amount, and how many days they have to raise the order afterwards. Then report these every month so the controller can see whether emergencies are staying rare.
What happens when an invoice arrives for something that never had a purchase order?
Why ask it
The vendor delivered in good faith, so the bill will most likely be paid. The design question is what it costs the person who placed the order. An after-the-fact form signed by the department head, counted per department each month, is often enough to make the pattern visible.
Who covers for an approver who is on leave, and how is that handover recorded?
Why ask it
Ask each approver to name a delegate now, at their own level or above, and never the person who reports to them and raises the requests. The system or the form should show that the delegate signed and on whose behalf. A shared password is the version of this to rule out by name.
If a request sits untouched, when does it move on, and to whom?
Why ask it
A reminder after a day or two and a handoff to the approver's own manager after a few more is one pattern, but the numbers are yours to set, and approvers should agree they can keep them in a busy month. What to avoid is automatic approval on timeout. That teaches people that waiting is a way of saying yes.
What happens to a request that is turned down?
Why ask it
A rejection with no reason sends the requester to try again under a different description. Require a short comment, and decide whether the request can be edited and resubmitted or has to start over. If editing is allowed, check that the first version and the reason it was refused stay on the record.
When are competing quotes required before an order can be approved?
Why ask it
Many organizations ask for two or three quotes above a set amount, and some funders, grants and public bodies set bidding rules of their own. Ask whether any of those apply to your organization before you pick a number. Also decide what a buyer writes down when there is only one possible supplier.
Who can override the process, and how will each override be recorded?
Why ask it
Someone senior will eventually push an order through, and pretending otherwise leaves it invisible. Name the one or two roles that may, require a written reason, and send the list to the controller each quarter. An auditor is likely to ask for that same list.
Budget and matching
Will a request be checked against the remaining budget before it is approved?
Why ask it
Find out whether the system can do the check or whether an approver has to open a report. A check that depends on someone looking a number up gets skipped in a busy month. If budgets are loaded once a year at a high level, ask what level of detail the check can really work at.
What happens when a request would take a department over its budget?
Why ask it
The choices are to block it, to warn and let it through, or to send it one level higher. Department heads tend to prefer a warning and controllers a block, so put the question to both in the same meeting. Whichever wins, decide who can move budget between lines to clear it.
Does an approved order count against the budget right away, or only once the invoice is posted?
Why ask it
If it waits for the invoice, a department can look comfortably under budget while holding a pile of approved orders. Counting commitments shows the true position sooner. Not every accounting system can report them, so check yours before promising department heads that view.
Who records that goods arrived or a service was performed, and where?
Why ask it
For goods it may be a warehouse or a front desk. For services it has to be the person who asked for the work, confirming it was done. Without a receiving record there is nothing to compare the invoice against except the order itself, so settle this before the matching rules.
Will invoices be matched to the order and the receiving record before payment, and who sorts out a mismatch?
Why ask it
Matching all three is the usual goal, and it only works if someone reliably records receipt. Decide whether accounts payable chases the buyer or the buyer chases the vendor when the numbers differ. An unassigned mismatch sits until the vendor calls about a late payment.
What price or quantity difference between an invoice and its order is small enough to pay without a second look?
Why ask it
With no tolerance, a few cents of rounding or a freight line stops payment. With a loose one, overbilling passes unnoticed. Accounts payable can list the small differences they see every week, and the tolerance should clear those and nothing bigger.
What must the order carry so accounts payable can code the invoice without asking anyone?
Why ask it
The account, the cost center and any project or grant code belong on the request, chosen by the person who knows what is being bought. The payables team can name the field they chase most often. Making that one mandatory may save more time than any approval rule.
When is an order closed, and who clears out the ones left open?
Why ask it
Partial deliveries, cancelled balances and orders nobody used pile up and overstate what the company has committed. Give someone a monthly list of orders with no activity past a set age. The controller will also want the open, received orders at month-end to book what is owed but not yet billed.
Rollout
Will this run in the accounting system, a separate purchasing tool, or email and a shared form?
Why ask it
Check what the current system can already do before pricing anything new, since some accounting packages include purchase orders and basic approvals. Email and a spreadsheet can work for a small team if one person owns the log. The test for any of the three is whether it enforces the approval limits or relies on people remembering them.
Can an approver review and approve from a phone, with the quote attached?
Why ask it
Approvers who travel or work on a shop floor will not open a laptop for a single order. If approving is easy and seeing the backup is hard, they will approve blind. Try it yourself on a phone before launch.
What record does each approval leave, and could someone follow it a year later?
Why ask it
You want who approved, when, at what amount, and what they could see when they did it. Pick one finished order and try to rebuild its history from the records alone. If that takes a search through inboxes, the trail is not good enough yet.
How will vendors learn that an invoice without a PO number may be sent back?
Why ask it
Vendors keep billing the way they always have unless someone tells them. A short notice, a line on every order and a date from which the rule applies give them a fair chance. Buyers will know which suppliers are going to struggle with it, and those ones get a phone call as well as the notice.
What happens to orders already placed on the day the new rules begin?
Why ask it
Pick a cutover date and decide whether orders in flight are paid under the old routine or brought into the new one. Bringing them in means raising orders after the fact, which is the habit you are trying to end. A dated list of open commitments, agreed with each department, keeps the first month from looking like mass non-compliance.
Who will train requesters and approvers, and what fits on a single page?
Why ask it
Most people will never read the full policy. They need the limits table, the list of what is exempt and the name of who to call. Hand the page to a requester from outside finance, have them explain it back, and fix whatever they get wrong.
Should one department try the process before everyone does?
Why ask it
A pilot with a willing department head surfaces the missing vendor, the wrong approver and the form field nobody understands while the stakes are low. Choose a department with enough orders to test every band in a month. Set an end date so the pilot does not quietly become a permanent exception.
What will be measured to show whether the process is working?
Why ask it
Days from request to approval, the share of invoices that arrive with an order behind them, and the count of after-the-fact orders cover speed and compliance between them. Take a baseline before launch, even a rough one. Without it, complaints about slowness can only be answered with opinion.
Who owns the process after launch and decides on changes?
Why ask it
Projects end and the designer moves on to the next thing. Name the role, not the person, that keeps the limits table current, adds approvers and hears complaints. Whether that sits with finance, purchasing or operations differs from one organization to the next, so have the controller assign it before go-live.
How to run the conversations before you design the workflow
Practical guidance for the conversation itself
Before you talk to anyone
Pull a year of spend first
Export twelve months of paid invoices with the vendor, department and amount on each line. Sort them by size and count how many fall under a few round figures. That table answers half of the Thresholds group before the first meeting, and it stops the discussion from running on anecdotes about the one large purchase everyone remembers.
Collect the rules that already exist
Look for a signing authority policy, bank mandates, card limits, grant or funder conditions and any audit comment about purchasing. These set the outer edges of what you can design. Bring copies to the controller and ask which are still in force, because an old policy often outlives the people who wrote it.
Choose who to interview, and in what order
Start with the controller, since their answers on limits and on keeping duties apart constrain everything else. Then see two or three department heads who spend in different ways, then the buyers and the accounts payable staff who will live inside the process. A few questions, such as monthly volume and the cutover date, are yours to answer from the records.
In the meetings
Ask about the last purchase, not the policy
'How do you approve spending?' gets a tidy account. 'Tell me about the last thing your team bought for a few thousand dollars' gets the email chain, the favor from a vendor and the invoice that turned up unannounced. Design for the second version.
Give department heads the trade-off
Every control costs time, and people accept one more readily when they had a hand in choosing it. Offer a real choice, such as a higher first limit in exchange for a monthly spend review, and note which they pick. Their choice also tells you where they will push back at launch.
Take the Exceptions group to the buyers
Buyers know which orders are truly urgent and which vendors will not wait. Have one walk through a rush from last quarter step by step, and write down every point where they needed someone who was not there. Each of those points is a rule the process needs.
Record disagreements instead of settling them on the spot
The controller and a department head will often want opposite things on budget blocks or on finance review. Write down both positions and who holds them. Deciding in the meeting usually means agreeing with whoever happens to be in the room.
From answers to a draft
Put the approval matrix on one table
Rows for the dollar bands, columns for the kinds of spend, a role in each cell. If it does not fit on a page, it has too many bands or too many special cases. Use roles and not names, so the table survives a resignation.
Walk real purchases through it
Take ten orders from last year, including a rush, a contract renewal, a capital item and one that changed after approval. Trace each through the draft and count the approvals and the likely days. The ones that come out absurd show where to adjust.
Write the exceptions into the same document
A process whose exceptions live in one person's head has two versions. Put the rush path, the emergency rule, delegation and the override list directly under the matrix. People should be able to find the fast lane without phoning finance.
Send the draft back to the people you interviewed
Give the controller and each department head the draft with their own answers reflected in it, and ask for objections by a date. Agreement gathered before launch is what you will point to when the first order gets held up.
Where PO approval processes break down
Approval that starts at the invoice
If orders are routinely raised after the goods arrive, the process records decisions and does not make them. Watch the after-the-fact count from the first month and take it to each department head by name.
More approvers than anyone can wait for
Each added signature feels safe while the design is on a whiteboard. In practice a long chain pushes people toward cards, split orders and verbal promises to vendors. Take a step out before adding a second one for the same check.
Limits copied from somewhere else
Another company's bands were set for its size and its risks. Test every figure against your own year of purchases, and be ready to say why each one sits where it does.
Nobody answers for it after launch
Approvers leave, departments reorganize and limits go stale. With no owner, the routing breaks quietly and people drift back to email. The final Rollout question is there to prevent that.