It may be that they don’t really in a traceable manner. They go off to Rachel or Darren from Accounts and miraculously get paid.
But, if you have a bigger or more institutional business, there will be a process there somewhere.
Chloe in ops will sign off on material purchases. Darshan in IT all the, funnily enough, IT costs. Fred the marketing and event costs. Amelia, the Managing Director, wants to see all legal fees and anything over £10,000.
The sign-off may be by email, Approval on Teams or the humble written scribble on a paper invoice.
The posh McKinsey term for this is an ‘Approval Matrix’.
When we are helping clients design their digitised and automated new systems, we often hear them say things like, “Oh, our Approvals system is so varied and complex and reliant on each of us [in accounts] knowing who to send an invoice to for approval, you will never be able to systemise this for us.
We show them the ApprovalMax (AM) system and how their Approval Matrix can be set up with infinite rules based on who the supplier is, the nominal or tracking code, the amount or other permutations.
We would be really surprised if, even if we map out 100 informal rules you currently have, this could not be coded into AM.
AM has been a bit of a dark horse coming up the inside rail in 2024. They released their ApprovalMax Capture invoice scanning feature. This is a game-changer in that, whereas previously you had a triumvirate of Xero + Dext + AM, which risked an app sprawl, now you just have Xero + AM.
And if you do need an audit or have some form of external regulator or other supervision, each of those invoices will be saved with the audit history of who approved it at what step and at what time.
With the prevalence of cyber fraud and the understandable paranoia around paying an invoice to a fraudster, they also have a supplier set-up and [bank-account] change approval process.
An often criticism aimed at Xero is that it’s an accounting software for small businesses which you will grow out of as you get bigger. That may be true, but with ApprovalMax and the available reporting apps, the definition of bigger gets bigger.
What is your level of invoice sign-off maturity? Is it paper and pen, a nod, an email trail or WhatsApp trail?
What does it need to be in a year’s time?