Expense Approval
A documented process—manual or automated—by which a business reviews, validates, and authorizes employee-incurred costs before reimbursing them or recording them in the books.
Key Facts
Alternate names: cost approval, spend authorization, reimbursement sign-off
Common approvers: direct manager → finance/AP → (sometimes) CFO or budget owner
Trigger points: employee expense reports, corporate card statements, purchase requisitions under a preset dollar threshold
Tooling: spreadsheets & email, expense-management software (e.g., SAP Concur, Expensify), ERP workflows
Why It Matters
Without a clear approval workflow, illegitimate or duplicate expenses slip through, eroding profit and exposing the organization to audit risk. A tight, well-communicated process:
Controls spend by checking each claim against policy and budget.
Prevents fraud & errors through multi-level review and required documentation (receipts, mileage logs, per-diem rates).
Speeds reimbursement when approvals are streamlined, boosting employee satisfaction and card compliance.
Strengthens audit readiness because every approval leaves a digital trail that external auditors can trace.
Bottom line: expense approval is the gatekeeper between day-to-day spending and the general ledger.
Real-World Examples
Enterprise SaaS company
Volume: ~5,000 reports/month. Workflow routes claims ≤ $250 to the line manager; > $250 also goes to Finance. Automated policy checks flag out-of-policy airfare, cutting reimbursement cycle time from 12 to 4 days.
Mid-size consulting firm
Consultants upload receipts on the road. “Project code” is a required field; the project manager approves within 48 hours so costs post to client invoices quickly, improving cash flow by two weeks.
Diagram / Visual (optional)
A flowchart showing: Employee → Manager → Finance/AP → ERP posting, with automated policy checks at each hop.
Related Terms
Purchase Requisition
Expense Policy
Accounts Payable Automation
Cost Center
Frequently Asked Questions
Q: Who should approve an expense report?
A: At minimum, the employee’s direct manager (to verify business purpose) and an AP/finance reviewer (to validate receipts and coding). High-value or sensitive spend may require senior-level sign-off.
Q: What thresholds are typical for secondary approval?
A: Many companies set a dollar cap (e.g., US $250–500) or policy exceptions (international travel, entertainment) that automatically escalate to Finance or Leadership.
Q: How can we speed up approvals without losing control?
A: Automate policy checks (per-diem limits, duplicates) in your expense software, use mobile receipt capture, and set SLA reminders for approvers.
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