How to Set Up Expense Approval Workflows for Your Team

When your business is just you, expense management is simple — you spend the money, you record it, you move on. But as soon as you have employees or team members incurring expenses on behalf of the business, you need a system. Without one, spending creeps up, receipts go missing, and you have no visibility into where the money is going until it is already gone.

An expense approval workflow defines who can spend what, how expenses are submitted, who approves them, and how they are recorded in your accounts. Done well, it protects the business without creating bureaucratic friction that slows your team down.

Why you need an expense approval workflow

Spending control

Without approval requirements, there is no check on whether an expense is necessary, reasonable, or within budget. An approval step forces a conscious decision about every expenditure.

Fraud prevention

Expense fraud — from inflated mileage claims to fictitious receipts — is one of the most common types of workplace fraud. An approval workflow with receipt requirements makes fraud harder to commit and easier to detect.

Budget adherence

When approvers can see how much has already been spent against budget before approving additional expenses, they can make informed decisions. This prevents budget overruns that only become visible at month-end.

Accurate records

A structured workflow ensures every expense is recorded, categorised, and supported by documentation. This makes your accounts more accurate, simplifies tax preparation, and provides the evidence you need if expenses are ever questioned.

Tax compliance

To claim tax deductions for business expenses, you typically need proper documentation — receipts, business purpose, and authorisation. An approval workflow creates this documentation systematically.

Designing your expense policy

Before you can set up workflows, you need to define the rules. Your expense policy should cover:

What can be expensed

Define the categories of allowable business expenses:

Travel (flights, trains, taxis, mileage)
Accommodation
Meals and entertainment (with any per-person or per-meal limits)
Office supplies and equipment
Software and subscriptions
Professional development and training
Client gifts (with value limits)

Be specific. "Reasonable travel expenses" is open to interpretation. "Economy class flights for domestic travel, business class for international flights over six hours" is clear.

Spending limits

Set limits at multiple levels:

Per-transaction limits — Maximum amount for a single expense without additional approval
Per-category limits — Monthly or quarterly caps for categories like entertainment or travel
Per-person limits — Monthly spending authority for each role or level

Receipt requirements

Specify what documentation is needed:

Receipts required for all expenses above a minimum threshold (such as 10 or 25)
Itemised receipts required for meals (not just the total)
Mileage logs required for vehicle expenses
Pre-approval required for expenses above a certain amount

Approval hierarchy

Define who approves what:

Line manager approval for routine expenses within policy
Department head approval for expenses above a threshold
Finance or senior management approval for exceptional or high-value expenses
No self-approval — Nobody should approve their own expenses

Setting up the workflow

Step 1: Configure expense categories

In your accounting software, set up expense categories that match your policy. Common categories include:

Travel — flights
Travel — ground transport
Travel — mileage
Accommodation
Meals — client entertainment
Meals — working meals
Office supplies
Software and subscriptions
Professional services
Training and development

Step 2: Define approval rules

Configure approval rules based on your policy:

Expenses under a certain amount may be auto-approved or require only one level of approval
Expenses above the threshold require higher-level approval
Certain categories (entertainment, gifts) always require approval regardless of amount
Expenses are routed to the appropriate approver based on the submitter's team or department

Step 3: Set up submission requirements

Configure what information is required when submitting an expense:

Date of expense
Amount and currency
Category
Business purpose or description
Receipt (photo or digital copy)
Project or client code (if applicable)

Step 4: Enable notifications

Set up automatic notifications so:

Approvers are alerted when expenses are waiting for their review
Submitters are notified when expenses are approved or rejected
Finance is notified of approved expenses ready for payment or reimbursement
Escalation alerts fire when expenses have been waiting for approval beyond a defined time

Step 5: Train your team

The best workflow is useless if people do not use it correctly. Provide clear guidance on:

How to submit expenses
What documentation is needed
What the approval process looks like
How quickly they can expect reimbursement
What happens if expenses are rejected

Approval workflow patterns

Simple linear approval

Best for: Small teams (under 20 people)

Employee submits → Manager approves → Finance processes

Every expense follows the same path. Simple and easy to understand.

Threshold-based approval

Best for: Medium teams with clear spending authority levels

Under 100: Auto-approved (with receipt)
100-500: Line manager approves
500-2,000: Department head approves
Over 2,000: Finance director approves

Routine expenses are handled quickly while larger expenses receive appropriate scrutiny.

Category-based approval

Best for: Businesses where different expense types carry different risk levels

Travel and accommodation: Line manager approves
Client entertainment: Department head approves (always)
Equipment purchases: IT manager approves
Software subscriptions: IT and finance jointly approve

Different categories route to the person best placed to assess whether the expense is appropriate.

Pre-approval for large expenses

Best for: Controlling high-value spending

Planned expense over 500: Pre-approval required before spending
Submit request → Manager approves → Employee makes purchase → Submits receipt

This prevents situations where an employee makes a large purchase and then submits it for approval after the fact.

Making it work in practice

Keep it proportionate

The approval process should be proportionate to the expense. Requiring three levels of approval for a five-pound parking receipt wastes everyone's time. Focus controls on material expenses and higher-risk categories.

Set approval deadlines

Define how quickly approvers should act — two to three business days is reasonable. Expenses sitting in an approval queue for weeks frustrate employees and delay accurate record-keeping.

Handle rejections constructively

When an expense is rejected, the approver should explain why. "Rejected" with no explanation is demoralising. "Rejected — exceeds per-meal limit of 25. Please resubmit with the amount within policy, or provide justification for the excess" is constructive.

Reimburse promptly

Once expenses are approved, process reimbursement quickly. Employees who wait weeks for reimbursement become reluctant to incur business expenses, which can hinder their effectiveness.

Review and iterate

Review your expense data quarterly. Look for:

Categories where spending is consistently above budget
Frequent rejections (which may indicate unclear policy)
Bottlenecks in the approval process
Patterns that might indicate policy abuse

Use this data to refine your policy and workflow.

Technology makes it easier

Modern accounting software can automate most of the expense approval process:

Mobile receipt capture — Employees photograph receipts on their phone
Automatic categorisation — Software suggests categories based on the merchant or description
Rule-based routing — Expenses are automatically sent to the right approver
Approval from anywhere — Managers approve on their phone while travelling
Integration with accounts — Approved expenses are automatically posted to the correct accounts

Relentify's accounting platform includes expense management with configurable approval workflows, receipt capture, and mileage tracking, making it straightforward to implement professional expense controls without burdening your team.

Start with the basics

You do not need a perfect system from day one. Start with a simple policy, a basic approval workflow, and receipt requirements. As your team grows and your needs evolve, add complexity — additional approval levels, category-specific rules, and tighter controls.

The important thing is to start. Any structured expense process is better than no process at all.