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Approval Processes in Procurement: How Companies Maintain Control Over Their Sourcing
Approval Processes in Procurement: How Companies Maintain Control Over Their Sourcing
by Anna Ullmann on Jun 24, 2026Purchasing & Procurement
What are approval processes in purchasing?
Approval processes define who is authorized to approve orders within a company.
Before an order is placed, it is automatically forwarded to the responsible person or department. This allows companies to maintain control over expenses, budgets, and purchasing policies.
In short
Approval processes automatically forward orders to the relevant department before they are executed. Value-dependent or cost center-related approvals create transparency without slowing down procurement if the number of approval stages is deliberately kept low.
Why do companies need approval processes?
The larger a company grows, the harder it becomes to keep track of orders.
Without clear rules, the following often occur:
Unplanned expenses Duplicate orders Budget overruns Maverick buying Lack of transparency
Approval processes create clear responsibilities and traceable decisions.
How does an approval process work?
For example, if an employee needs new monitors, the process could look like this:
Step 1: Create order
The employee places the desired products in the shopping cart.
Step 2: Automatic forwarding
The order is automatically forwarded to the responsible manager or budget owner.
Step 3: Review
- Necessity
- Budget
- Cost center
- Compliance with purchasing guidelines
Step 4: Approval or rejection
After the decision, the order is automatically triggered or rejected.
What types of approval processes are there?
Value-dependent approvals
The higher the order value, the higher the approval level.
- Up to €100 no approval
- €100 to €1,000 team leader
- From €1,000 department head
Cost center-related approvals
Orders are automatically assigned to the responsible budget owner.
Department-related approvals
Each department receives its own approval rules and responsibilities.
Multi-level approvals
For larger investments, several decision-makers are involved.
What are the benefits of approval processes?
More transparency
Companies always see who orders, what is ordered, and what costs are incurred.
Better budget control
Expenses are checked before ordering and can be actively managed.
Fewer incorrect orders
Unnecessary or incorrect orders are identified early.
Comply with policies
Approved products and suppliers are used more consistently.
Greater planning certainty
Budgets can be managed more easily, and future expenses can be planned better.
Typical errors in approval processes
Too many approval stages
Excessive approvals cause delays and frustration.
No clear responsibilities
Unclear responsibilities lead to queries and waiting times.
Approvals via email
Manual processes are difficult to track and prone to errors.
Uniform rules for everything
Not every order requires the same level of scrutiny.
What do modern approval processes look like?
Modern procurement systems automate the entire process.
Companies can, for example, define:
- Who is allowed to order
- Up to what amount orders can be placed
- Which products are approved
- Which cost center is charged
- Who needs to approve
As a result, many approvals run automatically and without manual intervention.
Practical example
A company with 80 employees regularly orders office supplies, hygiene articles, and consumables.
Before the introduction of an approval process, orders were often placed directly.
The consequences:
- Lack of transparency
- Many individual orders
- Budget overruns
After the introduction of digital approval workflows, orders are automatically assigned to the correct responsible parties. This reduces administrative effort and improves expense control.
When are approval processes useful?
Multiple locations Multiple departments Budget owners Regular procurement needs Rising purchasing costs
Conclusion
Approval processes help companies better manage their procurement, adhere to budgets, and create transparency.
The right balance between control and efficiency is crucial.
Well-designed approval processes prevent unnecessary costs without slowing down workflows.
Frequently Asked Questions
How many approval stages are reasonable?
In practice, one to two stages are usually sufficient; more stages often slow down procurement without additional benefit.
Can approval processes be automated?
Yes, modern procurement systems automatically forward orders based on value, cost center, or department.
What happens if approval processes are missing?
Often, this leads to maverick buying, budget overruns, and a lack of transparency regarding overall expenses.
Further Wiepa Guides
Maverick Buying: When employees order bypassing purchasing
Purchasing with approval loop and quotation obligation
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