What is Approval Workflow?
Definition
An Approval Workflow is a structured sequence of review and authorization steps that a document, transaction, or request must pass through before it is finalized. In finance and accounting, approval workflows establish internal controls by ensuring that appropriate stakeholders review and authorize activities according to company policies and governance standards.
How Approval Workflows Function
Approval workflows define who must review a request, in what order, and under which conditions. A Multi-Level Approval Workflow may require sequential approvals based on transaction value, department, or risk level. For example, a small operational expense may require only an Expense Approval Workflow, while a significant capital investment might require both a Budget Approval Workflow and an Asset Approval Workflow before funds are committed.
Automated routing of requests to designated approvers
Threshold-based escalation rules
Conditional approvals based on risk or compliance factors
Audit trails for regulatory and internal review
Types of Approval Workflows in Finance
Organizations implement specialized workflows depending on transaction type. A Vendor Approval Workflow ensures due diligence before onboarding new suppliers. A Contract Approval Workflow governs legal and commercial terms prior to execution. Finance teams rely on a Journal Approval Workflow to validate accounting entries and maintain reporting accuracy. Similarly, a Revenue Approval Workflow supports proper revenue recognition, while a Credit Approval Workflow helps manage counterparty risk.
Operational Benefits
Well-designed approval workflows improve transparency, strengthen compliance, and reduce fraud risk. Automated workflows minimize processing delays and provide visibility into bottlenecks. By standardizing review procedures—whether through an Inventory Approval Workflow, Lease Approval Workflow, or Model Approval Workflow—organizations enhance governance while maintaining operational efficiency.
Summary
An Approval Workflow is a formalized process that ensures transactions and documents are reviewed and authorized before completion. By implementing structured and automated workflows, organizations enhance internal controls, reduce risk, and improve financial accuracy and accountability.