How to build a delegation of authority matrix for accounts payable

Short answer

1. List the people who approve bills and the biggest bill each should sign.
2. Build amount bands that start at $0 and run into each other with no gaps.
3. Name one approver and one backup per band, then add exceptions by supplier or account.
4. Test the edge of every band.
5. Enter each row as an approval rule in your approval tool.

Before you start

You need a list of your approvers and what they are comfortable signing. You need your last three months of bills, so you can see how many fall in each band. You need someone senior to agree the top limits. A matrix that the director has not signed is only a suggestion.

If you want a starting table, the free delegation of authority template generator builds one for you. Fill it in, then come back to check it against the steps below.

The manual way

A matrix can live in a Word document or a spreadsheet. That is where most businesses keep theirs.

1. Make a table with four columns: band, amount range, approver and backup.
2. Fill the amount range so each band starts one cent above the last. For example $0.00 to $2,000.00, then $2,000.01 to $10,000.00.
3. Write whether the amount includes GST. Put it in the table header.
4. Add a rule above the table: nobody approves a bill they raised or coded themselves.
5. Add an exceptions list under the table. New suppliers, legal fees and anything coded to a director’s loan account are common ones.
6. Get the director or owner to sign and date it. Store it where the accounts team can find it.

The limits of the manual way are plain. Xero’s own approval is a single step on a bill. It does not change who approves by amount, so the matrix has to be enforced by people remembering it. See our guide to Xero bill approval for what Xero does and where it stops. In MYOB the same gap applies. The result is a table nobody checks until an auditor asks.

The Pulsify way

Pulsify turns each row of the matrix into a rule on the approval board.

1. Open Approvals in the sidebar. Turn on multi-step approvals. Steps are part of the Approval Workflows Add-on, which some plans include.
2. Add a step for each band. In each step add a row, then choose who approves under Add approver. You can pick a role (Any Approver or Any Admin), a team or a named person.
3. Set the row conditions: supplier, amount range, GL account or a tracking category such as a job. Amounts are the bill total including GST.
4. Choose “Any one of them approves” or “Everyone signs” for each step. Set a backup approver. Step 1 needs one.
5. Click Try an invoice to run a sample bill through your rules without saving anything. Then click Save board.

Once approved at the last step, Pulsify creates the bill in Xero or MYOB. Every approval is recorded in the bill’s activity.

Worked example

Example Plumbing Supplies has four bands. Amounts include GST.

Band	Amount	Approver	Backup
1	$0.00 to $2,000.00	Team leader	Operations manager
2	$2,000.01 to $10,000.00	Operations manager	Finance manager
3	$10,000.01 to $50,000.00	Finance manager and operations manager (both sign)	Director
4	Over $50,000.00	Director	Chair

Exception: the first bill from any new supplier goes to the finance manager, whatever the amount.

Test the edges. A $2,000.00 bill goes to the team leader. A $2,000.01 bill goes to the operations manager. A $10,000.01 bill needs two signatures. If any of those test amounts lands in two bands or none, fix the matrix before you load it.

Check against last quarter. If 70 of 80 bills fall in band 1, the team leader carries most of the load, which is the point. If 30 fall in band 3, your top limit may be too low and finance will become a bottleneck.

Common mistakes

• Gaps and overlaps. A band that ends at $10,000 and the next that starts at $10,000 both claim a $10,000.00 bill. Use cents at the edges.
• Mixing GST bases. One band tested before GST and the next after GST moves bills into the wrong band.
• No backup. The approver goes on leave and bills sit. Name a backup in every band.

Next step

Try an invoice to run a sample bill through your own bands. Or book a call to find out how customers have saved hours per week after switching.

Read the approval workflows guide for the full setup, or use the delegation of authority template generator to draft the table first. For the thinking behind the bands, see delegation of authority for Australian SMBs.