About This Policy
A payment approval policy establishes clear guidelines for who can authorize different types of expenditures in your organization. This policy defines spending limits, approval requirements, and documentation standards to ensure financial controls while maintaining operational efficiency.
The Policy
Who Needs This Policy
This policy is valuable for:
- Teams experiencing payment approval bottlenecks
- Organizations with multiple staff members who process payments
- Nonprofits managing significant transaction volumes
- Organizations seeking to establish clear financial delegation
- Organizations preparing for audits or funder reviews
When To Use This Policy
Implement a payment approval policy when:
- Transaction approvals are causing bottlenecks
- You need to delegate financial authority without losing oversight
- Transaction volumes require faster approval processes
- You're establishing or strengthening financial controls
Key Components
Approval Tiers The template establishes three approval levels based on payment amounts. Organizations should adjust these thresholds based on their budget size, risk tolerance, and operational needs.
Self-Approval Limits The policy addresses when leaders can approve their own payments (such as expense reimbursements) and when additional approval is required. This balances efficiency with appropriate oversight.
Documentation Requirements All payments require supporting documentation. The policy allows flexibility for routine, low-value expenses while maintaining audit trails.
Role Designation The template uses "Director" as the approval authority, but organizations can modify this to match their structure—such as "Executive Director," "Senior Leadership Team," or "Board Member."
Implementation Tips
Set Appropriate Thresholds Smaller organizations might use lower amounts (e.g., $250/$2,500/$10,000), while larger organizations might increase them. Consider your typical transaction sizes and organizational budget.
Clarify Roles Clearly identify which positions hold approval authority at each level. Use specific titles rather than names to maintain continuity when staff changes occur.
Plan for Exceptions Consider how to handle urgent payments when approvers are unavailable. Document any emergency procedures separately.
Review Regularly Revisit approval thresholds annually or when your organization's financial situation changes significantly.
Set Up a Documentation Mailbox Create a dedicated email address (such as bookkeeping@ or accounting@) for payment approvals and documentation. Staff can forward receipts, invoices, and approval confirmations to this centralized address, making it easier to maintain records and ensure your bookkeeping team has access to all necessary documentation.