Department: Finance & Accounting Process Owner: Finance Director Last Updated: January 2026
1. Overview and Purpose
Objective: To define the procedures for invoice approvals based on organizational authority thresholds, project-specific routing, and high-value payment review. This SOP ensures that invoices are reviewed and approved by appropriate parties before payment, supporting financial control and audit readiness.
2. Scope
This SOP applies to all vendor invoices processed through your accounts payable system that require formal approval prior to payment. It includes standard routing for general expenses, escalated approval for invoices exceeding your organization's high-value threshold, and special handling for capital project invoices.
3. Step-by-Step Process
3.1 Assign Invoice to Appropriate Approver(s)
When invoice is uploaded to your AP system, check:
- Amount of invoice
- Purpose / program / project
- Vendor (for known capital / construction vendors)
Assign required approver(s) based on thresholds:
- All invoices: Route to Finance Director
- Invoices exceeding high-value threshold: Route to Executive Director / CEO
- Capital project invoices: Also route to Project Oversight Lead
Confirm AP system approval chain reflects these rules
Reviewer / Back-up: AP Specialist / Accounting Coordinator
3.2 Notify Approvers and Track Status
- Review pending approval queues weekly in AP system
- Follow up with approvers as needed for timely processing
- For high-value or urgent invoices, send reminder emails
- Flag unapproved invoices before weekly AP batch release
Reviewer / Back-up: AP Specialist / Finance Director
3.3 Document Approval Evidence
- Approvals via AP system are logged and can be pulled as audit trail
- If approval occurs outside of system (e.g., via email due to access issues), attach PDF / email confirmation to invoice record
- For invoices requiring dual approval (Executive Director + Finance Director), ensure both approvals are logged or attached
Reviewer / Back-up: Accounting Coordinator
3.4 Review Approvals During Weekly Payment Prep
Before payment batch is processed:
- Confirm all invoices are fully approved
- Re-check for high-value or capital project invoices with special routing
- Flag any that are missing one or more required approvers
- Hold unapproved invoices and roll into future batch if needed
Reviewer / Back-up: Finance Director / Controller
4. Key Roles and Responsibilities
| Role | Responsibilities |
|---|---|
| AP Specialist | Assign approvers, monitor status, ensure compliance |
| Accounting Coordinator | Support routing and documentation of manual approvals |
| Finance Director | Primary approver for all invoices |
| Executive Director / CEO | Approves invoices exceeding high-value threshold |
| Project Oversight Lead | Approves capital project invoices |
| Controller | Supports review of weekly batch and high-risk payments |
5. Key Files and Systems
- AP System – Invoice routing, approvals, and system log
- AP Approval Threshold Matrix – Defines approver rules by scenario
- Weekly AP Batch Tracker – Confirms approvals before payments
- Email Archives / Document Share System – Stores any manual approvals as backup
- Cash Flow Forecast (Excel) – Ensures approved invoices are aligned with funding
6. Exceptions and Special Cases
- Access Limitations: If approvers cannot access AP system, approvals may be given via email and attached to invoice
- Multi-Party Invoices: If expense spans multiple grants / programs, approvers may include multiple department heads (flag for Finance Director review)
- Emergencies or Off-Cycle Payments: Require express written approval from both Finance Director and Executive Director / CEO before release
- Legacy Vendors: Invoices from old contracts may need special re-approval or vendor update review
7. Risks and Controls Summary
| Step | Risk | Control |
|---|---|---|
| 3.1 Assign Invoice to Appropriate Approver(s) | Invoices processed without appropriate signoff may result in unauthorized disbursements or compliance violations | Approval routing logic is embedded in AP system and verified during entry |
| 3.2 Notify Approvers and Track Status | Delays in approval may stall payments, damage vendor relationships, or misalign with cash flow | Weekly AP review includes aging analysis of unapproved invoices; escalation to Finance Director if needed |
| 3.3 Document Approval Evidence | Lack of documented approval may result in audit findings or failed internal controls | Every invoice payment is tied to an AP system approval log or attached manual approval |
| 3.4 Review Approvals During Weekly Payment Prep | Payment without final approval exposes organization to legal or reputational risk | Weekly payment prep includes final review of approval trail for every invoice |
