Introduction to Approval Workflows

Approval processes are a foundational process in any business. Here, we talk about approval process, the components, steps and more

Approval workflows are essential for managing requests, cases, and other items that need to go through a review and sign-off process within an organization. Implementing automated approval workflows can increase efficiency, enforce standards, and provide transparency into pending actions. In this comprehensive guide, we will explore what approval workflows are, the various types, key components, how they execute, and why automating them brings tremendous value.  

What are approval workflows?

An approval workflow is an automated process that guides items like cases, requests, documents or orders through multiple approvers in a sequential path for review and approvals based on preset rules. It acts as a quality and compliance checker by enabling the right people to review submissions before they are processed further.

Types of approval workflows

There are several common scenarios where approval workflows add control and visibility

Quality check approvals:

QC approvals are done by Audit and QC teams to ensure whether the quality of product and service are as per expectation. These can be applied for every single service or order item. Or it could also be done on a sampling basis if the quantity is large.

Case approvals:

Cases are usually customer driven approval requests. These can be a review of cases to sanction loans, claims, requests, exceptions or service orders. In other scenarios it could be vendors or partner requests that need to be addressed.

Finance approvals:

Finance teams are one of the key users of approval workflows. They use the standard approval process to sign off budgets, expenditures, invoices and disbursements. Typical process involves the individual teams having the ability to submit their requests, and then the request goes through the approval process.

Process approvals:

Almost all other types of approvals can be grouped under Process approvals. It's typically used as a common term for any kind of approval within the business day to day process.

Components of an approval workflow

The major components that make up an intelligent approval workflow are:

Tickets/Submissions/Cases/Orders:

The requestor initiates a new ticket, case, order or in general a submission. This is collected usually through an email, a web portal, a mobile app or even a call in some cases. The creation of this submission initiates the approval process.

Statuses or Steps:

Statuses are the different stations that the ticket travels through like Submit, First Level Approval, Second Level Approval, Final Approved Status. These statuses can be custom to different processes within a team. Often as the process evolves more such statuses are added to maintain granularity. Statuses are the identity through which a leader can understand where a particular case is stuck and where it spends more time.

Permission Levels:

Depending on the approval process, different personnel can have different approval permissions. For eg., to approve a 1000$ expense, a finance manager's approval would be sufficient but to approve a $10000 expense, it probably needs 2 levels of approvals from both the finance manager and the finance head. These different personnel are then covered under different permission levels.

Approvers:

Approvers are the actual users mapped to permission levels that will receive and act on the submissions. They get mapped to the different permission levels and get to act on the individual cases to review them and take care of approval.

Conditions:

Given how the approval flow should work and parameters of a case, there are different paths an approval process can take. Given these checks are done dynamically during a case execution, we need a realtime mechanism like conditions to execute it.

Notifications:

How does an approver know if a case is pending on their desk? This is through notifications. Notifications are typically done through email or in app notifications. But sending notifications through whatsapp and text messages are not unheard of.

SLAs:

They key objective of an approval process is to ensure that the approvals are done as per the defined SOPs (Standard Operating Procedures) and on time. The time component here becomes key to monitor. SLA here means Service Level Agreements which in the case of approval workflows is the time taken to provide a response to the approval request.

Execution of an approval workflow

The step-by-step flow of how an automated approval workflow processes submissions is:

Submission of the case/ticket/order:

The requester raises a purchase order or publishes a new policy document or files an insurance claim. This is done through a portal available to the creator or simply through an email or call.

Check conditions for selecting the approver:

The process evaluates the rules to determine the correct reviewer like checking purchase above $1000 requires Finance Head. These conditions are preconfigured and automatically evaluated based on the data that is present in the case. These data points are reviewed and enhanced and these conditions are improved to optimize the approval process.

Notifications to approvers:

Notification through agreed channels to the approvers. These are typically done via email but can also be in-app notifications in app or web, or via text, whatsapp etc.

Review by approvers:

Approvers review the case, the details and provide their inputs.

Request for info or approval:

The approvers can request more information from the requester or they can approve or reject the case right away depending on the SOPs of the company.

Steps 2-5 will repeat in a systematic order based on conditions until the final approval is received.

Why automate approval workflows?

There are several key benefits companies gain by implementing automated approval workflows:

Clear, defined process improving quality:

Gone are the days of managing approvals through paper forms and getting a signature. When there are a lot of requests to process, mistakes and delays are inevitable. A good approval process ensures a systematic review of the request as per the agreed SOP of the company instead of random checking. This significantly enhances process quality and reduces mistakes.

Saving time, cost and predictability:

Human coordination is one of the significant time sink factors in a corporate setup. Automating the approval processes ensure that this human coordination factor is taken out of the equation. This is done by the following steps

  • All information needed to review the ticket are provided as part of the ticket
  • Notifications that ensure that the case does not get missed
  • The individual parties can determine when they want to complete these tasks based simply on their availability.

Reduce bottlenecks:

While each approval case is a single item, the overall approval process is monitored as a continuous but evolving system. Given all the requests, rejections and approvals are digitally tracked, the leaders can identify problems, determine bottlenecks, tweak SOPs to ensure that the process efficiency keeps improving over a period of time.

Approval workflows create the backbone for governance by formalizing the review processes for a wide variety of business scenarios. Automating these flows enhances efficiencies in the system by speeding up approvals, reducing human effort and enabling predictable decisions. As companies seek higher quality outputs and cost control - implementing approval workflows with an intelligent rules engine provides the answer. Their flexibility to adapt to complex real-world review procedures make them invaluable for regulated industries like Banking, Insurance, Healthcare where both compliance and superior customer experience are vital.

To understand more about process management, checkout Operations Management.

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