Approval management is a crucial factor in the growth and success of your company, whether you own a multinational business or operate as an SME. While approval management is important for businesses of all types, it plays a particularly important role in the manufacturing sector. This is because a well-structured approval management system will help you and your team get the most out of the work that has been done, or that needs to be done in the future.
What Is Approval Management?
Approval management is a system that is put in place to ensure that a particular piece of work moves through the right channels and is permitted by authorized people within an organization. Approval management is a structure or a hierarchy that has the sole purpose of ensuring that a request for approval is raised correctly and that the request reaches the desk of the person who has the authority to give it the green signal.
Most businesses operate on the basis of hierarchies with teams across departments having clearly defined roles and responsibilities. Very often different departments also need to work together and collaborate to get a piece of work to its completion. Approval management helps move a project forward both within a department as well as across departments.
Approval management comes in handy for a variety of types of work such as pitching new projects internally, invoices and budget approvals of existing projects, or even when you are working towards recruiting new team members. Approval management makes sure your workflow is optimized and the project moves forward with accountability and transparency maintained at every step.
What Is Approval Process
An approval process is the series of steps that need to be followed in order for a particular project or activity to move forward and reach its final intended outcome. These steps are established and put in place so that it is clear to everyone in the organization exactly what the path forward is, for the work to move towards completion.
There can be a variety of different approvers in the course of an approval process. The decision on who needs to be a part of the approval process depends upon the nature of the work that needs to get done.
For example, a marketing budget may need approval from the head of marketing and finance, while a new product launch may need approval from various departments such as the CEO, CFO, sales, operations, and marketing.
Important Approval Process Elements
Approval management is a systematic process that takes place so that any piece of work or task is able to be completed after getting approved by people under whom the jurisdiction for that work falls. The approval process can be customized as per the needs of the business, but there are a few elements that are common across the approval process:
Initial submission document
The approval management process begins with someone who is in need of getting something approved, without which they would not be able to proceed. That is when they kick-start the process with an approval request, also known as an initial submission document. This can be anything from a quote for an intended purchase to an invoice for an already completed sale, and many other types of requests.
The person who raises a request needs to know who the right person is to whom the request should go. This is decided by the senior management of a business and every department is made aware of the list of approvers. Think of these as the signing authorities for their respective departments or functions.
An approval management system can have many layers and levels. This system is established according to the needs of the business and can be as flat or as hierarchical as it needs to be. This can also change depending on the nature of the work that needs to be approved.
An approval management system is incomplete without proper due dates for each requested approval. The main purpose of approval management is to encourage efficiency which cannot be achieved without deadlines that are respected.
Approval management works to create a certain level of transparency within the organization. This is best done when each and every step is properly documented and tracking is easy whenever there is any kind of discrepancy.
Steps Involved in Approval Process
Approval management is a great way for you to ensure that work within your organization is not facing unnecessary and avoidable bottlenecks. An approval management system will make it efficient for work to move forward through the right channels and see it reach fruition. These are the steps typically involved in an approval process:
Step 1: Form setup
The first step of the approval process is to set up a document that contains all the right forms and fields that are relevant to a particular piece of work. This form should contain all the necessary information that illustrates the nature of the work as well as the nature of the request for approval. Approval management software such as the one offered by TranZact will make this easy for you with elements like custom fields, data tables, and more.
Step 2: Establish workflow
The next step in the approval management process is to establish the right kind of workflow for the various approval requests that could be generated. The nature and makeup of the workflow depend entirely on the nature of the request. This workflow could be as simple as requiring a single authorization or could be as complex as needing a multi-layered approval structure that spans across departments.
Step 3: Define approvers and requesters
An approval management process needs a clear definition of who is responsible for what, in the system. As per the need of the work or the project at hand, the right people are given the right responsibilities across the system.
Your approval management system can change based on the nature of the work. Someone who is an approver in a particular piece of work can also become the person who raises a request for approval in another piece of work. These decisions are made based on the nature of the work and the roles and responsibilities of the proposed approvers.
Step 4: Implement and improve
Just like any system, you will find the approval management system is also one that can be improved and refined after implementation. A lot may change as your company grows. What was relevant when you first established your approval management process may not be so anymore. This is where approval management software such as TranZact can help you optimize your approval management process.
Benefits of Having an Effective Approval Management Process
When approval management is implemented effectively, there are significant advantages you give your business. A well-thought-through approval management process can end up giving your business a competitive edge, as you increase overall productivity and optimize your resources.
Let's take a closer look at some of the benefits of having an effective approval management process:
An approval management process is put in place to ensure the work moves forward as planned within your business. When everyone is aware of who they need to go to in order to move a piece of work forward, the efficiency of your throughput greatly increases.
With streamlined approval management software, your system can achieve complete transparency and reliability. These kinds of software solutions are designed to incorporate all the levels, requirements, and workflows across your departments, making it easy and fast for you to track all workflow movements.
For a business to be successful, it is important that it has the ability to adapt to a dynamic environment. An approval management system will ensure that all planned as well as ad hoc approvals that are needed are done in a timely and efficient manner.
Approval management software such as TranZact takes the potential of human error out of the equation with end-to-end digitization. This makes the entire process automated, saving you precious time and unnecessary expenses.
Disadvantages of Having an Ineffective Approval Management Process
When your approval management process is comprehensive and rooted in reason, you stand to gain a lot as described above. However, when you are running a business where the approval management system is not present or is set up inefficiently, you may encounter certain disadvantages.
Let's take a closer look at some of the ways an ineffective approval management system can hurt your business.
Inefficient resource allocation:
When running a business, one of the most important resources you have at your disposal is time. It is imperative that each process in your business is optimized and each human resource is spending their time being productive. An ineffective approval management system will result in people wasting too much time trying to figure out the approval process.
A business often throws up unique challenges and scenarios that need to be resolved by thinking on your feet. If you do not have an approval management process that is full-proof and plans for outlying events, your business will not be able to react within time to unforeseen circumstances. This could end up creating unnecessary delays and adding up costs that could have been avoided.
Lack of accountability
An approval management process is an extremely reliable way to ensure that accountability remains in the right places, across your organization. When you put an ineffective approval management system in place, it will be impossible for you to hold people accountable as you would not have the necessary information at hand.
Implement Exceptional Approval Management Using Tranzact
The kind of approval management system you put in place should depend on the nature of your business and the scale of your operations. TranZact has developed a software solution catered specifically to the Indian SME manufacturing industry. It helps teams to customize and adapt to digitized operations with no hassle. It offers a seamless approval and access management process that enables business owners to streamline workflow processes and enhance strategic growth!
FAQs on Approval Management
1. Why is an approval process important?
An approval process is crucial for your business as it helps you ensure that time is being spent productively in your organization. Managing approvals properly will help you increase your overall efficiency, improve your transparency and ensure proper accountability exists across your business and various stakeholders.