What the PO approval process is for
A purchase order is a promise to pay. The approval process decides who can make that promise on the company’s behalf, up to what amount, and what has to be true first. Done well, it stops spend nobody agreed to, without slowing down the spend everyone agreed to.
The steps, one by one
- Requisition. Someone asks for something, with items, quantities, an estimated price and a reason.
- Requisition approval. The budget owner agrees the need before anyone talks to a supplier.
- Purchase order. The buyer turns the approved requisition into a PO with the supplier, prices and terms.
- PO approval and release. The PO goes to the right approvers for its value, then is released to the supplier.
- Goods receipt. What actually arrived is recorded against the PO lines.
- Invoice check. The supplier’s invoice is matched to the PO and the goods receipt before it is paid.
Approval tiers by value
Most companies route a PO by its total. A simple three-band setup looks like this:
- Small orders, for example below ₹50,000: released automatically once the requisition was approved.
- Medium orders, for example up to ₹5 lakh: one manager approves.
- Large orders above that: a manager and then a director, in sequence.
The numbers are examples. Yours belong in your delegation of authority, and the system should read them from there rather than from people’s memory. Rejection at any tier should stop the order, not send it round again quietly.
Where it usually breaks
- Approvals by email, with no record of whether the approver had the authority for that amount.
- POs typed in again from the requisition, with prices or quantities changing on the way.
- The total calculated by hand, so a PO lands in the wrong tier.
- The person who raised the PO also releasing it.
- Invoices paid without anyone checking them against what was ordered and received.
What to automate first
- A requisition form with line items, so the request is structured from the start.
- Requisition to PO in one step, with the lines carried over instead of retyped.
- The PO total and its approval tier calculated by the system, not typed in.
- Routing by tier, with the raiser blocked from approving their own PO.
- Reminders and escalation when an approval sits too long.
- An audit trail of every request, approval, rejection and change.
How this looks on Averoic
On Averoic the procure-to-pay flow is built and tested end to end: requisition to PO, approval by value tiers that you configure, goods receipt, three-way invoice matching and payment clearing. Totals and tiers are calculated on the server, so they cannot be changed on the way in, and every step lands in the audit trail. It is configured without code, on the same platform that runs lending approvals in production.
Works with alternative lenders, AIFs, NBFCs and insurers in India on approvals, maker-checker controls and audit readiness.
See how your own process would run on Averoic — configured, not coded, with maker-checker controls and a tamper-evident audit trail built in.
Frequently asked questions
What is the purchase order approval process?
The steps a purchase order goes through before it is released to a supplier: requisition, requisition approval, creating the PO, approval by the right people for its value, and release. Goods receipt and invoice matching follow before payment.
Who should approve a purchase order?
Whoever your delegation of authority names for that value and category. Commonly a manager for mid-sized orders and a manager plus a director for large ones, with small orders released automatically after the requisition is approved. The person who raised the PO should not approve it.
What are PO approval tiers?
Value bands that decide the approval path. For example, below ₹50,000 automatic, up to ₹5 lakh one manager, and above that a manager then a director. The bands come from your own policy.
How do you automate purchase order approvals?
Capture requisitions in a structured form, convert approved requisitions to POs without retyping, let the system calculate the total and its tier, route to the right approvers with reminders, block self-approval, and record every step in an audit trail.