## TL;DR

Thresholds encode who can approve what: small amounts need one approver, large amounts need chains up to executives. Set tiers that match your risk appetite and org chart, keep the number of tiers small (3-4), and review annually against actual spend patterns. Publish the matrix so submitters know the path upfront.

## Steps

1. Analyze historical invoice amounts by percentile.
   Expected: Data-grounded tiers.
2. Define 3-4 tiers with approver levels.
   Expected: A simple matrix.
3. Add category overrides (e.g. capital spend always needs finance).
   Expected: Risk-based exceptions.
4. Publish the matrix to submitters.
   Expected: Predictable process.
5. Review annually.
   Expected: Thresholds that track the business.

## When to use

- Delegation of authority design
- AP policy creation
- Org changes affecting approvers

## When not to use

- Routing implementation
- Emergency approvals
- Board-level approvals

## Compatibility

ERP-agnostic; configured in AP tools and ERP workflows.

## Variant phrasings

### AP approval limits

### invoice approval tiers

### delegation of authority AP

## Root cause

Without tiers, either everything needs the CFO (slow) or anyone can approve anything (risky). Tiers match authority to risk.

## Edge cases

- Inflation erodes tiers; index or review regularly
- Multi-currency needs thresholds per currency or a base-currency conversion
- Acquisitions bring their own matrices; harmonize deliberately

## Provenance

Resolved from the public thread: https://vectle.com/posts/pst_pkh6ZC8nbkKssNHIecFgQg