Blog · Approvals and authority

How to set approval limits for your team

Published 8 October 2026 · 5 min read

Set approval limits by choosing a few bands of spend, measured excluding tax, and naming who signs off each band, in order from the lowest limit up. Give requesters a small limit of their own for routine buying, name who decides above the top limit, agree cover for time away, then write it on one page and review it each quarter. A finance lead can do this in an afternoon.

Before you start

You need three things to hand: a list of the people who buy for the business, last year’s purchases with their amounts, and an idea of which decisions the owners or directors want to keep for themselves.

Limits work well when they follow the way the business already spends. The aim is that most requests are decided quickly by someone close to the work, and the large ones reach the people who answer for the money.

Set your approval limits in ten steps

Work through these in order. Each one is a decision you can write down in a sentence or two.

1. List who raises requests and who can approve. Write down everyone who buys things, by company and site, then mark the few people who should sign off spending. Most small and mid-sized teams need two to four levels: a line manager, an operations or department head, and a director.
2. Decide the bands by amount excluding tax. Compare each request’s total before VAT with the limits, so the same purchase lands in the same band whatever the supplier charges in tax. Pick round numbers that fit your spending: for example, up to 500 for the requester, up to 5,000 for a line manager, up to 25,000 for the operations head and anything above that for a director. These figures are only an illustration; yours should come from last year’s purchases.
3. Give requesters a small own limit for routine items. A limit that covers consumables, small tools and repeat orders keeps approvers for the decisions that need them. Keep it low enough that a mistake would be cheap, and check what it let through at your first review.
4. Order the approvers from the lowest limit up. A request goes to the first approver, then the next, until it reaches someone whose limit covers the total. Starting with the line manager means the person who knows the work sees it first, and senior people only see what is above the limits of the people before them.
5. Decide who decides above the top limit. Some requests will be above every limit: a vehicle, a fit-out, an annual contract. Name the person or small group who decides those, usually a director or the owner, rather than leaving it to whoever is senior that day.
6. Vary by entity or site only where the people differ. If two companies or sites have different managers, they need different paths. If the people are the same, one set of bands is easier to explain and to check. Keep separate numbers for a site only when the risk there really is different.
7. Decide what happens when someone is away. For each approver, choose whether requests move on to the next person or to a named colleague who covers with the same limit, never a higher one. Agree this before the first holiday, not during it.
8. Write it down and tell everyone. Put the bands, the names, the rule above the top limit and the cover arrangements on one page in your purchasing policy, and state that nobody approves a request they raised. Tell requesters what they can buy without asking and who sees the rest.
9. Set it up. Enter each person’s limit and approvers exactly as written. Before you go live, walk three example amounts through each path on paper: one under the requester’s limit, one in a middle band and one above the top limit. Check each ends with the person you expect.
10. Review it every quarter. Look at which requests went to the top, which approvers held things up and whether the requester limits are right. When people join, leave or change roles, update their paths that week and note what changed and why.

An example approval matrix

Here are the illustrative bands from step two as a single table. Amounts exclude tax and are in your home currency. Change the names and numbers to suit your business.

Common mistakes

A few patterns cause most of the trouble with approval limits.

• Limits that include tax, in a VAT-registered business. The band then depends on whether the supplier charges VAT, not on what the business is committing to.
• Too many bands. Five or six levels slow everything down and nobody remembers them. Two to four is usually enough.
• A requester limit of zero. Every small purchase waits for a manager, and people start buying around the process.
• No rule for absence. Requests sit with someone on leave, and the work stops with them.

Questions

Should approval limits include VAT?

Most businesses set limits excluding VAT, because recoverable VAT is not a cost to the business and it keeps the bands steady whether or not a supplier is registered. Confirm the approach with your accountant, especially if you can’t recover all the VAT you pay.

What is a typical approval limit for a manager?

There is no standard figure; it depends on the size of the business and what it buys. Look at last year’s purchases and set the manager’s limit so it covers the everyday requests in their area, with the larger, rarer ones going further up.

Can someone approve their own purchase request?

They shouldn’t. Separating the person who asks from the person who approves is a basic control, and it applies to directors and owners too. Name someone else to decide the requests of the most senior approvers.

How often should approval limits be reviewed?

At least once a year, and quarterly while the limits are new. Update them whenever someone joins, leaves or changes role, and after a price rise or a change in what the business buys.