Q: Why should approval responsibilities be separated for contracts and invoices?
Approval workflows help protect your company and streamline work.
Defining approval workflows and approver roles and responsibilities for contracts and invoices helps ensure that your company is legally protected, avoiding potential compliance risks, and has internal visibility and transparency for cash flow.
The final approvers for contacts and invoices should have both the necessary expertise and authority within your company. Your company’s organizational structure and corresponding areas of responsibility should drive establishing the appropriate approvers.
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Contracts, Statements of Work, and Work Orders
Developing and approving contracts, statements of work (SOWs), and work orders (WOs), should involve both the “business” side (the group or department that needs the services) and the “legal” side (internal or external). The business group provides the subject matter expertise. The legal or procurement department will ensure that the terms and conditions of any agreement are in the best interests of the company.
For frequently executed contract types, it is a best practice to have a pre-developed template. Templates significantly streamline the contracting process, as well as reducing contracting costs.
Liquid users can either use the included standard templates or upload custom templates for contracts, SOWs, and WOs.
Similar to contracts and other agreements, invoice approval workflows should involve the “business” side (aka “stakeholder”), as reviewers of the work/services provided, and the “financial” side (finance / accounting department). The business approver needs to verify delivery of the work / services, within the agreed on expense. The financial approver must review and approve the invoice prior to payment processing.
Invoice approval workflows help prevent issues as a result of human error (for example, duplicate payments) and invoice fraud. Additionally, invoice workflows help ensure full transparency for your business, appropriate audit trails, and accurate financial reporting.
Liquid’s integrations enable invoices from your freelancers, contractors, and consultants to automatically appear in Bill.com or Xero.
Simplifying Approval Workflows
With Liquid, you can set the different approver roles for your organization, expenditure approval authority rules, and the approval flow. The approvals flow setup will then apply automatically to all your contracts, SOWs / WOs, and invoices, as appropriate.
Ready to simplify managing your independent contractors, freelancers, and vendors? Sign-up for Liquid beta today!
Updated: June 2, 2020
Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.