What are approval chains in payments?

Approval chains, also known as approval workflows, are sequences of approvers, each with varying levels of authority, through which a payment request must pass before being accepted. These chains ensure that payments are authorized by the appropriate individuals, reducing the risk of fraud and errors.

When are approval chains typically used in payments?

Approval chains are commonly employed for larger payments. They typically begin with the party initiating the payment request, such as a contractor, employee, or vendor, and conclude with the final review by a manager or supervisor. The decision-makers in the chain either approve or reject the request based on established policies and procedures.

What are some use cases for approval chains in payments?

Use cases for approval chains can vary depending on the organization and the type of payment involved. Here are some examples:

• Vendor Payments: Approval chains are beneficial for scrutinizing larger payments made to suppliers, helping detect potential threats like fraudulent requests from fake vendors.
• Compliance Requirements: Complex payment requests often require review by individuals with compliance expertise. Approval chains ensure that payments undergo a thorough evaluation by the relevant experts.
• Expense Management: In the case of employee expense reports, approval chains ensure proper evaluation, preventing under or overcompensation of employees.
• High-Risk Payments: Payments with above-average risk factors, whether due to their size or transfer method, require heightened scrutiny. Approval chains ensure that the right individuals evaluate such payments appropriately.

How do approval chains factor into payroll processing, especially for global workforces?

Approval chains play a significant role in global payroll, especially for organizations with global workforces. As businesses expand, the approval process for global payments becomes more intricate, often involving multiple stages of review. Payment distribution platforms can simplify this process by automating and organizing each approval stage, ensuring a smooth and well-defined workflow.

If you have more questions or need assistance with approval chains in payments or global payroll processes, please feel free to contact our team for guidance and support.