What is an Invoice Approval?

Definition: Invoice approval, also called check authorization, is a document that lists the steps and documents required before an invoice can be paid. In other words, this is the approval process that the accounting department must perform before it is allowed to cut a check for the purchase of goods.

What Does Invoice Approval Mean?

Businesses typically have a system of internal controls that protect their cash from being disbursed without approval. The invoice approval document acts like a checklist of items needed before a company issues payment. This list includes a purchase requisition, purchase order, receiving report, invoice price, date, payment terms, and approval payment personnel. Each one of these items is listed next to a date and initial column, so the person receiving the document can sign off and write the date.

Let’s take a look at an example.


Since the invoice approval process is put in place to secure cash and not allow checks to be issued for unapproved purchases, the first few steps on the approval document involve verifying that the purchase was ordered and received.

The purchase requisition and purchase order forms are compared to make sure the order that was requested by a department was actually ordered by the purchasing department. The receiving report is then compared with the request and the purchase order to ensure the goods received by the receiving department were the goods that were actually ordered.

If all three of these documents agree, the invoice price, date, and payment terms are compared with the prior three documents. This shows that the amount billed by the vendor is the same amount that was ordered by the company. After all the forms have been reviewed and compared, the accounting department can approve the payment to the vendor and authorize the cashier to issue a payment check to the vendor.