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Controls on expenditure

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When people think about controlling expenditure, there is a tendency to focus mainly on the point of payment, but by then it is often too late, because your organisation is already committed to pay – the goods have been received, or the work commissioned. So you need to have robust controls around ordering and that is what this section looks at; controls around the payment itself are covered in the section on control of financial assets

You will need to decide on authority levels for approving purchases, and it is a good idea to be explicit about the different levels depending on whether the expenditure is within budget or not. 

If choosing the right level feels very difficult, test it out for three to six months (perhaps start cautiously) and keep an eye on whether:

  • expenditure is being incurred responsibly
  • work is being unduly held up for small transactions

...and then adjust accordingly. 

As with any of your finance processes, it is helpful to record how purchasing works (eg on a flowchart) from someone requesting goods or services through to sending an approved invoice off for payment (though you probably won’t want to enshrine this as part of a trustee-approved document). 

Procurement, estimates and tendering

You will be well aware of the need to compare suppliers in order to ensure value for money; the more costly the purchase, the more research required. The template suggests you formalise this with different numbers of quotes or a tender depending on the purchase value. Here again, you will need to choose the values that make sense for your organisation.

The other issues you should be considering are:

  • whether to have more strict criteria for consultancy or contracts for services that last over a longer period
  • how you would assess and record a choice of supplier if not solely on price
  • what you would do if you couldn’t get sufficient quotes for a specialised piece of work.

Purchase orders and invoices

The purpose of this part of your process is to make sure that your organisation:

  • orders goods and services responsibly
  • only gets what you have ordered
  • only pays for what you have received.

Purchase orders

Purchase order systems are often bureaucratic and badly understood so staff end up complying with the letter not the spirit, and any value in the control is lost. 

You need to have a system that works for your organisation (not just something that looks robust on paper) and communication is key to this. Staff need to understand why an order of a particular value has to be approved before it can be placed, and the person approving that order needs to know whether the purchase is within budget and that funding is actually available – it is good practice to get the person making the request to take responsibility for initial checks on this.  

In a very small organisation approval is often done in conversation, but you must confirm it in writing (in case of accident or just forgetfulness). You may want a formal purchase order system, or you could confirm the conversation by an email. Whoever manages the finances needs a copy of the order/email so that they have a picture of what expenses are coming up around the organisation. 

Whatever approval system you decide on needs to apply to card purchases as well as purchases on account.

The statement in the template policy that staff should not authorise payments for anyone senior to them is to protect all concerned as it may be difficult to challenge your manager. 


Invoices should all be recorded centrally when they come in, again so that the finance person has the latest picture of what your organisation’s position is. This can be difficult to remember as suppliers often email them to their contacts rather than to a finance department, so this needs to be an explicit step in the process.

Before invoices for purchases on account can be approved for payment, they need to be matched both to the original order and to any evidence of goods/services received (delivery note, timesheets for temps). This needs to be confirmed in writing so that when it is passed for payment, the signatories can see that it is properly cleared to pay and don’t then have to redo all the checks.

Some accounts packages are able to deal with this, but if not, you could create a template approval stamp to help people remember what steps they need to go through – with boxes such as:

  • Prices agreed to purchase order
  • Receipt of goods/service confirmed, quality acceptable, agreed to purchase order
  • Invoice calculations checked
  • Project/department/fund
  • Cost category
  • Amounts
  • Approved for payment
  • Paid.

Last reviewed: 30 May 2019

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This page was last reviewed for accuracy on 30 May 2019

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