A procurement policy exists to answer one question before money is committed: has the right person agreed to this spend, at a fair price, on acceptable terms? This template ties quote requirements, purchase orders, and contract review to spend thresholds, so small purchases move quickly and large ones get the scrutiny they need. Pair it with our software category guides to see which tools fit your team. Once you have a shortlist, check the vendor profiles and the finance glossary for unfamiliar terms, then use our head-to-head comparisons before your first demo.
Built for: Controller, CFO, Procurement lead, AP manager
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Set thresholds from your spend profile. Sort last year's vendor spend by transaction size. Thresholds should put most transactions in the fast lane while capturing the few that make up most of the value.
Align approvers with your delegation of authority. The approver column must match the board-approved delegation of authority. Where the two conflict, the delegation of authority wins and the policy should be corrected.
Configure PO and match rules in the system. Set the PO-required threshold and match tolerances in your ERP or purchase order software so invoices without a PO route to exception rather than to payment.
Report exceptions quarterly. Track after-the-fact POs, sole-source awards, and split purchases. The exception report shows where the policy is too slow or being worked around.
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Thresholds apply to the total contract value over its full term, including renewals, not the first invoice. Splitting a purchase to fall below a threshold is a policy violation.
| Total contract value | Quotes required | PO required | Approver | Contract review |
|---|---|---|---|---|
| Under [$2,500] | None; use card or preferred vendor | No | Budget owner | Only if terms apply |
| [$2,500] to [$25,000] | [2] written quotes | Yes | Department head | Standard terms check |
More free templates finance teams use alongside this one.
A card programme is only as controlled as its limits, merchant blocks, and reconciliation deadline. This policy puts the preventive controls in the card platform, where they stop a bad transaction before it happens, and uses the monthly reconciliation as the detective control that catches the rest.
Most approval matrices fail in one of two ways: every invoice goes to the CFO, or nobody can say who approves a $40,000 software renewal. This approval matrix separates PO-backed invoices, where approval already happened at the purchase order, from non-PO spend, where the invoice is the only control point. It also names a backup for every approver so invoices do not sit in someone's inbox while they are on leave.
Vendor onboarding is where most payment fraud is set up, weeks before any money moves. A vendor record created from an emailed form with unverified bank details is a standing instruction to pay whoever supplied them. This vendor onboarding checklist puts tax, sanctions, and bank verification ahead of activation, and keeps the person who creates the record separate from the person who approves it.
Scope, purchase thresholds with quote requirements, when a purchase order is required, approval levels, sole-source rules, contract review triggers, conflict-of-interest rules, vendor onboarding, and receiving and three-way match. Thresholds should be measured on total contract value.
It is a company decision. A common structure is no quotes for small purchases, two written quotes for mid-value spend, three for larger purchases, and a formal RFP above a high threshold. Set the bands so most transactions stay in the fast lane and the few large ones get competitive pricing.
AP compares the purchase order, the receiving record, and the vendor invoice before paying. Vendor, quantity, and price should agree within a set tolerance. It prevents paying for goods not ordered, not received, or billed at the wrong price.
When only one vendor can realistically meet the need, for example proprietary products, unique expertise, documented switching costs on existing work, or a genuine emergency. It should be documented with the market research done and how price was judged reasonable, and approved one level higher than normal.
