How to use this

While most companies have governance in place for approving decisions, in many cases its not clearly documented. We encourage you to make this clear so agents in Riff can use it to help your team understand what the next steps are in writing a business case or getting approvals. 

Tip: Paste this into your preferred LLM and attach any existing documentation you have on who approves what and ask for this to be customised to fit your organisation. If you find it takes a long time to get stakeholders approving this, it may be another reminder you need Riff.  

Approval Policy – Contracts & Expenditure

Applies to: All employees, contractors, and officers
Entity type: Mid‑market manufacturing group (~$500M turnover)
Effective date: [Insert]
Policy owner: Chief Financial Officer (CFO)
Review cadence: Annual (or upon material change)

1. Purpose

This policy establishes a clear, consistent, and auditable framework for approving:

• Commercial contracts

• Capital expenditure (Capex)

• Operating expenditure (Opex)

• Un-budgeted and non‑routine commitments

The objective is to:

• Ensure appropriate financial, legal, and operational oversight

• Support timely, high‑quality decision‑making

• Prevent unauthorised commitments and spend leakage

• Maintain strong governance aligned with Board and audit expectations

2. Scope

This policy applies to all:

• Purchases of goods and services

• Supplier and customer contracts

• Capital investments and projects

• Renewals, extensions, and material variations

• Commitments creating financial, legal, or operational obligations

This includes commitments entered into verbally, electronically, or in writing.

3. Guiding principles

All approvals under this policy must adhere to the following principles:

1. Authority is explicit – Approval authority is defined by role, not tenure or influence.

2. Segregation of duties – Initiation, review, and approval must not rest with the same individual.

3. Materiality matters – Higher risk, value, or strategic impact requires higher approval.

4. Budget alignment – Budgeted spend is treated differently to unbudgeted spend.

5. Auditability – All approvals must be documented and retrievable.

6. Commercial rigour – Decisions must be supported by appropriate analysis.

4. Definitions

Capex: Expenditure resulting in the acquisition or enhancement of assets capitalised on the balance sheet.

Opex: Expenditure expensed in the period incurred.

Budgeted: Approved within the current Board‑approved budget.

Unbudgeted: Not included in the current approved budget.

Total Contract Value (TCV): Aggregate value over the full contract term, including extensions and options.

5. Approval thresholds

5.1 Expenditure approval matrix

Thresholds apply to total commitment, not annualised value.

6. Contract approval requirements

6.1 Contracts requiring approval

Approval is required for:

• All new contracts

• Renewals or extensions

• Variations increasing value, scope, or risk

• Termination or settlement agreements

6.2 Mandatory contract reviews

6.3 Prohibited actions

Employees must not:

• Sign contracts without documented approval

• Commit verbally prior to approval

• Circumvent approval thresholds by splitting contracts

7. Required approval documentation

All approval requests must include, at minimum:

1. Description of the proposal

2. Commercial rationale

3. Total financial commitment (TCV)

4. Capex vs Opex classification

5. Budget status

6. Key risks and mitigations

7. Alternatives considered

8. Recommendation and decision sought

For material spend, a formal business case is required.

8. Business case requirements

Business case requirements apply regardless of whether spend is budgeted or unbudgeted. Budget inclusion does not remove the need for commercial justification; it only affects approval authority.

8.1 Business case thresholds

Thresholds apply to total contract value or total project cost, not annualised spend.

8.2 Short-form business case (≤ $100,000)

A short-form business case must provide a clear, concise justification and include:

1. Problem or opportunity statement

2. Proposed solution

3. Total cost and spend classification (Capex/Opex, budgeted/unbudgeted)

4. Expected benefit or outcome (financial or operational)

5. Key risks or dependencies

6. Confirmation of budget availability (if budgeted)

The objective is clarity and speed, not exhaustive analysis.

8.3 Long-form business case (> $100,000)

A long-form business case is required for all commitments exceeding $100,000, including budgeted spend.

At minimum, the long-form business case must address:

• Clear definition of the problem or strategic objective

• Options analysis (including do nothing)

• Financial analysis (ROI, payback period, NPV where applicable)

• Assumptions and sensitivities

• Non-financial impacts (safety, operational, strategic, ESG)

• Key risks and mitigations

• Implementation considerations and dependencies

Long-form business cases must be sufficiently robust to support executive or Board-level scrutiny.

9. Approval process

1. Initiator prepares request and supporting documentation

2. Relevant reviews obtained (Finance, Legal, Risk)

3. Approval sought in accordance with matrix

4. Decision recorded in the approved system of record

5. Commitment executed only after approval

Email or informal approvals are not valid unless captured in the system of record.

10. Delegations and acting arrangements

Delegations must:

• Be documented in writing

• Specify scope and duration

• Be approved by the CFO or CEO

Acting arrangements do not extend approval limits unless explicitly stated.

11. Monitoring and compliance

Finance will:

• Periodically review compliance

• Report breaches to the Audit & Risk Committee

• Recommend corrective actions

Non‑compliance may result in disciplinary action.

12. Exceptions

Exceptions to this policy require:

• CFO approval

• Documentation of rationale

• Disclosure to the Audit & Risk Committee where material

13. Systems and records

All approvals must be:

• Logged in the approved decision or procurement system

• Retained in accordance with record‑keeping requirements

• Accessible for audit and review

14. Policy review

This policy will be reviewed annually or earlier if:

• Material organisational change occurs

• Governance requirements change

• System or process deficiencies are identified

Approved by: [Insert]

Approval date: [Insert]