AS | Ankit Sarawagi|Founder, CFOmatrix·July 2026·9 min read | SOP + free template |
- Two people, not four signatures. Everyday spend needs finance to do or check the action plus one other approver (founder or department head). Two sets of eyes is a real control without a chain.
- Every spend is approved. There is no auto-approve-below-X free pass; small just means fast and lightweight, not unapproved.
- Sensitive items always go to the founder: new vendors, salary changes, and bank-detail changes, regardless of amount.
- Big items go to the board, at the threshold set by your investment agreement or shareholders agreement reserved matters, not a number you invent.
- The approval must leave a record inside the tool (Zoho Books, bank maker-checker) or a captured email, because that is what an auditor asks for.
| 2 People involved in everyday spend, not four | 3 Tiers: everyday, sensitive, above the board limit | 0 Spends that auto-approve with no sign-off |
| 1. What an approval matrix actually is 2. Delegation of authority, in plain terms 3. The three-tier model | 4. A lean default matrix (copy this) 5. When to add a step 6. Where the approval is recorded |
What an Approval Matrix Actually Is
An approval matrix is a single table that maps every kind of spend or decision to the person allowed to approve it. Rows are the type of spend or an amount band; columns are the possible approvers, finance, founder, department head, board. Where a row and a column meet, you mark who signs off. That is the whole idea, and its value is that nobody has to ask, guess, or escalate: the answer to “who approves this?” is already written down.
This SOP is the process. The matching expense and procurement policies are the rules. The policy says what the company will and will not pay for; the approval matrix says who presses approve. You need both, and they should agree with each other. This post is one of the foundational SOPs in our finance SOPs and controls guide for startups.
Four sign-offs, days of delay, and nobody feels truly accountable.
Two sets of eyes, minutes not days, clear ownership.
Delegation of Authority, in Plain Terms
Delegation of authority (DOA) is the founder or board deciding, in advance, who can commit the company’s money and up to what limit. Without it, only the founder truly has authority, so either everything waits for the founder or people spend without any real mandate. The approval matrix is your delegation of authority written down: it hands defined, bounded authority to finance and to department heads, keeps the sensitive decisions with the founder, and reserves the biggest ones for the board.
Done well, DOA is what lets a founder let go of the small stuff without losing control of the important stuff. The founder is not approving every taxi bill; the founder is still the one approving a new vendor, a salary change, and anything above the board threshold. That is delegation, not abdication.
“I do not believe in long approval chains. For everyday spend, two people is enough: finance does the work and one other person approves. What I never delegate is the sensitive stuff, a new vendor, a change in someone’s salary, a change in bank details. That always comes to me.”
Ankit Sarawagi, from building the finance function at growing startupsThe Three-Tier Model
A right-sized matrix has just three tiers. Almost every spend or decision falls neatly into one of them, which is what keeps the whole thing simple enough for a lean team to actually run.
Notice the two things that make this lean model work. First, the board threshold is not a number you invent: it comes from the reserved matters in your investment agreement or shareholders agreement (SHA), the list of decisions your investors have negotiated the right to approve. Read your own agreement and use those limits. Second, sensitive items jump straight to the founder no matter how small, because that is where fraud and costly mistakes actually happen.
A request to change a vendor’s or employee’s bank account is the single most common route for payment fraud. Never action it on an email alone. It is a Tier 2 item: the founder confirms it, ideally through a second channel like a phone call, before finance updates the record. This one rule prevents a whole category of loss.
A Lean Default Matrix (Copy This)
Here is a filled-in matrix for a team of roughly 5 to 40 people. Rows are the spend type or decision; columns are who is involved. Finance always does or checks the action; the tick shows who else must approve. Adjust the rupee bands and the SHA limit to your own numbers.
| Spend type / decision | Finance (does/checks) | Dept head | Founder | Board |
| Everyday spend up to ₹1,00,000 | ✓ | ✓ | – | – |
| Spend ₹1,00,000 to SHA limit | ✓ | – | ✓ | – |
| Onboard a new vendor | ✓ | – | ✓ | – |
| Salary / compensation change | ✓ | – | ✓ | – |
| Bank-detail change (vendor / employee) | ✓ | – | ✓ | – |
| Anything above the SHA / IA limit | ✓ | – | ✓ | ✓ |
Get the CFOmatrix Approval Matrix template: the table above as an editable file, with the amount bands and approver columns ready for you to set your own limits and roles. Fill it in once, share it with the team, and the “who approves this?” question is settled.
Lean Now, When to Add a Step Later
The two-person model is right for a small team. As you scale, you add steps deliberately, not by copying a big-company template wholesale. Here is the contrast.
- Finance + one approver for everyday spend
- Founder for all sensitive items
- Board only above the SHA limit
- One matrix, one page
- Department heads own real budgets: add a budget-owner tier
- Volume grows: add a purchase-order step before commitment
- A finance manager joins: they approve, founder reviews high-value only
- Higher amount bands appear between everyday and board
Every spend still gets approved, even the small ones. An “auto-approve anything below ₹5,000” rule feels efficient, but it is exactly the gap that leaks money and fails an audit. Keep small approvals fast (one tap inside the accounting tool), not absent. The founder can also compensate lightly: eyeball spend as it happens and formally review and approve all expenses at the month-end financials review.
Where the Approval Is Recorded
A matrix only works if each approval leaves a record. Auditors and diligence teams do not just ask whether you approved a spend; they ask you to show the approval. Startups get caught here all the time: they do the work but never document it. The fix is to keep the approval inside a tool that has its own audit trail, and to capture back anything that happened over chat.
Run this way and the documentation an auditor or investor asks for is produced as a byproduct of approving spend, not as extra work later. This same audit-trail discipline runs through the rest of the series: read how it pairs with segregation of duties on a tiny team and with the payment and maker-checker SOP, and see the full picture in the finance SOPs and controls pillar guide.
Frequently Asked Questions
What is an approval matrix?
An approval matrix is a simple table that maps each type of spend or decision to the person or body allowed to approve it. Rows are the spend type or amount band (everyday operating expenses, a new vendor, a salary change, anything above the board threshold), and columns are the approvers (finance, founder, department head, board). It removes the constant question of who signs off on what, so approvals happen quickly and consistently and every one of them leaves a record.
What is delegation of authority (DOA)?
Delegation of authority is the founder or board formally deciding, in advance, who can commit the company’s money and up to what limit. The approval matrix is how that delegation is written down: finance plus one other person can approve everyday spend, the founder must approve sensitive items like new vendors and salary changes, and anything above the limit in the investment agreement or shareholders agreement goes to the board. DOA is what lets a founder step back from every small decision without losing control of the important ones.
How many approvers does a startup need?
For a lean startup of roughly 5 to 40 people, two people is enough for everyday spend: the head of finance does or checks the action and one other person (the founder or the relevant department head) approves it. Two sets of eyes give you a real control without a long signature chain. You add a third approver only for sensitive or high-value items, and the board only above the threshold set in your investment agreement or shareholders agreement.
What needs board approval in a startup?
Big and strategic items go to the board, and the threshold should come from your investment agreement or shareholders agreement reserved matters, not an arbitrary number. Typical reserved matters include spending or borrowing above a stated limit, capital expenditure above a limit, annual budget approval, new fundraising, related-party transactions, senior hires and material contracts. Read your own agreement, because the exact list and limits are negotiated deal by deal.
Should small expenses still be approved?
Yes. A right-sized matrix does not auto-approve anything below a threshold. Every spend gets approved by someone, because an auto-approve-below-X rule is exactly the gap that leaks money and fails an audit. The trick is to keep small approvals fast and lightweight (one approver, done inside the accounting tool or captured over email), not to skip them. Small does not mean unapproved; it means quick.
What should always need founder approval?
Three sensitive items should always go to the founder regardless of amount: onboarding a new vendor, any salary or compensation change, and any change to a vendor’s or employee’s bank details. These are the classic fraud and error points. A bank-detail change request is the single most common route for payment fraud, so it should never be actioned on an email alone; the founder confirms it, ideally through a second channel, before finance updates the record.
This is general educational information for founders, current to mid-2026, drawing on the author’s experience building finance functions inside growing startups, and is not legal, tax or audit advice. Reserved matters, thresholds and the exact approval design vary by company and by your investment agreement or shareholders agreement. Verify your own position or consult a professional before acting on a specific matter.
The Payment and Maker-Checker SOP
Finance SOPs and Controls: The Founder’s Guide
AS | Founder, CFOmatrix | Finance Strategy & Equity Compliance CFOmatrix is a knowledge platform focused on how finance actually works inside growing companies. This SOP draws on hands-on experience setting up right-sized approvals, controls and audit trails for lean startup teams. |