In any organizational workflow, there are multiple stages where tasks are executed and decisions are made. In the context of accounting, we often come across the terms ‘approving’ and ‘posting’. For anyone who isn’t familiar with accounting terminology, these two terms might sound interchangeable. However, there is a significant difference between these two concepts. In this blog post, we will explore the difference between approving and posting in detail.

Approval is the first step in any accounting workflow, whether it’s an invoice, purchase order, expense report, or timesheet. During the approval stage, the relevant stakeholders, such as managers, clients, or even auditors, review the transaction, verifying its accuracy, and ensuring that it complies with the organizational policies and guidelines. At this stage, they can either approve or reject the transaction, and most often, they can add comments or suggestions for improvements, which can be acted upon.

Once a transaction has been approved, it moves on to the posting stage. Posting refers to the process of recording the transaction to the accounting system, where it becomes a part of the general ledger. In simple terms, posting is akin to writing a check after getting approval from the bank. At this stage, a finance user examines the approved transaction and confirms that it is ready for recording. Once posted, the transaction is considered final, and it becomes available for financial reporting.

It’s important to note that approving and posting are not always sequential. Depending on the organization’s workflow, the two stages can overlap or occur simultaneously. For example, in a small business with a single finance person, that person might approve and post the transaction themselves. Alternatively, in a large organization with multiple approval levels, multiple people might approve the transaction at different stages before it gets posted by the finance team.

Another difference between approving and posting is that approval is often a manual process that involves human judgment and scrutiny, whereas posting can be automated once the transaction has been approved. In other words, approval requires human intervention, whereas posting can be done systematically based on a set of rules entered into a computer program. Typically, organizations use workflow automation software to manage the approval process and accounting software to automate the posting process. An integrated approval and posting workflow managed in a centralized platform is ideal.

Approving and posting are key gates in the financial operations workflow for any organization. For an agency, where the timing of client and vendor invoices and related transactions are almost always asynchronous, having a dynamic and flexible infrastructure to manage these key gates is essential.  While approval involves verifying the transaction’s accuracy and compliance with organizational policies or client/vendor agreements,, posting is all about recording the transaction to the General Ledger for financial reporting. By understanding the difference between approving and posting, organizations can improve their financial operations and ensure transparency across stakeholders. 

Click here to say hello and learn more about Accountability.