Invoices pitched just below an approval limit
How to spot supplier invoices and orders kept just under an approval limit or split to dodge a second sign-off, and rules that make splitting pointless.
By Achekam · · 5 min read · For Running a business businesses in South Africa, Nigeria, Kenya
Every approval limit creates a line, and every line invites someone to stay just on the right side of it. If the manager can approve purchases up to a set amount without the owner seeing them, it is worth noticing how many purchases land a little under that amount. Sometimes it is coincidence. Sometimes it is a manager saving the owner's time. And sometimes it is the shape of a problem: one large purchase broken into several small ones, or a friendly supplier invoicing in pieces so that no single bill attracts attention.
The pattern is easy to see once you know to look for it, and the cure is mostly about how the rules are written rather than how hard anyone stares at the invoices.
Why amounts cluster just under a limit
ACCA lists authorisation and approval limits among the common control procedures in a business. They exist so that bigger decisions get a more senior look. The weakness is that a limit tells everyone exactly where the senior look starts.
ICAEW, writing about fake supplier invoices, lists amounts just below approval limits among the warning signs within an invoice, alongside duplicate invoice numbers, vague descriptions of goods or services, wrong addresses and unusual formatting. An invoice pitched just under the line is not proof of anything, but it deserves a second glance, especially when it comes with one of the other signs.
Splitting one purchase into several orders
The OECD, in its guidance on preventing corruption in public procurement, lists abuse of non-competitive procedures, such as contract splitting and abuse of extreme urgency, as an integrity risk when choosing how to buy. The same mechanics show up in private businesses:
- one supplier invoices a job in several parts, each under the limit, dated a few days apart;
- the same item is bought on several orders in one week instead of one order;
- a purchase is labelled urgent to skip quotations that would otherwise be needed.
The OECD also lists false or duplicate invoicing for goods and services not supplied, and weak separation of financial duties, as risks after a contract is awarded. Splitting and fake invoicing often travel together: the smaller the invoice, the less likely anyone checks that the goods arrived.
Reading the ledger for the pattern
You do not need special software to look for this. Achekam's general ledger lists every posted line, so a quarterly review needs nothing more than a ledger export and some sorting. Look for:
- Clusters. Sort supplier bills by amount and look at how many sit in the band just under each approval limit, compared with the band just over it.
- Same supplier, short spells. Group bills by supplier and date. Several bills from one supplier within a week or two, each under the limit, are worth a question.
- Repeat amounts. The same round amount, billed again and again, can be a genuine retainer or a pattern someone settled into.
- Sequential invoice numbers from a supplier who is supposed to have many customers. If your bills from a supplier carry consecutive numbers, you may be their only customer.
- Vague descriptions. "Services rendered" or "materials" with no detail, under the limit, from a supplier with few other bills.
Write down what you checked and what you found, even when you found nothing. That record is your monitoring.
What Achekam enforces today, and what it cannot yet set
Achekam's purchasing controls cover approval at every amount rather than above a threshold:
- Bills without an order. A supplier bill recorded without a purchase order waits for approval before it posts, whatever its amount. Splitting such a bill gains nothing, because each piece still needs an approver.
- Orders. A purchase order is raised from the selected quotation of an approved requisition, and the person who raised it cannot approve it.
There are two honest limits to plan around. First, a rule requiring a number of quotations above an amount cannot be switched on from the app at the time of writing, so no purchase needs quotations until such a threshold exists; the server has the policy, but no screen saves it. Second, the procurement integrity review, sold as its own add-on, raises questions about warning patterns such as competing quotes sharing contact or bank details, or a supplier paid into an employee's bank account. Its check for purchases split under a threshold does nothing until a threshold is set, which the app cannot yet do. Until then, the ledger review above is your split-purchase check.
Spend against budget and committed orders
Splitting hides individual purchases, but it does not hide the total. In Achekam, a business can set a budget per account and period and compare it with actual figures. Approved purchase orders count as committed spend against those budgets, and the screen shows budget, spent, committed and available for each expense account and period. Over-committed lines are flagged, though a purchase is not blocked.
A repairs account that is suddenly far over budget, built from many small orders, tells you something that no single order would. Review the flagged lines monthly and ask what made them up.
Rules that make splitting pointless
The strongest defence is a rule that gives nobody a reason to split:
- Approve by supplier and period, not only by invoice. State that the limit applies to the total spent with one supplier on one job or in one month.
- Require a second approver for any new supplier, whatever the amount.
- Ban "urgent" as a reason to skip steps. Allow genuine emergencies, but require a written reason and an after-the-fact review by someone senior.
- Rotate who reviews the ledger, so the person who might split is not the person who looks for splitting.
- Tell staff you look. A quarterly review that everyone knows about deters more than one nobody knows exists.
For how these risks look in a contractor's business, see quote thresholds and split purchases in construction, and for the wider set of supplier checks, purchase-to-pay checks that stop fake invoices.
Where to start
ICAEW's article on how to identify and deal with fake invoices sets out the warning signs and the preventive controls that sit behind them. Export last quarter's supplier bills, sort them by amount, and look at the band just below your approval limit before you decide whether your limits need rewriting.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
