Formal
Companies have internal processes to approve financial commitments. A sponsor, typically from Operations may have an opportunity to save cost or improve service. A proposal is raised (Opex or Capex request) that explains the costs/benefits arising. The Board of the company reviews the proposal and commits to spend only when it makes economic and business sense. Remember, businesses are not uncontrolled charities - it’s safe to assume that hardheaded decisions are the norm.
Real-world Example
A sales rep pitches a $200k software deal. Before signing, the customer's finance team routes it through their internal approval process, requiring CFO sign-off because it exceeds their $100k threshold.
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