Business Rules: Comprehensive Guide with Examples for Effective Automation

Leo Maurer -

Business rules are predefined rules/conditions that aim to standardize an organization’s workflow and reduce errors, thereby saving overhead costs and time.

In essence, business rules are a set of ‘laws’ that streamline business operations. The only difference here is that business rules are concerned with efficiency in work performance instead of business ethics.

Moreover, these rules are much more flexible and can be customized to fit operational needs.

An expansive business has several autonomous departments working in tandem to ensure everyday business operations run smoothly. As an organization grows, it becomes more challenging to establish an operational understanding between all departments. Employee errors, lack of a well-defined business structure/hierarchy, poor communication, etc., can severely affect business efficiency.

How can this be avoided? By implementing well-defined and aptly structured business rules.

Check out Nanonets to automate your various business rules & processes. Schedule a demo to learn more about our intelligent document processing use cases!


Table of Contents

What are business rules

So what are business rules?

Business rules define how business processes are to be performed under specific conditions. They lay out set instructions on how business activities need to be carried out. Business rules are often applied to approval workflows within organisations - e.g. invoice approval, loan approval etc.

Most businesses act on agreed-upon relationships and specific guidelines in a more verbal/informal manner. However, digital documentation and implementation of business rules examples allow for stricter control over these guidelines.

Business rules control business activities and processes by integrating the required conditional logic into an organization’s workflow. When properly implemented, business rules can reduce contingencies and conflicts that slow down business processes and make the organization much more time, energy, and cost-efficient.

Business rules are usually implemented through business rules management systems (BRMSs). BRMS is a decision management software that gives organizations the ability to draft, manage and employ business rules across the entire organization.

Examples of business rules

While we can find many examples of business rules across different workflows, here are a few use cases where business rules examples are effectively implemented:

Customer discount programs

Business rules examples can be employed to automate customer discounts based on sales amount. For example, if you want to offer a 20% discount on any product over $10,000, you can apply this rule during invoice processing. Similarly, discount schemes can be used to reward customer loyalty by employing business rules like - “Offer 10% discount to customers who shopped at least ten times from us in the last year.”.

Loan proposal approval

Loan processing requires the evaluation of many factors like credit history, type of investment, and the current employment status of the applicant. An automated approval system can use business rules to calculate the credit score of an applicant based on all these parameters. This can help streamline the process of loan approval in finance organizations to a large degree.

Bonus based on employee performance

Many organizations employ business rules to hand out conditional bonuses and commissions to employees. For example, a conditional bonus of $1,000 can be automatically added to an employee’s salary once they complete a sales target of over $50,000.

Additional invoice approvals

These business rules limit the financial responsibility assigned to employees who are not authorized to make transactions over a certain limit. For example, the system can be automated to require special permission from a manager/ executive to finalize any purchases over $100,000 made by the procurement department.

Assigning better leads to sales representatives

When a sales representative makes a certain number of high-value sales, the company might want to assign them better leads who are interested in making bigger purchases. This business rule can be implemented in an automated system by applying a trigger on the sales figures that automatically moves sales reps up a client level every time they meet specific sales targets.

The importance of business rule automation

As business structures and workflows become more complex, a guided set of automated rules become necessary to make sure all business operations are carried out efficiently. In addition, automation of business rules can improve sales, reduce expensive errors, and help employees achieve organizational objectives much faster.

How Business Rules Management Systems increase efficiency

Business rules management systems (BRMSs) create visual representations of processes and workflows conducted in a business environment. This helps identify critical tasks and pinpoint inefficient processes. In addition, these systems can help accelerate critical tasks through guidelines and change and automate inefficient processes, increasing overall work speed.

How Automated Business Rules improve decisions

Automated business rules can be used to assign objectives based on specific roles, expertise, or conditions empowering individuals to make better decisions. Examples of business rules include limiting the purchase of goods over $20,000 by non-managerial staff. Here, this rule ensures that more significant purchase decisions come only after a manager’s approval, reducing bad decision-making within the procurement department. Business rules also impose specific conditions on these decisions.

How Automated Business Rules help deliver a consistent performance

Automated business rules that prescribe certain standards for employee performance and overall task completion can increase employee productivity. Streamlining menial activity with the help of automation softwares allows employees to focus on the important aspects of their jobs, thereby increasing their work output.

Types and examples of business rules

Business rules are expressed through conditional statements. They implement a certain set of consequences once a condition is invoked. Broadly, there are two types of business rules.

Constraint Rules

Constraint rules limit the behavior of an object based on specific conditions. They are further subgrouped into - stimulus and response rules, operation constraints, and structure constraints. Stimulus and response rules execute specific actions only when the conditions are true.

Higher-level managerial staff is only informed about an individual sale (through system notifications) if it is above $10,000.

Operation constraints control what happens before and after an operation is conducted.

An employee is entitled to X$ in benefits if they have been working with the company for less than five years. After they complete five years, the system automatically adds a salary benefit of $Y (higher than X) to their payment package.

Similarly, structure constraints create broader limitations on data and decisions based on the policies that are defined during its programming.

Only a manager should be able to access employee data like work hours, days off during the month, sales target met and clients handled by the employee.

Derivation Rules

Derivation rules infer a certain set of facts based on given information. They are subdivided into inference rules and computational rules. Inference rules test the veracity of the conditions and try to determine a specific conclusion based on the facts.

If a lead doesn’t respond back within 30 days of the first contact, it must be a cold lead and can be marked accordingly.

Computational rules do the same but utilize complex computer algorithms to infer those conclusions.

The rule engines utilize a combination of these types of rules to automate and streamline daily business workflow.

Combining business processes & automated business rules

Organizations can install business rules management systems (BRMSs) in their workflow to automate business decisions and standardize business processes. These systems are applied across the organization and make the business rules more manageable by charting and standardizing business rules and managing their implementation in automated business processes. Their malleable nature allows shareholders, developers, and executives to interact with examples of business rules to apply, update or modify them without seeking technical assistance.

Nanonets comprehensive business process automation solutions enable businesses to streamline their documentation, business inspection, and many other important organizational activities. Our Optical Character Recognition (OCR) and Deep Learning powered modules help you digitize all your documents within seconds. With Nanonets, you can harness the power of best-in-class enterprise automation software to make sure your business always plays by your rules!