Delivering value through procurement can be challenging without the use of purchase requisition process. Depending solely on purchase orders can hold your team back as you scale. Having purchase requisition process helps you to gain visibility and enable employees to be part of the purchase activities.
Several businesses are unwilling to update their procurement process, even though it directly affects their bottom line. These organizations fail to understand that the more employees start involving in procurement activities, the less control and visibility they have on their spend.
To ensure spend visibility and eliminate maverick spending, businesses must streamline their requisition processes.
Here is everything you need to understand to streamline your requisition process.
A purchase requisition is an internal document created by an employee to request the purchase of goods or services. It initiates the purchasing process and ensures that all necessary approvals are obtained before any purchase is made. This document typically includes details such as the items needed, quantity, estimated cost, and the reason for the purchase.
Aspect | Purchase Requisition |
Purchase Order
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Definition | A formal request to obtain goods or services, initiated by an employee or department within an organization. |
A formal document issued by the buyer to the supplier, detailing the items to be purchased, including quantities and prices.
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Purpose | To seek internal approval and budgetary authorization before proceeding with a purchase. |
To officially authorize a purchase and create a legal contract between the buyer and supplier.
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Initiated By | Employee or department in need of goods or services. |
Procurement or purchasing department based on approved requisitions.
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Approval Process | Requires internal approvals from relevant departments (e.g., finance, management). |
Generally does not require further approval once issued, but must align with the approved requisition.
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Contents | Description of requested items, quantities, estimated costs, and justifications for the purchase. |
Detailed list of items to be purchased, quantities, agreed prices, delivery dates, and terms of payment.
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Role | Initial step to ensure the need and budget for a purchase are validated internally. |
Subsequent step that finalizes the purchase decision and communicates it to the supplier.
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Legal Binding | Not legally binding; serves as an internal document. |
Legally binding; serves as a contractual agreement with the supplier.
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Tracking and Documentation | Used for internal tracking and budget control. |
Used for external tracking, order fulfillment, and financial accounting.
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Supplier Interaction | No direct interaction; purely internal. |
Direct interaction with suppliers; specifies the terms of the transaction.
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Example | An employee requests new office chairs, detailing quantity and justification for approval. |
After approval, the purchasing department issues a purchase order to the supplier specifying the type, number, and price of the chairs.
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Organizations can build an accountable spend culture and maximize spend effectiveness through purchase requisition processes. It also greatly eliminate unapproved spending while enabling employees to be part of the purchasing process.
Purchase requisitions provide a systematic way to oversee and control spending within an organization. With purchase approval process, organizations can ensure that all expenditures are necessary and authorized. This control mechanism helps prevent unauthorized purchases and reduces the risk of fraud.
With a purchase requisition process in place, managing your budget gets lot easier. It ensure that all purchases are approved, tracked, and complaint with your procurement policies and budget constrains. Requisition approval process gives spend visibility and eliminate maverick spending.
Having a documented trail of all purchase requests is essential for accountability and transparency. Purchase requisitions create a paper trail that can be used for auditing purposes, ensuring that every purchase is justified and approved. This documentation helps in resolving disputes, tracking spending patterns, and maintaining compliance with internal and external regulations.
Purchase requisitions help streamline the procurement process by clearly outlining the need for goods or services before initiating a purchase. This helps in planning and organizing procurement activities, reducing delays, and improving the efficiency of the purchasing process. It ensures that all necessary information is available upfront, which speeds up the approval and procurement cycle.
Purchase requisitions help ensure compliance with internal policies and external regulations. By mandating approvals and providing a clear record of purchase requests, organizations can demonstrate that they follow proper procedures and adhere to regulatory requirements.
The purchase requisition process begins when an employee identifies a need for goods or services. The employee completes a purchase requisition form, which is then submitted to the relevant department or authority for approval. Once approved, the requisition is converted into a purchase order, which is then sent to the supplier to fulfill the order.
A purchase requisition form is a document used internally within an organization to request the purchase of goods or services. It serves as a formal request from a department or employee to the procurement or purchasing team to initiate the procurement process. The requisition template typically includes details such as the type and quantity of items needed, the preferred supplier, the estimated cost, and the reason for the purchase. Once the requisition is submitted, it must be reviewed and approved by the appropriate authority within the organization before a purchase order is issued to the supplier.
Here are the common details covered in a purchase requisition form template:
Requestor Information:
Requisition Number:
Date of Request:
Description of Items or Services:
Supplier Information:
Justification/Reason for Request:
Budget Information:
Approval Signatures:
Delivery Information:
Payment Terms:
Attachments:
Notes/Additional Information:
Determining whether your organization needs a purchase requisition process involves evaluating your current procurement practices and identifying areas of improvement. Uncontrolled spending, lack of visibility, frequent errors, tracking difficulties, inefficient workflows, compliance issues, and scaling challenges are all indicators that a formal purchase requisition process could significantly benefit your organization.
Enforcing purchase requisition in your procurement process ensures that all purchases are made strategically and in compliance with organizational policies. It helps prevent unauthorized spending, improves financial accountability, and enhances overall procurement efficiency. By implementing and automating a robust purchase requisition process, organizations can achieve greater control over their procurement activities and drive better business outcomes.