Requisition Management

  • By ProcureDesk
  • March 19,2024
  • 10 min read

Requisition Management

In the world of business, procurement plays a pivotal role in ensuring the smooth operation of an organization. One of the key aspects of procurement is requisition management. This article will delve into the intricacies of requisition management and explain the various procurement terms associated with it. The aim is to provide a comprehensive understanding of these concepts, especially for small companies that may not have dedicated procurement departments.

Requisition management, in simple terms, is the process of managing requests for the purchase of goods or services within an organization. It involves several steps, from the initial request to the final approval and purchase. Understanding the terminology associated with this process can significantly enhance the efficiency and effectiveness of your procurement operations.

Understanding Requisition

The term ‘requisition’ in procurement refers to a formal request for the purchase of goods or services. It is the first step in the procurement process and is typically initiated by an employee or department within the organization that requires the goods or services. The requisition includes details such as the type and quantity of goods or services required, the reason for the purchase, and the desired delivery date.

Requisitions are crucial for maintaining control over the procurement process. They ensure that purchases are necessary and within budget, and they provide a record of procurement activities for auditing purposes. For small companies, understanding and managing requisitions can help prevent unnecessary spending and ensure that resources are used efficiently.

Requisition Form

A requisition form is a document used to make a purchase request. It typically includes fields for the requester’s name and department, the date, the items or services requested, the quantity, the estimated cost, and the reason for the request. The form may also include a section for approval signatures from relevant authorities within the organization.

In small companies, a requisition form can be a simple paper document or an electronic form. Regardless of the format, it is important to ensure that the form is completed accurately and thoroughly. This helps to avoid misunderstandings and delays in the procurement process.

Requisition Number

A requisition number is a unique identifier assigned to each purchase request. It is used to track the request through the procurement process and to reference the request in future communications or records. The requisition number is typically generated automatically when the requisition form is submitted.

For small companies, using requisition numbers can greatly simplify the tracking and management of purchase requests. It allows for easy retrieval of information about a specific request and helps to ensure that each request is handled promptly and accurately.

Procurement Process

The procurement process is the series of steps that an organization follows to acquire the goods or services it needs. It begins with the identification of a need (the requisition) and ends with the receipt and payment of the goods or services. The process includes several stages, including requisition, approval, vendor selection, purchase order issuance, delivery, and payment.

Understanding the procurement process is essential for small companies, as it can help to ensure that purchases are made in a timely, cost-effective manner. It can also help to prevent fraud and misuse of company resources.

Approval Process

The approval process is the stage of the procurement process where the requisition is reviewed and either approved or denied. The approval is usually given by a manager or other authority within the organization, based on factors such as the necessity of the purchase, the cost, and the availability of funds.

In small companies, the approval process may be relatively informal, with approvals given verbally or via email. However, it is still important to maintain a record of approvals for auditing purposes.

Vendor Selection

Vendor selection is the process of choosing a supplier for the goods or services requested. This may involve comparing prices, evaluating the quality of the goods or services, and assessing the reliability of the supplier. The goal is to choose a supplier that can provide the best value for the organization.

For small companies, vendor selection can be a critical factor in managing costs and ensuring the quality of goods or services. It may be beneficial to establish relationships with reliable suppliers and to negotiate favorable terms whenever possible.

Purchase Order

A purchase order (PO) is a document issued by the buyer (the organization) to the seller (the supplier) to confirm the purchase. It includes details such as the items or services to be purchased, the quantity, the price, and the delivery date. The PO serves as a contract between the buyer and the seller, and it is legally binding once it is accepted by the seller.

In small companies, the use of purchase orders can provide several benefits. It can help to prevent misunderstandings with suppliers, provide a record of purchases for auditing purposes, and allow for better tracking and management of expenditures.

PO Number

A purchase order number (PO number) is a unique identifier assigned to each purchase order. It is used to track the order and to reference it in communications with the supplier. The PO number is typically generated automatically when the purchase order is issued.

For small companies, using PO numbers can simplify the management of purchases and help to ensure that orders are fulfilled accurately and on time. It can also make it easier to reconcile purchases with invoices and payments.


An invoice is a document issued by the seller to the buyer to request payment for the goods or services provided. It includes details such as the items or services delivered, the quantity, the price, and the total amount due. The invoice is typically sent after the goods or services have been delivered, and it is used by the buyer to verify the delivery and to process the payment.

For small companies, managing invoices effectively is crucial for maintaining good relationships with suppliers and for ensuring accurate financial records. It is important to check invoices carefully against the corresponding purchase orders and deliveries, and to pay them promptly and accurately.

Payment Terms

Payment terms are the conditions agreed upon by the buyer and the seller regarding the payment for the goods or services. They include the amount to be paid, the method of payment, and the time frame for payment. The payment terms are typically specified in the purchase order and are legally binding once the order is accepted by the seller.

For small companies, understanding and adhering to payment terms is essential for maintaining good relationships with suppliers and for managing cash flow effectively. It is important to negotiate favorable payment terms whenever possible and to ensure that payments are made in accordance with these terms.

Net Terms

Net terms are a type of payment term that specifies the number of days within which the payment is due. For example, ‘net 30’ means that the payment is due within 30 days of the invoice date. Net terms are commonly used in business transactions, and they provide a clear deadline for payment.

For small companies, understanding net terms can help to manage cash flow and to avoid late payment penalties. It is important to plan for payments in accordance with the net terms and to communicate with suppliers if there are any difficulties in meeting these terms.

Discount Terms

Discount terms are a type of payment term that offers a discount for early payment. For example, ‘2/10, net 30’ means that the buyer can take a 2% discount if the payment is made within 10 days, but the full amount is due within 30 days. Discount terms can provide a financial incentive for early payment and can help to improve cash flow for the seller.

For small companies, taking advantage of discount terms can be a good way to save money and to improve relationships with suppliers. However, it is important to ensure that early payments do not strain the company’s cash flow.


Requisition management and the associated procurement terms can seem complex, especially for small companies without dedicated procurement departments. However, understanding these concepts and managing them effectively can bring significant benefits. It can help to control spending, improve efficiency, and ensure that the company gets the best value from its purchases.

By understanding the terminology and processes involved in requisition management, small companies can take control of their procurement activities and make informed decisions that support their business objectives. Whether it’s managing requisitions, selecting vendors, issuing purchase orders, or handling payments, every step of the procurement process can be optimized for success.