by martieLast Updated : Jul-17-2023
Effective procurement management plays a very crucial role in maintaining your operational efficiency and maximizing your cost savings.
To secure a smooth and transparent purchasing process, your organization must rely on various tools and documents, including purchase requisition forms and purchase orders. These essential components are the backbone of your procurement workflows, facilitating seamless communication between departments, suppliers, and stakeholders.
In this blog post, we aim to explore the fundamentals of purchase requisition forms and their importance in your company’s procurement cycle. Aside from that, we will also discuss:
A purchase requisition form refers to an internal document that your company’s employees use to request the purchase of goods or services on behalf of your organization. A purchase requisition contains important information such as the name of the employee requesting the purchase, detailed information about goods or services being requested, and even the reason behind the purchase.
After an employee requests a purchase using the purchase requisition form, it is submitted to the purchasing department, which will approve the request. Once a purchase requisition is approved, it is issued to the vendor selling the requested goods or services.
To further understand purchase requisition forms, it’s important to note their contents. Here are some of the contents of a purchasing form and their specific description:
You should know that Purchase Requisition Forms come in different types, aiming to cater to different purchasing needs.
Understanding the distinction between these requisition forms will help you manage your procurement process more effectively to ensure smooth transactions. Let’s explore the 4 types of requisition forms used in procurement:
By understanding the unique attributes of each purchase requisition type, your company can tailor your approach so you can meet the requirements of your unique purchasing needs.
As mentioned above, purchase requisition forms are used to request goods or services formally. Here are the most common uses of a requisition form:
The purchase requisition workflow comprises several crucial steps that ensure your organization experiences a smooth and efficient procurement process. Let’s dive into each step in detail:
The first step is for your business to identify what goods or services you need. Your company can assign a department manager, a team leader, or an employee to do this.
Once you have identified the required goods and services, your assigned staff must submit a purchasing requisition form to the purchasing department. Your purchase requisition form typically includes information about the requested goods or services, like quantity and estimated cost.
The purchase requisition form is then reviewed and approved by the department manager. This ensures that the purchase is necessary and that the budget is available.
Your company’s purchasing department may conduct a stocktake to ensure that the goods or services are not already available in your inventory. This can help your company to prevent unnecessary purchases.
Your purchasing department then screens the purchase requisition form to ensure that it is complete and accurate. The purchasing department may also contact your chosen vendor to verify the price and availability of the goods or services.
Your purchasing department then approves the purchase requisition form. This gives your purchasing department the authority to issue a purchase order.
Your purchasing department then generates a purchase order. The purchase order is a formal document that specifies the goods or services being purchased, the quantity, the price, and the delivery terms.
Your chosen vendor then delivers the goods or services to your company. Your company should inspect the goods or services to ensure they are received in good condition and meet the specifications.
Your purchasing department then conducts a three-way matching process to ensure that the goods or services you requested have been received, the invoice is accurate, and the purchase order is approved.
The purchasing department then pays the invoice to the vendor.
You should enforce a purchase requisition form in your procurement process for many reasons. Let’s dive into some of the reasons why:
A purchase requisition form requires a requester of your company to provide detailed information about the goods or services they request. Multiple people then review this information before a purchase order is issued. This helps to ensure that all purchases are properly authorized and that there is no fraud.
A purchase requisition form helps streamline the purchasing process within your organization by providing a central repository for all purchase requests. This helps to ensure that purchase requests are not forgotten or lost and that they are processed promptly.
A purchase requisition form requires the requester to provide their name and department, which helps track who makes purchase requests. This ensures fraud prevention by ensuring only authorized people can make purchase requests.
A purchase requisition form helps avoid duplicate orders by requiring the requester from your company to provide the purchase order number for any previous orders for the same goods or services. This helps to ensure that the company does not end up ordering the same goods or services multiple times.
A purchase requisition form helps to increase accountability and business security by requiring the requester from your company to provide their signature on the form. This helps to ensure that the requester is aware of the purchase and that they are responsible for it.
A purchase requisition form can help increase cost savings by ensuring your company gets the best price for the required goods or services. This is because your company’s purchasing department can use the information on the purchase requisition form to negotiate with vendors.
Did you know your purchase requisition form can be used as proof during audits? This is because your purchase requisition form records all purchase requests and approvals. This helps you ensure that your company follows all applicable regulations to ensure a smooth flow in your procurement process.
Your company’s preparation of a requisition form can vary, depending on your organization’s internal processes. Generally, creating a purchase requisition form falls on the person or department needing a good or service.
Here are some common scenarios:
Your organization must understand that specific processes and responsibilities for requisition forms may vary between organizations.
Do you know the difference between a purchase order and a requisition form? If you’re still confused, we’ll clarify it for you.
Both purchase requisition forms and orders are important documents to ensure a smooth procurement process flow. But it’s important to remember that both serve different purposes.
As explained earlier, a purchase requisition form is an internal document to request goods or services needed within your company. Usually, it is filled out by the employee who requires goods and services from a vendor. It contains important information such as the requestor’s name, department, description of goods and services, quantity, estimated cost, and even the date when the service or goods are needed.
On the other hand, a purchase order is an external document used to order the goods or services from the vendor, which the purchasing department typically issues after a purchase requisition form has been approved. A purchase order includes important information from the purchase requisition form, including information about the vendor. A purchase order can also contain the purchase terms such as price, delivery, and payment terms.
Here are the differences between a purchase requisition form and a purchase order.
Purchase Requisition Form: To request the purchase of goods or services
Purchase Order: To order goods or services from a vendor
Purchase Requisition Form: Internal
Purchase Order: External
Purchase Requisition Form: Name of the requester, department, description of the goods or services, quantity, estimated cost, and date the goods or services are needed.
Purchase Order: Name of the requester, department, description of the goods or services, quantity, estimated cost, date the goods or services are needed, vendor’s name, address, contact information, terms of the purchase
Purchase Requisition Form: Employee
Purchase Order: Purchasing Department
The contents of a purchase requisition form typically include important information such as the date of the request, the name and contact information of the person making the request, the department or team that the purchase is for, the specific items or services being requested, the quantity and unit price of each item, the total cost, and any additional notes or details.
Let’s dive deep into each of its elements.
This is the first piece of information in your Purchase Order. This will help them know who they are dealing with.
The date of issuance is important for tracking your purchase orders throughout the purchasing process. It is also important for the vendor to know when the order is expected to be placed.
The quantity, description, and price of the goods or services ensure that the vendor understands your order. The price per unit is also important for calculating the total cost of the order.
The delivery date is important for ensuring that the goods or services are delivered on time, based on your request. The vendor should be able to meet the delivery date that you have specified, or they should notify the company as soon as possible if they cannot meet the date.
The billing details ensure that the vendor knows where to send the invoice. Unless otherwise specified, the billing address should be the same as the shipping address.
The delivery address is where the goods or services are to be delivered. This address should be the same as the billing address unless otherwise specified.
The payment terms are important for ensuring your company knows when and how to pay for the goods or services. The payment terms should be clearly stated on the purchase order, and the vendor should agree to them before the order is placed.
The purchase order number is a unique identifier for the purchase order. This number is important for tracking the purchase order throughout the purchasing process. It is also important for the vendor to know the purchase order number to reference it when sending the invoice.
The signatures of the people who are authorized to approve the purchase order are important for ensuring that the purchase order is valid. The signatures should be from the requester, the approver, and the vendor.
A purchase order is typically used in situations where your purchasing department should initiate a formal buying process and ensure accurate and accountable purchasing within your organization. Circumstances that may result in needing a purchase order include procurement of expensive items for your company, such as machinery, the need for office supplies, and generally, the requirement for any goods or services needed by a department.
A purchase order serves as a crucial document in the procurement process. It specifies the quantity, description, and agreed-upon price of the actual purchase of items or services. The purchase order form also outlines the terms and conditions of the transaction, including delivery dates and payment terms.
The use of a purchase order provides several benefits, such as:
Purchase requisition forms and orders play a crucial role in the following areas:
Once the purchase requisition form is approved, a purchase order is issued. This document authorizes the supplier to provide the requested goods or services and outlines the terms and conditions of the purchase. Your organization can control your buying process by simply utilizing purchase orders and ensuring that only important items are approved and purchased.
Using purchase requisition forms and orders, your company can streamline its purchasing process, promote responsible spending, and maintain a secure and efficient procurement system.
Did you know that automating your purchase requisition forms can benefit your business? Here are 6 benefits of automating your purchase requisition forms:
Automation eliminates the need for physical paperwork, reducing storage requirements and the time and effort involved in managing and filing your paper documents.
Automated systems can populate fields and pull data from other sources, reducing the need for your team to do manual data entry. Without a doubt, this can save you time and even minimize your chances of errors or typos.
Automated forms can enforce data validation rules, ensuring all necessary information is provided and in the correct format. This reduces errors and discrepancies, improving the overall accuracy of your organization’s requisition process.
Automated systems provide real-time visibility into the status of your purchase requisitions. Authorized stakeholders can track the progress of your requisitions, view pending approvals, and monitor the overall workflow, enhancing transparency and accountability.
Automated requisition forms can be designed to incorporate policy and legal compliance requirements. Mandatory fields, approval hierarchies, and predefined workflows can be built into the system, ensuring all requisitions adhere to the established guidelines and regulations.
An automated purchase requisition form can be customized to match your organization’s purchasing process. The form can be tailored to include the necessary fields, approvals, and routing rules, aligning with your internal procedures and workflows.
Completing a purchase requisition form correctly is very important for any organization. A purchase requisition form is an initial step in your company’s purchasing process and is vital in ensuring accurate documentation of your purchasing requests.
Here are some of the benefits of completing a purchase requisition form:
A purchase requisition form provides a clear and organized channel for requesting and approving purchases.
Tracking a purchase requisition form is important to your organization’s procurement process. This brings numerous benefits that ensure your business spends responsibly, can streamline its workflows, and maintains accurate records.
Here are some key advantages to tracking purchase requisition forms:
By keeping your record of purchase request forms, it becomes easier for your business to identify the individuals who are responsible for each request. This prevents any fraudulent purchases and ensures all your purchases are authorized by relevant department heads.
Having an audit trail of all purchase requests and approvals is crucial for financial audits. It enables the finance and procurement departments to provide accurate and detailed information when required.
Purchase requisitions are a vital part of your procurement management, concerning your finance department. They are crucial in facilitating seamless communication and transparency throughout your procurement cycle.
Your purchase requisition form serves as a foundation for your procurement process, capturing the important details about your requested goods or services by implementing the use of this correctly. Your organization can ensure that all purchase requests are documented, reviewed, and approved.
By embracing the correct practices in using purchase requisition forms and purchase orders, combined with the right purchasing solution for your business- we’re confident that you can truly improve your bottomline and contribute to the success and growth of your business!
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