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How To Use A Purchase Requisition System To Control Cost

  • By ProcureDesk
  • January 09,2024
  • 10 min read

How To Use A Purchase Requisition System To Control Cost

purchase requisition system

Are you a controller or a finance manager struggling to keep your costs down and manage your spending?

Do you have all your purchase data in one single place?

Seems like a purchase requisition system is what you need. This smart solution can help you gain control over your costs easily as it automates the entire process.

We made this blog to teach you how to establish a powerful purchase requisition. By following this process, most companies witness a remarkable 30-40% reduction in the time it takes to create a purchase requisition.

In this article, we’ll delve into:

  1. Designing an Effective Requisition Process: Learn how to structure your requisition process to slash approval times.
  2. Options for Purchase Requisition Systems: Explore a range of choices, from free solutions to paid ones, to find what fits your needs.
  3. Essential Features in a Purchasing System: Discover the must-have features to make your purchase requisition system effective.
If you’re looking for procurement software to help with your purchase requisitions, our tool ProcureDesk might help. Our team of experts can walk you through how our tool works. Click here to see it in action

What Is A Purchase Requisition System?

A purchase requisition system, also known as a requisition management system- refers to a digital or paper-based platform companies use to manage requesting, approving, and tracking purchases.

It streamlines the flow of purchase requests, an internal document- from employees to the procurement team. This ensures transparency, efficiency, and control over your organization’s spending.

To break it down, here are the key functions of a purchase requisition system:

Creates Purchase Requisitions

With a purchase requisition, employees in your company’s various departments can initiate purchase requests for needed goods or services for a more streamlined process.

This formal request includes details such as the requested item, quantity, price, supplier information, reason for purchase, and even the department’s budget control.

Approves Workflow

Requisitions are routed through pre-defined approval workflows based on the requested amount, item category, or department for a more efficient procurement process.

Approvers at different levels, such as department managers, budget managers, and procurement specialists, can review and approve or reject the request.

Generates Purchase Order

Once a requisition is approved, the system automatically generates a purchase order (PO) based on the details. The PO is then sent to your preferred vendors.

Tracks And Reports Data

The system provides a central repository for all purchase requisitions and status updates. This allows for easy tracking of the approval process, budget utilization, and supplier performance.

Reports can be generated to analyze spending patterns, identify potential cost savings, and ensure company policies and regulations compliance.

Related: Purchase Requisition Form

What Is The Purpose Of A Purchase Requisition In A Procurement Process?

Purchase requisition serves the following purpose in a company:

  1. Control Cost
  2. Provide better visibility into spending.
  3. Improve productivity of the company

Let’s review each of these in detail.

Control Cost

When you have an efficient purchase requisition system for your purchasing activities, you can set up a review process to review all expenses before making a purchase.

And if a purchase is not required or needs to be delayed, you can do so. In other words, you can control the maverick Spend.

Let us explain with an example:

Let’s say your sales team invested in a CRM tool to handle your customer data better.

The marketing team is also looking for a new email marketing tool.

If the CRM tool can support marketing requirements, you can consolidate both department requirements in a single tool.

That is not only one less vendor, you also save cost by negotiating a better price for additional licenses.

Another example is office supplies.

Let’s say you keep a stock of the most common items for office supplies.

A new employee might not know that, and they put a requisition in for purchasing supplies.

With the requisition system, you can reject the purchase and route it to be fulfilled by stock you already maintain.

Another benefit of a purchase requisition is that it allows you to avoid any procurement fraud.

You can also increase transparency by requesting many quotes from vendors and selecting the vendor with the best pricing.

Spend Visibility

With a purchase requisition process, you have complete visibility into your Spend.

With a requisition process, the spending is pre-approved so that the finance team always knows what is coming down the pipe for cash flow needs.

Unlike a credit card purchase, you must wait for employees to submit expense reports to see what has been spent.

With a requisition process, you can also get granular data.

For example, if you look at your chart of accounts, you can see the summary of total Spend and the list of suppliers.

However, you don’t know the line-level details.

Let’s say you spent $100,000 on Advertising in a year.

Was that on online media, PPC ads, or anything else? That is the level of granularity you can get with a requisition process.

This not only helps with spending visibility but also helps you with better budgeting without using inaccurate data that might come from manual errors.

Especially if you do zero cost-based budgeting.

Improving Productivity Through A Purchase Requisition Software Solutions

Most companies use a version of the purchasing requests form that is then manually routed for approval.

How much productivity is lost due to the manual requisition process and the associated paperwork?

As per a recent study, it costs almost $60 to approve a purchase request.

That is the time spent on activities like:

  1. Filling in manual requisition form.
  2. Sending emails for approvals.
  3. And then chasing managers to get approval.

The above cost doesn’t include the opportunity cost of delayed products or services and their impact on business.

With an automated requisition process, you reduce the cost of the operation. That also leads to increased employee productivity.

Most customers see at least a 45% decrease in the total time to create a requisition.

This can be achieved within the first 15 days of going live.

Related: Purchase Order Software Compatible With Sage Intacct

What Is The Purchase Requisition Process Flow Chart?

Here is how a typical purchase requisition workflow. The common steps in purchase requisition management are:

The steps are covered in detail

What Are The Steps Involved in a Purchase Requisition Process?

Let’s look at the typical purchase requisition process flow. These steps can be easily automated using a procurement system.

  1. Purchase requests initiation
  2. Review/Approval of the request
  3. Complete the purchase / Issue a purchase order

Step 1: Purchase Requests Initiation

The first step in a purchase requisition process is initiating a purchase request.

In this step, an employee submits a request to purchase a product or service.

The basic information that is being captured is as follows:

  1. What is this purchase for? The business purpose of the purchase. For example, IT setup for a new hire.
  2. What are you purchasing, and from whom? For example, A new laptop from CDW.
  3. Which department is going to pay for it, and how the cost is booked? The employees are identifying the department as well as the chart of accounts.
  4. Who needs to approve the purchase request? If you have a manual process, employees must remember the approval matrix.

If you have a manual process, the employees need to remember where to go to pull the requisition form, what values to fill out, and so on.

A manual process not only impacts productivity but also leads to manual errors due to bad data entry.

With an automated requisition process, you can allow users to create requisitions with only a few clicks.

Since the process can be automated, there is a moderate learning curve.

Step 2: Approval Process

Once the request is created, employees submit it per the approval matrix.

Most companies have an approval or authorization matrix—for example, a spend over $500 must be approved by a director, and so on.

There are two main challenges we see with the manual purchasing processes:

Companies have a complex approval matrix. Sometimes a single requisition needs 2-3 approvals. How many people need to approve a requisition before you can make the purchase?

The thought process is that we should have tighter control over Spend.

We agree, and we preach that, but…

It would be best if you also had accountability to trust the line managers or directors to do their job.

The second issue we see is that the process is manual. You create a request form and email it to the manager for approval.

The process is simple, but managers forget to approve the request, and approval gets lost, and so on.

To avoid all these issues, automate the approval process so employees don’t waste time chasing purchase approvals.

Step 3: Trigger To Create POs

The last step in the process is to convert a requisition into a purchase order.

After that, send the purchase order to the vendor after assigning a purchase order number.

Not every requisition needs to be converted into a purchase order.

For example, you can use the requisition system to issue office supplies you have in stock at your location.

Or you probably need to place the order by calling the vendor.

There are a few things to consider here:

Can you automate the conversion of requisition to purchase orders? If so, you don’t have to manually convert every requisition into a purchase order.

Set up rules so you can easily decide what requisitions to convert to a purchase order. For example, you can have a flag at a vendor level so that you know how an order needs to be placed.

To summarize, the purchase requisition process has three main steps:

  1. Create a purchase requisition.
  2. Approve a purchase requisition.
  3. Send the purchase order to the vendor.

Automating Your Purchase Requisition System With Procurement Software

So far, we have covered the purpose and benefits of a purchase requisition system. A purchase requisition system is also known as a procurement solution.

We also covered that you can create a manual purchase process by creating a requisition form.

We will now cover the automation capabilities of the purchase requisition process. As you review the process, try to map activities that the procurement department or the purchasing department can manage.

Here are the key features of a purchase requisition system software.

Purchase Request

The first basic feature you need in a purchase request process is the ability for your employees to submit a purchase request.

The idea is to automate the manual purchase request process and reduce the effort to create a requisition.

Here are things to consider for purchase request:

1. Do you have the ability to differentiate different types of requests so that they can be handled differently? For example, requests for IT hardware might need to be handled differently than office supplies.

2. Is it possible to automate the user defaults so that the users don’t have to spend time entering the data? For example, Ship to locations, departments, a chart of accounts, etc.

3. Does the system allow the users to add special comments for the buyers and suppliers?

4. Does the system allow you to configure fields shown on the line items to control what is shown on the screen easily?

With the purchase request, there are two main goals:

1. Simplify the process for creating a requisition.

2. Increase employee productivity so that they are not spending a lot of time on data entry to create a requisition.

Here is what a sample requisition form is like:



In the previous section, we mentioned that the goal of purchase request automation capabilities is to simplify the purchasing process.

And there is no better way to simplify the purchasing process than using supplier catalogs.

We have covered this topic in detail in the catalog and purchasing experience article.

But here is a summary:

Catalogs enable employees to create requisitions by browsing and selecting the items they want to purchase.

That way, they are not spending time manually entering line item details.

For example, You purchase office supplies from a local vendor. They offer you a standard rate card for the items you purchase from them.

It would be best to create a catalog so that users can easily select items they want to purchase.

Here is how simple a catalog process is:


Sometimes, it is not feasible to maintain a vendor catalog because of the number of items they sell. So, instead, you can link your purchasing system to the vendor’s website. This type of catalog is called a punchout catalog.

This allows employees to browse the catalog and pick what they need to buy but still get the data back to the requisition for approval.

The punchout catalog is a win-win scenario.

Employees don’t need to type in the data, and Companies have complete control of what is being purchased.

Here is an example of a punchout catalog:


Automation Rules For Accounting Defaults

Employees’ biggest frustration is not knowing what accounting codes to use on the purchase requisition.

That leads to many guesswork and back-and-forth emails with the accounting department.

To take the guesswork out of the equation, we recommend that the requisition system should support the following features:

User-Based Accounting Defaults

With user-based accounting defaults, you can set up a rule to default the user chart of accounts in every transaction.

But default doesn’t mean they can’t change the accounting codes; it is just that they have something to start with.

For example, If an employee purchases office supplies most of the time, you must set their default code to “Office Supplies.”

Or whatever is the equivalent account in your chart of accounts.


Supplier-based Accounting Defaults:

With supplier-level defaults, you are setting up accounting defaults for a supplier.

This applies when you only purchase one type of product from a supplier.

For example, If you are a Biotech company and all you purchase from a vendor is lab supplies, then you can set the default for that vendor.

So, no matter who purchased from that vendor, the default supplier accounting code would be used.


Item-Based Accounting Defaults

You might have a granular chart of accounts, and supplier-level default might not work.

For example, A biotech company purchasing lab equipment and lab supplies from a vendor would not have a common supplier-level default.

So, in this case, you can set up a catalog of items, and for each item, you can set up an accounting default.

This allows you to assign granular accounting codes to each item, leading to better accounting data.

Most of our customers use the combination of these three strategies to simplify the purchasing process.


Purchase Requisition Approval Workflow

Once a requisition is created, the employees can route it for approval. A few considerations here:

The requisition system should automatically generate the workflow based on the pre-configured conditions.

Employees don’t need to refer to an authorization matrix when purchasing something.

The purchasing team should have complete flexibility to define different workflows. For example, if you want to route a requisition based on what is being purchased or the $ amount.

The workflow engine should provide flexibility to route capital purchase requests to a project team. Or a standard Opex purchase that needs only a manager’s approval.

The system should maintain a complete audit trail so that auditors can certify controls based on the information in the system.

Here is an example of a multi-step workflow with conditional routing:


However, the system dynamically identifies the correct workflow based on predefined conditions.


Ease Of Approval

Once the request is sent for approval, the approvers should be able to approve the requisition with ease.

We suggest an omnichannel approval strategy so that approvers can easily approve.

The purchasing system should be able to support the following methods for approval:

Mobile App

With a mobile app, the approvers can approve the official documents.

The mobile app should support different platforms like iOS and Android.

Employees can approve the purchase requisition faster and don’t have to log in to the system for approvals.

Email Approval

Some people live in their inbox, and we get it!

That is why it is important to have the flexibility to support approvals only through email.

With email approvals, employees should be able to see the detailed data in email so they can confidently approve.

Review Of Approval

Mobile apps and emails are great for conveniently approving invoices. However, sometimes, you need the ability to review the official documents, make any required changes, and approve the document.

That is why it is important to have the ability to review the document and edit it before approving it.

It is very beneficial for finance teams to review the items, fix the chart of accounts, and then approve the requisition.

That way, you can ensure you don’t have to correct the downstream documents like Invoices/Bills.


Purchase Orders

Once the requisition is approved, it must be converted into a purchase order.

When it comes to a purchase order, you would need the following features:

Manual Or Automated Rules For PO Creation

Based on the structure of your team, you might or might not want to automate the process of converting a requisition into a purchase order.

For example, some companies have internal stock of items like office supplies. So once the user enters the requisition, all that needs to be done is to issue the item to the employee.

In this case, no purchase order is required.

Another example is website orders. For example, you need to purchase something from a big-box retailer that doesn’t accept purchase orders.

In that case, a requisition doesn’t need to be converted into a purchase order.

You should have the flexibility to convert a requisition into a purchase order or manually review the purchase order.

Merging requisitions into a single purchase order

Many vendors still charge shipping for orders under a certain threshold.

This is a common scenario for lab supplies, office supplies, IT supplies, and so on.

You should be able to combine the different requisitions into a single purchase order.

Or manually review a purchase requisition and decide the next steps.

This not only simplifies order tracking, but it also saves you costs on shipping charges.

convert_requisitions into purchase orders

Track And Receive Orders

Once the order is placed, you need the ability to track the shipment, what was received, and when.

That is why a purchase requisition system should allow you to track the shipment status.

For example, you can enter a tracking #, and the system should be able to track your delivery status.

Moreover, when the delivery is made, the system should update you that your order has been delivered.


Once the order is received, the person who received the product should be able to mark the order as received and attach any supporting documents.

Overall, these are the features you need to look for in a cloud-based procurement solution. If you want to explore how these features of ProcureDesk can leverage your procurement system, see it in action today!


What Is The Purpose Of Requisition?

The purpose of a requisition is to serve as a formal request for something your company needs.

  • Initiates a process: A requisition starts a specific action, whether obtaining goods or services, allocating resources, or requesting specific actions from someone.
  • Provides documentation: It records the request, its details, and who made it to ensure transparency and accountability.
  • Ensures authorization: Approval workflows built into requisition systems boost responsible decision-making and proper budget allocation.
  • Streamlines process: Requisitions provide a standardized format for requests, minimizing confusion and errors in communication.
  • Improves control and oversight:  A purchase requisition creates a clear audit trail and facilitates resource allocation and spending tracking.

What Are The Disadvantages Of Manual Requisition?

Compared to digital systems, manual requisitions suffer from several disadvantages, such as:

  • Inefficiency: Paper forms, routing approvals, and data entry are slow and require manual effort.
  • Lack of control: Paper documents are vulnerable to loss, damage, and unauthorized access. Aside from that, manual processes offer more opportunities for fraudulent activity.
  • Limited communication: Information gets stuck in paper trails or email chains, slowing approvals. Manual workflows also make it harder for different departments to collaborate on requisitions.

Purchase Requisition vs. Purchase Order

To keep things simple- let’s differentiate a purchase requisition and a purchase order about their function, approval process, content, and legality:


  • Purchase Requisition: Internal document requesting permission to purchase goods or services. Initiates the buying process internally.
  • Purchase Order: External document sent to a supplier to confirm the purchase of goods or services. Represents a binding agreement with the supplier.

Approval process:

  • Purchase Requisition: Requires internal approvals from budget managers, department heads, etc., before progressing.
  • Purchase Order: Usually issued only after an approved purchase requisition.


  • Purchase Requisition: Includes item details, quantity, estimated cost, justification for purchase, and requesting department.
  • Purchase Order: Similar to a requisition but also includes agreed-upon price, payment terms, delivery details, and purchase order number.


  • Purchase Requisition: Not a legal document. No binding commitment to the supplier.
  • Purchase Order: A legally binding contract between the buyer and the supplier. Creates an obligation to pay.

Related: Purchase Requisition Vs Purchase Order

What Are The Benefits Of Automating Your Purchase Requisition Process?

Automating your purchase requisition process offers many benefits for businesses of all sizes. Here are some key advantages:

Increased Efficiency

  • Faster processing times: Automation eliminates manual tasks like paper forms, routing approvals, and data entry, significantly speeding up the requisition process.
  • Reduced errors: Automated workflows decrease the risk of human errors in data entry, approval routing, and document management.
  • Improved productivity: Employees are freed from tedious tasks, allowing them to focus on more strategic and valuable work.

Enhanced Control and Visibility

  • Greater budget control: Real-time budget tracking and spending insights facilitate responsible decision-making and prevent unauthorized purchases.
  • Streamlined compliance: Automated workflows ensure adherence to company policies and regulations, minimizing compliance risks.
  • Improved transparency: All requisition history and data are readily accessible, providing complete visibility into spending patterns and vendor performance.

Cost Savings

  • Reduced paper handling and storage costs: Eliminating paper forms and documents streamlines document management and saves on printing and storage space.
  • Lower processing costs: Automation reduces the need for manual processing, minimizing labor costs and administrative overhead.
  • Better supplier negotiations: Consolidated spending data from automated systems offers stronger bargaining power when negotiating with suppliers.

Other Advantages

  • Improved supplier relationships: Faster order placement and clear communication enhance vendor communication and satisfaction.
  • Enhanced data analysis: Automated systems provide valuable insights for optimizing purchasing decisions and identifying cost-saving opportunities.
  • Scalability and flexibility: Automated systems can easily adapt to changing business needs and handle increased requisition volume.

The Bottomline

Using a purchase requisition system, our clients see the following benefits under 30 days

  1. 30-40% reduction in time spent on creating and approving purchase requisitions.
  2. 8-10% cost reduction because of cost avoidance. Since management can see the purchase before it happens, they can control the spending.
  3. 5-10% reduction in stockouts because of misplaced orders. With a central purchase order tracking process, orders cannot be lost.

It’s about time you skip the manual purchase requisition process you’ve been going through for a while now. Take our advice and explore customizable approval workflows that procurement software can bring your company.

You’ll be surprised how much it positively affects your bottom line!

What you should do now

Whenever you’re ready… here are 4 ways we can help you scale your purchasing and Accounts payable process.

  1. Claim your Free Strategy Session. If you’d like to work with us to implement a process to control spending, and spend less time matching invoices, claim your Free Strategy Session. One of our process experts will understand your current purchasing situation and then suggest practical strategies to reduce the purchase order approval cycle.
  2. If you’d like to know the maturity of your purchasing process, download our purchasing process grader and identify exactly what you should be working on next to improve your purchasing and AP process.
  3. If you’d like to enhance your knowledge about the purchasing process, check out our blog or Resources section.
  4. If you know another professional who’d enjoy reading this page, share it with them via email, Linkedin, Twitter.