Introduction

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:

• The importance of purchase requisition forms to your procurement cycle
• The benefits of purchase requisition forms for your business
• Purchase requisitions (PR) vs. Purchase orders (PO)

What Is A Purchase Requisition Form

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.

What Are The Contents Of A Purchase Requisition Form?

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:

• Purchase order number: The purchase order number is a unique identifier for the purchase order. This number is typically assigned by your company’s purchasing department and is used to track the purchase order throughout the purchasing process.
• Date: The date the purchase order is issued is important because it helps track its status. For example, if your chosen vendor does not receive a purchase order by a certain date, your purchasing department may need to follow up with the vendor.
• Buyer: The buyer is the person or department from your company ordering the goods or services. The buyer’s name and contact information are typically included on the purchase order so that the vendor can contact the buyer if there are any questions about the order.
• Vendor: The vendor is the company that is supplying the goods or services to your company. The vendor’s name and contact information are typically included on the purchase order so that your purchasing department can contact the vendor if there are any problems with the order.
• Shipping address: The shipping address is where the goods or services you request will be shipped. The purchase order typically includes the shipping address so the vendor knows where to ship the goods or services.
• Billing address: The billing address is where the invoice for the purchase will be sent. The purchase order typically includes the billing address so the vendor knows where to send the invoice.
• Description of goods or services: A detailed description is important so your vendor knows exactly what you are ordering. The description should be clear and concise and include the quantity of each good or service being ordered.
• Quantity: The quantity of each good or service you order is important so the vendor knows how much to ship. The quantity should be clearly stated on the purchase order.
• Unit price: The price of each good or service you are ordering is important so the vendor knows how much to charge for the goods or services. The unit price should be clearly stated on the purchase order.
• Total price: The total price of the goods or services you are ordering is important so the vendor knows how much to invoice the buyer. The total price should be clearly stated on the purchase order.
• Payment terms: The payment terms are for the goods or services you are ordering. The payment terms should be clearly stated on the purchase order so that your vendor knows when and how the buyer will pay for the goods or services.
• Special instructions: Any special instructions that you have for the vendor, such as delivery date or shipping method, should be clearly stated on the purchase order.

What Are The Different Types Of Purchase Requisition Forms?

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:

• Standard Purchase Requisition: Standard Purchase Requisition forms are the go-to-options for low-value purchases done in a routine. This form is a simple and efficient means of initiating the procurement process for daily operational needs.
• Pre-approved Purchase Requisitions: Pre-approved requisition forms are used for high-value or mission-critical purchases that require additional scrutiny. It contains comprehensive information that justifies the need for a purchase. This requisition form includes a detailed item description, estimated value, and even the reason behind a purchase. This often requires approval from higher-level authorities before proceeding.
• Blanket Purchase Order: This purchase requisition form is used for recurring or long-term procurement requirements. It establishes a standing order with a supplier for a predetermined quantity of goods or services needed over time. BPO companies usually utilize this purchasing requisition form to maintain a consistent inventory level.
• Contractual Purchase Requisition: This purchase requisition form is used when engaging suppliers under a contractual agreement. This type of requisition form incorporates contract-specific information such as contract number, supplier name, and even the contract expiration date.

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.

What Is A Requisition Form Used For?

As mentioned above, purchase requisition forms are used to request goods or services formally. Here are the most common uses of a requisition form:

• To request the purchase of goods or services: A requisition form is used by your company to request the purchase of goods or services from a vendor. The form typically includes information about your requested goods or services, the quantity needed, and the estimated cost.
• Track the purchase process of the goods or services you’re requesting: A requisition form can be used to track your purchase process from start to finish. This can help you ensure that all your purchases are authorized and that your requested goods and services are delivered on time and within budget.
• To ensure that all your purchases are properly authorized: An authorized person in your purchasing department must approve a requisition form before purchasing. This helps your company to prevent unauthorized purchases from being made other than official requests.
• To provide a record of the purchase: as documentation: A requisition form can be used to provide a record of the purchase. This can be helpful if there are any problems with the purchase or if the goods or services need to be returned.

What Are The Steps Involved In The Purchase Requisition Workflow?

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:

Requirements For Goods Or Services

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.

Submission Of Purchase Requisition Form

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.

Approval From Department Manager

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.

Stocktaking

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.

Screening By Purchasing Department

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.

Approval From Purchasing Department

Your purchasing department then approves the purchase requisition form. This gives your purchasing department the authority to issue a purchase order.

Generation Of 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.

Receipt Of Goods Or Services

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.

Three-way Matching

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.

Invoice Payment

The purchasing department then pays the invoice to the vendor.

Why Should You Enforce Purchase Requisition In Your Procurement Process?

You should enforce a purchase requisition form in your procurement process for many reasons. Let’s dive into some of the reasons why:

Makes The Procurement Process Transparent

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.

Streamlines The Purchasing Process

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.

Helps Prevent Fraud

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.

Helps Avoid Duplicate Orders

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.

Increases Accountability And Business Security

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.

Increase Cost Savings

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.

Can Be Used As Proof During Audits

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.

Who Usually Prepares The Requisition Form?

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:

• Departmental Staff: Sometimes, a staff member within a department or a team in your company can be responsible for preparing your requisition forms. For instance, if someone in your marketing department wanted to order new promotional materials, they would probably be the ones to fill out the requisition form.
• Administrative Staff: In some cases, your administrative or support staff may prepare the purchase requisition form on behalf of other employees or departments from your company. They may have received requests from other departments and have decided to consolidate them into one form.
• Procurement or Purchasing Department: Often, larger organizations would have a dedicated procurement or purchasing team to acquire goods or services. These departments usually have specialized staff responsible for preparing the requisition forms based on the requests from other departments.
• Online Systems or Software: Requisition forms can be prepared electronically using specialized software or online systems. In this case, the responsibility for preparing the form may be given to the employee who needs to make the request.

Your organization must understand that specific processes and responsibilities for requisition forms may vary between organizations.

What Is The Difference Between A Purchase Order And A Purchase Requisition Form? 

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.

Purpose

Purchase Requisition Form: To request the purchase of goods or services

Purchase Order: To order goods or services from a vendor

Audience

Purchase Requisition Form: Internal

Purchase Order: External

Information Included

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

Who Issues This?

Purchase Requisition Form: Employee

Purchase Order: Purchasing Department

What Are The Contents Of A Purchase Order?

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.

Name Of Your Company

This is the first piece of information in your Purchase Order. This will help them know who they are dealing with.

Date Of Issuance

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.

Quantity, Description, And Price Of The Goods Or Services Per Unit

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.

Delivery Date

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.

Billing Details

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.

Delivery Address And Invoice Address Of Your Company

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.

Payment Terms

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.

Purchase Order Number

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.

Signature Of Relevant Stakeholders

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.

When Is A Purchase Order Used?

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:

• It ensures that departments and individuals responsible for making the purchase follow the established procedures and obtain appropriate approvals.,
• Purchase order requests allow better control and oversight over spending, promoting responsible purchasing practices.
• It contributes to the accuracy and accountability of financial audits by providing an audit trail and documentation of all approved purchases. This helps prevent fraudulent or unnecessary purchases- ensuring your organization spends wisely.

Why Are Purchase Requisition Forms And Purchase Orders Important In Procurement?

Purchase requisition forms and orders play a crucial role in the following areas:

• Business procurement
• Streamlining purchasing process
• Ensuring responsible spending
• Providing an audit trail for your business

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.

 

What Are The Benefits Of Automating Your Purchase Requisition Form Template?

Did you know that automating your purchase requisition forms can benefit your business? Here are 6 benefits of automating your purchase requisition forms:

Eliminates Paperwork

Automation eliminates the need for physical paperwork, reducing storage requirements and the time and effort involved in managing and filing your paper documents.

Reduces Manual Input

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.

Improves Accuracy

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.

Offers Real-Time Visibility Of Purchase Requisitions

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.

Ensure Policy And Legal Compliance

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.

Reflects Your Purchasing Process

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.

 

FAQs

What Is The Importance Of Completing A Purchase Requisition Form Correctly?

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:

• It enables accurate documentation
• It provides details such as the item to be purchased, quantity, and stated cost-creating a record of the transaction.
• It proves valuable during financial audits, helping your business maintain its security standards.
• It facilitates budget planning.
• It allows your purchasing department to review requisitions to assess the overall spending of your company so that you can allocate funds accordingly.
• It helps avoid impulsive purchases and promotes responsible spending

A purchase requisition form provides a clear and organized channel for requesting and approving purchases.

Why Is It Important To Track Purchase Requisition Forms?

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:

• It provides an opportunity to monitor spending
• It allows close monitoring of requests
• It allows your purchasing department to ensure budget allocations are properly utilized
• It allows better control and management of funds, preventing overspending or unnecessary expenses
• It promotes accountability within your organization
• It streamlines workflows, allowing for a systematic and organized buying process
• It ensures purchase requests are properly reviewed, approved, and executed
• It helps your company maintain accurate records

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.

The Bottomline

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!