Purchase Requisition

« Back to Glossary Index

What is Purchase Requisition?- Definition

A purchase requisition is a formal document that is used when an employee needs to purchase or order something on behalf of their organization. This document informs the department managers or purchasing staff of the decision so the purchasing department can start the process of purchasing the requested products or services. The finance department will also use the purchase requisition to coordinate reporting with the accounting department.

Understanding Purchase Requisition

A purchase requisition is an internal document used by an employee to purchase goods or services on behalf of their firm. These purchases may be for business operations (such as office supplies), inventory, or manufacturing inputs.

The purchase requisition form is submitted to the purchasing department for approval which is the first step in creating an effective audit trail for purchasing. Once the purchase requisition is approved by the relevant department, a purchase order is issued to the vendor of the requested goods or services.

Why should you enforce purchase requisition in your procurement process?

Here are a few benefits of using purchase requisition in your procurement process:

1. Makes the procurement process transparent

You can see how the steps involved in the purchase requisition workflow add levels of hierarchical approval and make sure the purchase requisition is checked for accuracy and legitimacy. This workflow produces evidence that purchase requisition was issued and submitted by a department, and that the department that requested the supplies actually had a business purpose for them. 

2. Streamlines the purchasing process

When a company centralizes its purchasing process and gets its employees on board, it results in a well-defined and easy-to-manage workflow. The process makes it easier to organize and identify incoming products and services and simplifies inventory management as well. 

3. Helps prevent fraud

The absence of well-defined protocols leaves room for employees to engage in fraudulent acts like ordering materials for personal use, or arranging with vendors to steal from the firm. Purchase requisition puts an end to this by deterring fraud before it starts and ensuring that staff doesn’t order goods directly from vendors without a formal process.

4. Helps avoid duplicate orders

Large companies generally have an entire team to handle purchasing, instead of just one employee. Purchase requisition forms help the purchasing department keep track of what’s been requested and avoid accidentally making multiple purchases for the same order.

5. Increases accountability and business security

A purchase requisition form is a proof that certain materials were needed by a department and that they were ordered. Once the materials have been received and matched with the requisition, there is also a document trail to show that they were delivered. This record can be used as backup evidence in case of any later issues regarding the items ordered or the negotiated price.

Explore Additional Resources to Know More

4 stages of procurement maturity model
« Back to Glossary Index

Subscribe to our newsletter to get regular updates

    Related Blogs

    See how Aavenir works for your business needs.

    Learn how Aavenir can help you eliminate manual processes, get more transparency and accelerate turnaround.