In today's fast-paced business environment, organisations need efficient systems and processes to manage their procurement needs. Purchase requisitions and purchase orders are two essential documents that play a crucial role in the purchasing process. These documents ensure that goods and services are obtained in a timely and cost-effective manner, while also maintaining financial control and regulatory compliance.

Understanding Purchase Requisition

A purchase requisition is an internal document created by an employee or department within an organisation to request goods or services. It serves as a formal request for purchasing items needed to fulfil business operations. The purchase requisition provides information such as the proposed purchase, delivery date, payment terms, and any other pertinent details. This document acts as a key starting point for initiating the procurement process and ensures that all purchases are properly authorised and tracked.

The Role of Purchase Requisition in Business Operations

Purchase requisitions play a vital role in the smooth functioning of business operations, especially within the purchasing department. They serve as an internal document that helps streamline the procurement process, ensuring that goods or services are acquired through a structured and controlled approach.
By creating purchase requisitions, organisations can establish a formal request system that enables departments to articulate their purchasing needs accurately. These requisitions act as a pivotal document in the procurement process, providing important information such as the requested items, delivery date, payment terms, and internal departments involved. This information allows the purchasing department to effectively manage procurement, ensuring that the necessary goods or services are acquired in a timely and cost-effective manner.
Moreover, purchase order requisitions serve as a means of facilitating internal communication and approval processes within an organisation. By following a standardised format, purchase requisitions provide clarity and transparency, making it easier for management to assess, approve, and track purchasing decisions. This internal document also aids in budget management, as it allows departments to track their spending and ensures that purchases align with financial goals and regulatory requirements.

Key Components of a Purchase Requisition Form

A purchase order requisition form, also known as a purchase request form, is the document used to capture all necessary information when creating a purchase requisition. This form includes key components that help provide a clear and detailed overview of the requested items and purchasing requirements. The following are the key components of a purchase requisition form:
  • Requisition form: The purchase requisition form itself, which serves as a formal request for purchasing goods or services.
  • Payment terms: The terms and conditions of payment, including details such as payment method, payment terms, and any applicable discounts or penalties.
  • Delivery date: The requested delivery date by which the goods or services are required.
  • Proposed purchase: A detailed description of the items or services being requested, including quantity, specifications, and any additional requirements or considerations.
  • Internal departments: Information about the departments or individuals involved in the requisition process, ensuring appropriate communication and accountability throughout the purchasing process.
  • These key components ensure that the purchase requisition form contains all the necessary information for the purchasing department to process the request efficiently. By providing this information upfront, organisations can accelerate the procurement process, reducing delays and ensuring timely delivery of goods or services.

Importance of Purchase Requisition

Purchase requisitions serve as a critical component of an organisation's procurement system, enabling efficient management of purchasing needs. Let's delve deeper into why purchase requisitions are important.

Why Businesses Need Purchase Requisitions

One of the main reasons businesses need purchase requisitions is to establish a structured procurement system. By implementing purchase requisitions, organisations can create a formal process for requesting and approving purchases, leading to better financial control and regulatory compliance.
Purchase requisitions provide a clear audit trail, ensuring that all purchasing decisions are well-documented and can be easily audited. This is especially important for financial audits, as purchase requisitions serve as evidence of proper authorization and adherence to purchasing policies.
Additionally, purchase requisitions facilitate an approval process, ensuring that purchases are reviewed and authorised by the appropriate individuals or departments. This approval process helps prevent unauthorised purchases and ensures that purchasing decisions align with budgetary constraints and financial goals.

Practical Examples of Purchase Requisition Use

To understand the practical applications of purchase requisitions, let's explore some real-life examples of their use:
  • Office supplies: In businesses of all sizes, purchase requisitions are commonly used to request office supplies such as stationery, furniture, or technology equipment. Employees can submit purchase requisitions to ensure that necessary items are procured in a timely manner, allowing for smooth office operations.
  • Purchase of goods: Manufacturing companies rely heavily on purchase requisitions to request raw materials, components, or equipment needed for production. These requisitions enable the procurement team to track and manage the purchase of goods, ensuring that the manufacturing process remains uninterrupted.
  • Purchasing system: Purchase requisitions act as a key component of a company's purchasing system, ensuring that all procurement requests are properly documented and approved. By integrating purchase requisitions into the purchasing system, businesses can enhance transparency, accuracy, and efficiency in their procurement processes.
  • The practical examples mentioned above highlight the versatility of purchase requisitions and their role in streamlining purchasing processes across different industries and business functions.
Purchase requisitions are a crucial part of the procurement process for businesses. They serve as a formal request to obtain goods or services needed by the company. By creating a structured system for purchase requisitions, businesses can streamline their purchasing process, track expenses, and maintain accountability. It also helps prevent unauthorised purchases and ensures that all purchases are in line with the company's budget and objectives. Whether it's for inventory replenishment, equipment acquisition, or service procurement, purchase requisitions provide a clear and organised way to manage and control spending. Implementing a purchase requisition system can lead to increased efficiency, cost savings, and better financial management for businesses.