Organizations rely on structured processes to manage spending and maintain financial accountability. The Purchase Requisition (PR) form serves as a foundational document, ensuring that all procurement activities are properly initiated before any external commitment is made. It acts as an internal request for goods or services, formally signaling a need from one department to the organization’s purchasing team. This controlled approach helps companies track requirements and verify budget availability.
Defining the Purchase Requisition
A Purchase Requisition is a formal, internal document that marks the beginning of the procurement cycle within a company. It is generated by an employee or department identifying a need for materials, supplies, or services. The PR is directed toward the internal purchasing or finance department, communicating the specifics of the required items and the business reason for the expenditure.
This document serves as a structured communication tool, ensuring every request is documented and vetted before progressing to an external supplier. It establishes internal controls by forcing the requesting party to justify their need and verify budget availability. Crucially, a PR does not constitute an agreement or promise to pay an external supplier, as it is solely an instrument for internal communication and authorization to spend company funds.
Key Information Required on the Form
Requester and Department Details
The form must clearly identify the individual submitting the request and the department they represent. This information is necessary for internal accountability and directs the eventual cost allocation to the correct business unit or cost center. Accurate departmental information ensures spending is tracked against the appropriate budget owner.
Item Description and Quantity
Specific details regarding the desired goods or services are required, including part numbers, model names, and the exact quantity needed. Vague descriptions can lead to errors and delays if the procurement team cannot precisely identify the item or purchases the incorrect specification. Providing clear technical specifications helps ensure the procurement team sources the correct item.
Estimated Cost and Budget Code
The requesting department must provide a realistic estimate of the expenditure and the corresponding budget code or account number that will be charged. This step links the request directly to the company’s financial plan, allowing finance to confirm sufficient funds are available before the process moves forward. The cost estimate helps flag requests that may exceed pre-approved spending thresholds.
Justification for Purchase
A clear business rationale explaining why the item is needed and how it will be used is necessary for managerial review. This justification helps managers determine if the purchase aligns with current operational goals and prevents unnecessary spending. A strong justification provides the basis for approval and demonstrates the value of the expenditure.
Suggested Vendor (If Applicable)
While the final supplier selection rests with the procurement team, the requester may suggest a preferred vendor on the form. This suggestion is often based on prior positive experience, familiarity with a specific product, or an established relationship. The suggestion is treated as a recommendation only, as the procurement team is responsible for securing the best price and terms.
The Purpose of Using Requisition Forms
The primary function of utilizing requisition forms is to establish rigorous control over organizational expenditures before they are incurred. By mandating a formal request process, companies ensure that no spending occurs without proper internal review and authorization. This systematic approach directly supports budget control by preventing departments from overspending their allocated funds.
Formal requisitioning creates a comprehensive audit trail that documents the sequence of events from need identification to purchase execution. This documentation is valuable for internal audits, compliance checks, and accurate financial reporting. The mandatory review process acts as a safeguard against unauthorized purchases, reducing the potential for fraud and misuse of company resources. The standardized form also streamlines communication, providing the purchasing team with all necessary data in a standardized format, which accelerates the procurement timeline.
Steps in the Requisition Process Flow
The flow begins with the identification of a specific need by an employee or department that cannot be fulfilled by existing inventory or resources. Once the requirement is established, the requester completes and submits the purchase requisition, ensuring all required data fields are accurately populated with descriptions, quantities, and cost codes. This submission marks the start of the internal review process.
The document first moves to the requester’s direct manager or head of department for initial managerial approval, based on the documented justification. This step verifies that the request is legitimate, reasonable, and relevant to the department’s operational objectives. The manager’s sign-off transfers accountability for the expenditure to a higher level of authority.
Following this initial sign-off, the requisition is routed to the finance or procurement department for a specialized review. These teams scrutinize the request to confirm budget availability, check for compliance with internal spending policies, and assess if the item should be sourced from an existing contract. This review layer ensures financial prudence and adherence to corporate procurement guidelines before any external commitment is made. If the request meets all internal standards, the procurement team uses the approved requisition as the instruction to create and issue a Purchase Order, concluding the PR process.
Difference Between a Purchase Requisition and a Purchase Order
The Purchase Requisition (PR) and the Purchase Order (PO) are often confused but serve distinctly different functions within the procurement lifecycle. A PR is strictly an internal document used to express a need and seek authorization to spend company funds. It circulates only within the organization, flowing from the requesting department to the procurement team for approval.
The Purchase Order, conversely, is an external document that serves as a legally binding contractual agreement with a vendor or supplier. The PO is created only after the PR has been fully approved, converting the internal request into an external commitment. It details agreed-upon prices, delivery schedules, and terms, and is sent directly to the supplier to initiate fulfillment. The PR is the initial authorization tool, while the PO is the final commitment and instruction to the vendor.
Modernizing the Requisition Process
The process of submitting purchase requisitions has largely transitioned from paper-based forms to digital systems using e-procurement software. Modern platforms allow employees to submit and track requests electronically, integrating the PR flow directly with enterprise resource planning (ERP) systems. This shift introduces significant automation to the approval workflow, eliminating the need to physically move documents between offices.
Digital systems enable faster routing and provide real-time visibility, allowing requesters and managers to track the status of a submission. Automation reduces manual data entry errors and ensures that requests are automatically checked against pre-set budget limits before being routed for approval. This technological upgrade streamlines the entire process, making the internal authorization step more efficient, transparent, and auditable.