A requisition form is a business document used to formally request goods or services. It serves as the starting point for the purchasing process, allowing companies to manage and track requests from various departments. This internal form ensures that every intended purchase is reviewed and authorized before any money is spent, bringing order and accountability to procurement.
Defining a Requisition Form
A requisition form is an internal document an employee uses to ask for permission to buy goods or services on behalf of the company. Its purpose is to communicate a need from one department, like marketing or operations, to the department responsible for purchasing. This document initiates the procurement process by detailing what is needed, why it’s needed, and by whom.
Before the purchasing department can create an official purchase order, the requisition must first be approved internally. This ensures that the request is legitimate, necessary, and falls within the department’s budget. The form standardizes how requests are made, creating a clear and consistent procedure for everyone in the organization to follow.
Key Components of a Requisition Form
Requester and Department Information
Every requisition form begins by identifying who is making the request. This section includes the name of the employee and their department. This information is necessary for accountability, making it clear which team’s budget will be charged for the purchase and who to contact with questions.
Item Description and Quantity
This part of the form requires a detailed description of the goods or services being requested. Specificity is needed to avoid confusion and ensure the purchasing department orders the correct item. Alongside the description, the form will have a field for the exact quantity needed.
Vendor Information
While not always mandatory, there is often a space to suggest a preferred vendor or supplier. The employee making the request may have already researched a supplier that meets the company’s needs in terms of quality and price. This information can help the purchasing department expedite the ordering process.
Price and Justification
The form will include a section for the estimated cost of each item and the total cost of the request. This allows the approver to assess the financial impact of the purchase. A justification for the purchase is also required, explaining why the requested items or services are needed for business operations.
Signatures and Dates
To be valid, a requisition form must have a space for signatures and dates. This includes the signature of the person requesting the items and the signature of the manager with the authority to approve the expenditure. The date of the request and approval are also recorded, creating a clear timeline for the audit trail.
The Requisition Process Explained
The requisition process starts when an employee identifies a need for a product or service and fills out the form with all necessary details. This could be a request for new office software or raw materials for manufacturing.
Once the form is completed, it is submitted to a direct manager or department head for the first layer of approval. This manager reviews the request to ensure it is justified and aligns with the department’s budget and goals. If the request is approved, the form is then forwarded to the company’s purchasing or finance department.
The purchasing department takes over from here. They verify the information on the form, check for policy compliance, and confirm budget availability. Upon final approval, the purchasing team uses the information from the requisition to create a purchase order, which is then sent to the external vendor to officially order the goods or services.
Requisition Form vs Purchase Order
It is common to confuse a requisition form with a purchase order, but they serve distinct purposes. The primary difference is that a requisition is an internal request to buy something, while a purchase order is the external, official document sent to a vendor to make the purchase. A requisition form is created first and is used to gain internal approval.
A purchase order, or PO, is created only after a requisition has been fully approved. The PO is a legally binding contract between the buyer and the seller, detailing the specifics of the sale, including item descriptions, quantities, prices, and delivery dates. A requisition is the start of the purchasing process, representing the “ask,” while the purchase order is the execution of that request, representing the “buy.”
The requisition stays within the company, whereas the purchase order goes out to the vendor. This two-step process ensures that all purchases are properly vetted and authorized before any commitment is made to an external party.
Importance of Using Requisition Forms
Using requisition forms is important for sound financial management and operational efficiency. One of the main benefits is improved budget control. By requiring approvals before any purchase is made, companies can ensure that spending is aligned with their allocated budgets, preventing departments from overspending.
This system also establishes a clear audit trail for all purchases. Every request, approval, and subsequent order is documented, creating a transparent record that is valuable during financial audits. This documentation helps prevent fraud by ensuring all purchases are legitimate and authorized, and it streamlines procurement by centralizing requests into a standardized workflow.