The payment requisition and the purchase order are two documents used in the procurement cycle of goods and services. The documents provide crucial financial documentation, which simplifies auditing. Although these documents are quite similar, each is different and used for a different function.
Definition of Payment Requisition and Purchase Order
Different types of payment requisitions are used to request the purchase of items. This document is created by a requester within an organization and forwarded to the procurement department or unit. A payment requisition would typically contain information about the requester (designation included), details of requested items, and the preferred service provider’s information. Once the procurement team receives the payment requisition, the procurement officer would generate a purchase order is approved. The payment requisition is also used for financial reporting by the accounting department of the organization. A rejected payment requisition would be sent back to the requester for correction where necessary.
The procurement creates a purchase order once the requisition order is approved. Purchase orders are only issued by the authorized procurement officer of a company. Generated purchase orders are used to detail required items and forwarded to the supplier for processing. A purchase order automatically becomes a legal document between the buyer and the seller when the supplier accepts it. A typical purchase order would usually contain the buyer’s representative information, items to be supplied, shipping details, terms and conditions of the transaction, order number, and more. For uniformity and ease of processing, the purchase order and payment requisition number are usually the same.
Difference in Usage
A payment requisition is strictly used for the internal procurement processes of an organization. In no circumstance is a payment requisition used for procurement processes outside of the buyer’s organization. If the payment requisition is mistakenly used, it lacks the legal traction to develop a valid agreement between the two parties involved.
Although the payment order is generated internally within an organization, it is not used internally. Once created, it is forwarded to the supplier, and it can quickly form the bases for the creation of a valid legal agreement between the two parties.
Difference in structure
A typical payment requisition would not require the buyer’s information, which may include the company’s name and address. Also, it would usually carry an internal company’s account information that would typically be used to make payments to the supplier. No comments or remarks field is provided for within a payment requisition document.
A purchase order would usually have the buyer’s complete information. Such information includes company name, company address, and company shipping address. Also, a purchase order would often have a field for messages or remarks, which allows the buyer to provide additional information or references to the supplier.
Payment requisition and purchase order are two crucial documents, which are commonly used in an organization to simplify the general procurement processes of a company. These two documents have some similarities and a whole lot of differences across structure and function.
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Here’s the list of main invoice fields:
- Company information
- A unique identifier, date, and invoice number
- List of items and services
- Terms of sales
- List of fees
- Total due amount
Useful resources about invoices:
- How to Create an Invoice
- Tips to Customize your Invoice Templates
- Differences Between Bill and Invoice
- How to Create Invoice With/Without Logo
- How to Create Invoice With/Without Discount
- How to Create Invoice With/Without Tags
- Bill-Only Requisitions
- Payment Requisitions
- Purchase Orders
- PR vs PO
- Tax Invoice
- Chargeback Invoice