In most cases, people mistake purchase requisitions for purchase orders. Although similar, each document is different. A purchase requisition is a document that is used to purchase goods or services for an organization. Departments or individuals use it to request for work supplies or services from the procurement unit. The moment the procurement unit or officer receives the document, they begin purchasing the required items. The same document is used by the financial team to manage reports together with their accounting counterpart.
How it is Used
The purchase requisition is mostly used in organizations that are big enough to have separate procurement departments or units. Whenever a staff or a department within the organization requires a particular item (for example, a new computer), they write formally to the procurement unit requesting the purchase of the item. Such a formal document is the purchase requisition, which gives the procurement unit the ability to procure the requested item.
On the other hand, the procurement unit looks through the request and decides to approve, reject, or ask for a modification to the request. If the purchase requisition document is approved, the procurement unit or officer creates a purchase order, which assists in purchasing the requested item.
Functions of a Purchase Requisition
The primary function of a purchase requisition is to allow staff within an organization to purchase items through a well-defined process. Other functions of a purchase requisition include the following.
- Control of Purchase,
- Protection of an Organization,
- Centralized Process
Control of Purchase
Many organizations make use of purchase requisition to ensure control and prevent fraud. The formal nature of how the requisition is used makes fraud difficult as the request goes through many people, including the procurement unit. Additionally, the organization’s management can easily access information regarding when and who has requested for an item.
Also, in the event of an internal or external audit, the use of a purchase requisition makes the entire process easy and straightforward.
Protection of an Organization
As the use of purchase requisition ensures control, it also ensures the protection of business by protecting the asset and funds of an organization. The documentation makes it easy to track and find all assets and funds of an organization for transparency and accountability.
In small to medium organizations, the purchase requisition document makes the procurement of goods and services centralized, making management efficient. Also, a centralized system allows an organization to purchase items in bulk, which gives them the ability to negotiate favorable terms for each purchase. Also, a centralized procurement system fast-tracks procurement processes and prevents unnecessary delays, which can be detrimental to productivity. The use of a purchase requisition and other financial documents makes the entire procurement process centralized and smooth.
A purchase requisition is an important document that allows organizations to request and purchase items and services through a controlled, protected, and centralized system.