The Importance Of Purchase Requisitions Process In Procurement
- Robert
- Sep 5
- 11 min read
Updated: Sep 12
Table of contents
Here is a short AI Podcast summary in case you don't have time to read the whole article:
What differentiates organizations with exceptional procurement operations from those struggling with budget overruns and unauthorized spending? It's often not advanced software or larger teams. More often than you'd expect, it's mastery of one fundamental process: purchase requisitions.
While this might sound ordinary, effective procurement processes are built on this critical foundation that many organizations either implement poorly or treat as an administrative afterthought.
Here's something that can't be ignored: fraud occurs when people can place orders directly with suppliers without proper oversight. That's why well-managed organizations don't allow department managers to operate independently with vendor relationships. Instead, they channel all purchasing through formal requisition processes that create accountability and prevent costly errors.
This article explains everything you need to know about purchase requisitions. What they are, why they matter more than you think, and how they can save your organization from the kind of spending disasters that keep CFO's awake at night. We'll dig into the real benefits, show you exactly how they differ from purchase orders, and walk through workflows that actually make sense.
We'll also examine why automation has evolved from a convenience to an operational necessity.
Whether you're an experienced procurement professional seeking to optimize existing processes or someone working to understand why current procedures feel inefficient, this guide provides the insights you need.
What are purchase requisitions?
A purchase requisition is an internal document that formally requests the procurement department to purchase specific goods or services.
But calling it "just a form" misses the point entirely.
A purchase requisition captures the essential details of every potential purchase: who needs it, what's required, when it's needed, where it's going, and why it's necessary. All of this happens before any financial commitment occurs. For example, when Sarah in marketing identifies the need for $3,000 design software, she must articulate the business justification, demonstrate budget alignment, and secure appropriate approvals.
Think of it as a financial checkpoint that ensures proper evaluation before expenditure authorization.
The process typically works like this: employees inform their department managers about needed resources, department managers use that information to notify the purchasing department, and the finance team coordinates with accounting to ensure proper reporting procedures. Every purchase decision gets funneled through proper channels before becoming a financial commitment.
The real value emerges in what purchase requisitions prevent: duplicate subscriptions, unauthorized vendor relationships, and unexpected expenditures that create budget variance issues and strain financial controls.
Why are purchase requisitions important?
Here's a fundamental principle that procurement professionals understand: operational efficiency without financial control leads to costly organizational problems.
While allowing unrestricted purchasing might seem to accelerate operations, this approach typically results in multiple software licenses for identical functions, redundant service contracts, and equipment purchases that don't align with operational requirements or space constraints.
But there's a more significant concern: fraud prevention. When department managers can place orders directly with suppliers, organizations essentially eliminate essential financial safeguards. Purchase requisitions establish the control points necessary to ensure requests undergo proper approval and verification processes.
Purchase requisitions address these challenges by creating what we might call "strategic friction." When Tom from IT requests new server equipment, the requisition process ensures facilities understands power and space requirements, finance can verify budget availability, and management can evaluate alignment with current strategic priorities.
The value isn't in creating delays, it's in identifying and preventing expensive errors before they happen.
Centralized procurement through requisitions streamlines the entire buying process and reduces delays that negatively impact efficiency. When all purchasing requests flow through one department, you can coordinate better with suppliers, negotiate volume discounts, and avoid the confusion of multiple people ordering similar items from different vendors.
Beyond financial oversight, purchase requisitions create documentation that satisfies audit requirements and supports compliance initiatives. They establish clear accountability trails and ensure purchasing decisions align with company policies and external regulations.
When your procurement process includes proper requisition controls, you're not simply preventing problems. You're building a foundation for strategic purchasing that actually supports business objectives.
The benefits of using purchase requisitions
Implementing a robust purchase requisition system delivers tangible benefits that extend far beyond simple paperwork management. And honestly, once you see these benefits in action, you'll wonder how you ever managed without them.
Enhanced spending visibility tops the list. When every purchase starts with a requisition, finance and procurement teams gain unprecedented insight into organizational spending patterns. This visibility enables better forecasting, budget planning, and strategic sourcing decisions. Companies report average cost savings of 8-15% simply from having better visibility into their spending patterns. Not too shabby for what some consider "just paperwork."
You can avoid duplicate orders, which becomes increasingly important for larger organizations. If only one person were in charge of making purchases, keeping track of orders would be easy. But for larger organizations, purchase requisitions can keep track of what's needed, by whom, and when. This prevents the embarrassing situation of receiving three shipments of the same supplies because different departments didn't communicate.
They're incredibly useful for financial audits. Some financial audits require evidence that managers approved the company's purchasing decisions. Purchase requisitions (along with purchase orders) serve as concrete proof for these audits, making the process smoother for everyone involved.
They help you organize orders in ways that make inventory management significantly easier. Having a well-organized purchase system makes it simple to identify what products are coming in at any time. This organizational benefit ripples through the entire supply chain.
They prevent miscommunication by clearly documenting the details of every purchase. By having every aspect clarified and written down, organizations can avoid potential conflicts or confusion down the road. No more "but I thought you said..." conversations.
Streamlined approval processes eliminate the chaos of informal purchasing requests. Instead of hunting down managers for verbal approvals or dealing with post-purchase justifications, organizations establish clear approval hierarchies with defined spending limits. A department manager might approve requests up to $5,000, while anything above requires director-level approval.
They serve as legal documentation, even though purchase requisitions are internal documents. They can serve as legal documentation that can be enforced should any issues arise over what was ordered or the agreed-upon price.
Improved vendor management becomes possible when procurement teams have advance notice of purchasing needs. Rather than rushing to find suppliers at the last minute (we've all been there), they can negotiate better terms, evaluate multiple options, and build stronger relationships with preferred vendors.
Budget compliance improves dramatically. Finance teams can set spending limits at the requisition level, preventing departments from accidentally exceeding their budgets. Some organizations report reducing budget overruns by up to 40% after implementing structured requisition processes.
Documentation and accountability create a culture of responsible spending. When employees know their purchases will be reviewed and documented, they tend to be more thoughtful about what they're requesting and why they need it.
Strategic procurement planning becomes feasible when organizations can analyze requisition data to identify trends, consolidation opportunities, and potential cost-saving initiatives. This data-driven approach transforms procurement from a reactive function to a strategic business partner.
What's the difference between a Purchase Requisition and a Purchase Order?
The distinction between purchase requisitions and purchase orders confuses many people, but understanding the difference is crucial for effective procurement management. Let's clear this up once and for all.
Purchase requisitions are internal requests. They represent the "ask" phase of procurement. When someone in your organization needs something, they create a requisition to formally request it. This document stays within your company and serves as the starting point for the purchasing process.
Purchase orders, on the other hand, are external commitments. They represent the "buy" phase. Once the purchasing department receives an approved purchase requisition, they fill in purchase orders to actually place the order with suppliers. The purchase order is sent to the chosen supplier as a formal commitment to purchase specific goods or services at agreed-upon terms.
Approving the requisition gives the purchasing department the right to create a purchase order, which is basically a formal request sent to suppliers that notifies them of the intention to make a purchase.
Here's a comparison table to illustrate the key differences:
Think of it this way: the requisition is like writing a grocery list (you're planning what you need), while the purchase order is like actually placing your order at the checkout (you're committing to buy specific items at specific prices).
Makes sense now, doesn't it?
What is the format of a purchase requisition?
An effective purchase requisition form functions like a well-structured interview, it asks the right questions in logical sequence to gather information necessary for informed purchasing decisions.
Most forms fail because they either capture insufficient information (leading to extensive follow-up communications) or request excessive detail (creating forms so complex that users avoid them). The optimal approach captures essential information without making the process feel unnecessarily bureaucratic.
The contents of the purchase requisition form vary depending on the organization and the products requested, but the template should contain these basic elements for maximum effectiveness:
● Header information typically includes the requisition number (for tracking purposes), date of submission, requesting department, and the name of the person making the request. This basic information helps procurement teams prioritize and route requests appropriately. Nothing fancy here, just the basics done right.
● The name of the requestor should be clearly identified, along with the date of the request to establish a proper timeline for processing.
● Item details form the core of any requisition. This section should include detailed descriptions of the items, actions, or services requested, quantities needed, unit specifications, preferred suppliers (if any), and estimated costs. The more specific you can be here, the better. Instead of requesting "office chairs," specify "ergonomic office chairs with lumbar support, adjustable height, and wheels, suitable for 8-hour daily use."
● Delivery requirements are crucial and should specify the date of delivery, the location of the delivery, and the department in charge of making deliveries. Rush orders or specific delivery dates can significantly impact pricing, so it's important to be realistic about timing requirements.
● Business justification explains why the purchase is necessary and how it supports organizational objectives. This isn't just bureaucratic box-checking. It helps approvers understand the context and urgency of the request. Strong justifications might reference specific projects, replacement needs, compliance requirements, or business growth initiatives.
● Budget information should identify the budget code or account that will fund the purchase, helping finance teams track spending against allocated budgets. Some organizations also require requesters to confirm that sufficient budget remains available. This prevents those uncomfortable "oops, we're over budget" conversations.
● The signature of the requestor serves as formal acknowledgment and accountability for the request.
● Approval routing information indicates who needs to review and approve the request based on organizational policies and spending thresholds. This might include immediate supervisors, department heads, finance representatives, or procurement specialists.
● Supporting documentation attachments such as quotes, specifications, or vendor proposals provide additional context and help procurement teams process requests more efficiently.
Purchase requisitions Workflow
Understanding purchase requisition workflows is where procurement theory meets operational reality. While you can design sophisticated processes conceptually, if they don't accommodate how people actually work, you'll encounter bottlenecks, workarounds, and user frustration.
The most effective workflows aren't strictly linear. They're designed for real-world conditions where approvers travel, urgent requests emerge, and priorities shift without advance notice.
Step 1: Need Identification and Request Initiation
Someone identifies a business need requiring purchasing. This might be planned (quarterly equipment refresh) or reactive (equipment failure during peak operations). The key is capturing not only what's needed, but the business context driving the requirement.
Step 2: Requisition Creation and Documentation
The requestor completes the purchase requisition with detailed specifications and justifications. Well-designed organizations use guided forms that help people provide complete information initially rather than requiring multiple clarification cycles.
Step 3: Technical and Compliance Reviews
Before financial approvals begin, many organizations route requests through technical reviews. IT evaluates technology purchases for compatibility, facilities reviews equipment for space and power requirements, and legal might examine contract terms for compliance issues.
This parallel review approach can significantly accelerate overall processing timeframes.
Step 4: Financial Approval and Decision Management
This is where purchasing managers demonstrate their value. They can approve requests, modify them based on budget constraints or superior alternatives, or reject them entirely. However, rejection requires specific explanation: priority misalignment, budget unavailability, or better alternatives must be clearly communicated to prevent confusion and frustration.
Financial approvers verify budget availability and policy compliance. This might involve multiple approval levels depending on purchase amounts and organizational hierarchy.
Step 5: Procurement Review and Vendor Selection
Once internally approved, procurement teams assume responsibility for supplier identification, price negotiations, and contract preparation. Approving the requisition provides the purchasing department with formal authorization to create purchase orders and engage external suppliers.
Step 6: Purchase Order Generation and Supplier Communication
The final step involves creating formal purchase orders and communicating requirements to selected suppliers. At this point, the requisition has fulfilled its purpose and attention shifts to order fulfillment and delivery management.
Effective workflows include status updates and feedback mechanisms so requestors understand where their requests stand in the process. Communication gaps create user frustration and undermine process adoption.
Benefits of automated Purchase Requisition
Automation transforms purchase requisitions from administrative burden into strategic advantage, delivering benefits that compound over time:
● Processing speed improves dramatically with automation. Manual requisitions might take days or weeks to route through approval chains, while automated systems can process routine requests in hours. Electronic routing eliminates delays caused by people being out of office, misplaced paperwork, or unclear approval requirements.
● Better visibility becomes a game-changer when you move from paper-based systems to digital platforms. No more paper, better visibility means everyone can track the status of requests in real time, reducing follow-up calls and emails.
● Accuracy enhancement reduces errors that commonly plague manual processes. Automated systems can validate budget codes, check for required fields, and flag unusual requests before they enter the approval workflow. Some organizations report reducing requisition errors by 60-80% after implementing automated systems.
● Compliance monitoring becomes much easier when systems can automatically enforce organizational policies. Automated workflows can route requests based on spending thresholds, require specific approvals for certain categories, and maintain complete audit trails without human intervention.
● Cost savings emerge from multiple sources. Faster processing reduces administrative overhead, better visibility enables more strategic sourcing decisions, and automated controls help prevent maverick spending. The Aberdeen Group found that organizations with automated requisition processes average 7% lower procurement costs compared to those using manual processes.
● Real-time visibility into spending patterns helps organizations make better decisions. Finance teams can monitor budget utilization in real time, procurement can identify consolidation opportunities, and executives can spot spending trends before they become problems.
● Integration capabilities allow automated requisition systems to connect with other business systems like ERP, accounting software, and supplier networks. This connectivity eliminates duplicate data entry, reduces processing time, and provides more comprehensive reporting.
● Analytics and reporting functionality helps organizations understand their purchasing patterns and identify improvement opportunities. Advanced systems can provide insights into spending trends, supplier performance, approval bottlenecks, and cost-saving opportunities.
● User experience generally improves with well-designed automated systems. The form is filled in online and then sent to the person in charge, making the process more convenient for everyone involved. Requesters can submit requisitions from anywhere, track approval status in real time, and receive automated notifications about their requests. This transparency reduces the need for follow-up calls and emails.
● Scalability ensures that requisition processes can grow with the organization without proportional increases in administrative overhead. Automated systems can handle increased volumes without requiring additional staff or creating processing delays.
Why should you choose Prokuria's Purchase Requisition software?
After exploring the complexities and benefits of purchase requisition processes, it's clear that having the right software solution can make or break your procurement operations. The market offers numerous options, but finding one that truly addresses real-world procurement challenges requires careful consideration.
For smaller businesses, implementing a structured purchasing process may initially seem resource-intensive. However, for larger organizations, this process ensures transparency and delivers significant cost savings, making the investment worthwhile for sustained growth.
Prokuria's Purchase Requisition software distinguishes itself by addressing the practical challenges that procurement professionals encounter daily. Organizations can utilize technology to simplify and manage requisitions more effectively. Prokuria offers a comprehensive purchase requisition feature specifically designed to enhance employee efficiency and streamline procurement workflows.
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