What is a Purchase Requisition?
Definition: Purchase requisition is a form that departments in big organizations fill to indicate they wish to purchase some materials or merchandise.
The requisition form notifies relevant authorities, more so purchasing departments, that some materials or merchandise are needed for the smooth running of a given department.
Understanding Purchase Requisition Example Template
In departments responsible for overseeing the production of processing, a purchase requisition document will detail raw materials as well as equipment needed for production. Similarly, the sales department can fill the purchase requisition form when ordering merchandise needed on the sales floor.
Therefore, the purchase requisition process entails all the duties that control the application as well as approving and tracking each purchase request. The requisition process includes steps such as routing the requisition form through various departments for approval.
The finance team is usually at the heart of the purchase requisition process as it is responsible for releasing the necessary finances for purchasing ordered materials. Similarly, the procurement team procures the items required on behalf of departments upon the release of funds by the finance department.
In most organizations, department managers do not have the right to place orders directly with vendors on behalf of the company. The department managers must follow spelled out procedures whereby all orders are crosschecked with high-ranking managers or departments. The approval process is designed to curb any fraud by department managers colluding with vendors.
Therefore, department managers must fill out purchase requisition forms and hand them over to higher-ranking managers or departments for crosschecking and approval.
Purchase Requisition Steps
Purchase requisition workflow differs from one organization to another. However, there is a basic outline, which most organizations follow to ensure smooth placement of orders, as well as, acquisition.
Step 1: Purchase request submission
Submission of a purchase request is the first step in any purchase requisition process. In this case, whenever employees’ spot needs, they place requests of the items needed by raising purchase requests. In organizations, there is usually a requester tasked with the responsibility of filling the purchase request form, indicating all the items or merchandise that staff in a given department need.
Step 2: Request Screening
Once the purchase requisition form is filled, it is handed over to the Purchasing Agent tasked with the responsibility of screening all the items. If the purchase request form is not completed, the purchaser might ask the requester to make the necessary changes or fill out all the missing information.
Once everything is in order, the Purchasing Agent can create a purchase order and hand it over to the finance department for approval.
Step 3: Manager Review
This is usually the final step of the purchase requisition process. Requester manager or the finance team will go through the purchase order to ensure that everything is in order. Similarly, it is at this level that the manager ensures the value of the purchase order does not exceed the department spending limit.
It is at this level that the purchase request is approved or declined. If approved, the requester manager will place an order for the purchase of the items or merchandise from suppliers.
Why is the Purchase Requisition Process Important?
The purchase requisition process allows department heads as well as employees, plan purchases better, thus ensuring various processes run smoothly without hitches. Similarly, an effective purchase requisition process ensures optimal organizational spend most of the time.
Well-defined purchase requisition processes eliminate indirect spending within departments. Such processes also go a long way in eliminating time and effort wasted in chasing paperwork in a bid to maintain purchasing records.
Summary
Purchase requisition is an important process in big organizations that need to purchase items from time to time to sustain underlying operations. The requisition process serves the role of curbing fraud by ensuring all needed supplies are first approved’ by higher-ranking managers before a purchase is made. Therefore, a purchase requisition is a control and fraud control document when it comes to the purchase of various supplies in companies.