When managing and tracking purchases within an organization, purchase requisition forms play a crucial role. This internal document is used by employees to request goods or services on behalf of their firm.
These purchases may be for business operations, inventory, or manufacturing inputs. By utilizing a purchase requisition form, companies can streamline their procurement process, maintain accurate records, and ensure timely delivery of necessary supplies.
What Is a Purchase Requisition?
A purchase requisition is a formal request made by an employee to obtain goods or services needed for their job. It serves as a written record of the items requested, their quantity, specifications, and any other relevant information. The purchase requisition form is typically submitted to the purchasing department or the appropriate authority for review and approval. Once approved, it serves as the basis for creating a purchase order.
By using a purchase requisition form, organizations can establish a systematic approach to managing their procurement process. It helps in maintaining transparency, accountability, and control over the purchasing activities within the company.
Purchase Requisition vs. Purchase Order: What is the Difference?
While both purchase requisition and purchase order are essential components of the procurement process, they serve different purposes.
An employee generates a purchase requisition as an internal document to request the procurement of goods or services. It outlines the details of the requested items, including quantity, specifications, and estimated cost. The employee then submits the purchase requisition to the purchasing department for review and approval. Once they approve it, the requisition serves as the basis for creating a purchase order.
A purchase order, on the other hand, is a legally binding document issued by the purchasing department or the authorized personnel. It is sent to the supplier or vendor to formally request the delivery of goods or services. The purchase order includes information such as item descriptions, quantities, agreed-upon prices, delivery dates, and terms of payment. It serves as a contractual agreement between the buyer and the seller.
The Importance of a Purchase Requisition for an Organization
A purchase requisition form plays a vital role in ensuring efficient and effective procurement processes within an organization. Here are some reasons why it is important:
- Streamlining the Procurement Process: By using a purchase requisition form, companies can establish a standardized process for requesting and approving purchases. This streamlines the procurement process, reduces errors, and ensures that all necessary information is provided.
- Internal Control and Accountability: Purchase requisitions help maintain internal control and accountability. They ensure that purchases are made according to company policies and procedures. The approval process provides oversight and prevents unauthorized purchases.
- Budget Control: Purchase requisitions help companies maintain control over their budgets. By requiring employees to obtain approval before making purchases, organizations can ensure that expenses are within budget and aligned with strategic objectives.
- Accurate Record-Keeping: Purchase requisitions provide a paper trail and serve as documentation for future reference. They help in record-keeping, tracking expenses, and auditing purposes.
- Negotiating Better Terms: Having a centralized purchase requisition process allows organizations to consolidate their purchasing power. By aggregating requirements, companies can negotiate better terms, discounts, or volume pricing with suppliers.
Steps in the Purchase Requisition Workflow
The purchase requisition workflow typically involves several steps from initiation to approval and fulfillment. While the specific workflow may vary depending on the organization’s structure and policies, here are the common steps involved:
1. Initiation:
An employee identifies a need for goods or services and fills out a purchase requisition form. The form includes details such as item descriptions, quantity, specifications, estimated cost, and any supporting documents.
2. Review and Approval:
The purchase requisition form is then submitted to the appropriate authority or department for review and approval. This could be the purchasing department, department head, or a designated approver. The reviewer verifies the accuracy of the information provided, checks for budget availability, and ensures compliance with company policies.
3. Evaluation and Supplier Selection:
If the purchase requisition is approved, the purchasing department evaluates potential suppliers and selects the most suitable one. This involves comparing prices, quality, delivery time, and other relevant factors.
4. Purchase Order Creation:
Once the supplier is selected, a purchase order is created based on the approved purchase requisition. The purchase order includes detailed information about the items, quantities, agreed-upon prices, delivery dates, and terms of payment.
5. Order Fulfillment:
The supplier receives the purchase order and proceeds with fulfilling the order. They deliver the goods or provide the requested services within the agreed-upon timeframe.
6. Goods Receipt and Inspection:
Upon receiving the goods, the purchasing department or the relevant department checks the items for quality, quantity, and any damages. They compare the received goods with the purchase order to ensure accuracy.
7. Invoice Processing and Payment:
After the goods have been received and inspected, the supplier sends an invoice to the purchasing department. The invoice is matched with the purchase order and goods receipt. Once verified, the payment is processed according to the agreed-upon terms.
Contents of a Purchase Requisition Form
A purchase requisition form typically contains the following information:
- Requester Information: The name, department, and contact details of the employee making the request.
- Item Details: Descriptions, quantities, specifications, and any other relevant information about the requested items.
- Estimated Cost: The approximate cost of the requested items.
- Justification: A brief explanation of why the requested items are needed and how they will contribute to the organization’s operations.
- Supporting Documents: Any supporting documents, such as quotes, proposals, or technical specifications, that provide additional information about the requested items.
- Approval Section: A space for the appropriate authority to sign and approve the purchase requisition.
When is a Purchase Requisition Form Needed?
A purchase requisition form is needed in various situations within an organization:
- New Purchases: When an employee identifies the need to purchase goods or services that are not currently available within the organization.
- Replenishment: When existing supplies or inventory need to be replenished.
- Equipment or Asset Acquisition: When new equipment or assets need to be acquired for business operations.
- Special Projects: When specific projects or initiatives require additional resources or materials.
- Emergency Purchases: In urgent situations where immediate purchases are necessary to address critical needs.
By implementing a standardized purchase requisition process and utilizing purchase requisition forms, organizations can improve their procurement efficiency, maintain accurate records, and ensure timely delivery of goods and services. This leads to better control over expenses, increased transparency, and streamlined operations.
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Purchase Requisition Form – Excel
