Every organization requires a streamlined process for purchasing goods and services. A purchase requisition form is an internal document used by employees to request purchases on behalf of their firm. This form is crucial for maintaining a record of all purchases made by the organization, whether they are for business operations, inventory, or manufacturing inputs.
This article will explore what a purchase requisition is, why it is important for an organization, the contents of a purchase requisition form, and the steps involved in the purchase requisition workflow.
What Is a Purchase Requisition?
A purchase requisition is a document that an employee submits to their organization’s procurement department to request the purchase of goods or services. It serves as an official request for the procurement team to initiate the purchasing process.
The purchase requisition provides details about the requested items, quantities, and any specific requirements. It also includes information about the budget, cost center, and approval hierarchy.
Organizations often have specific guidelines and procedures for creating and submitting purchase requisitions. These guidelines ensure that all necessary information is included and that the request aligns with the organization’s budget and procurement policies.
The Importance of a Purchase Requisition for an Organization
A purchase requisition plays a vital role in maintaining control over an organization’s purchasing activities. Here are some reasons why it is important:
- Budget Control: Purchase requisitions help organizations manage their budgets effectively. By requiring employees to submit a requisition before making a purchase, it ensures that all expenses are accounted for and approved in advance.
- Approval Process: Purchase requisitions establish a structured approval process. This ensures that all purchases go through the necessary levels of review and authorization, preventing unauthorized spending.
- Record-Keeping: Purchase requisitions provide a documented record of all purchases made by the organization. This information is valuable for financial reporting, auditing, and tracking expenses.
- Vendor Management: Purchase requisitions help organizations maintain relationships with their preferred vendors. By having a central purchasing process, organizations can negotiate better terms and prices with their vendors.
- Inventory Management: Purchase requisitions aid in managing inventory levels. By centralizing purchase requests, organizations can analyze their inventory needs and avoid overstocking or stockouts.
- Compliance: Purchase requisitions ensure compliance with legal and regulatory requirements. They help organizations adhere to procurement policies, ethical standards, and internal controls.
Contents of a Purchase Requisition Form
A purchase requisition form typically includes the following information:
- Date: The date when the requisition is created.
- Requester Information: Details of the employee requesting the purchase, including their name, department, and contact information.
- Item Details: Information about the requested item, such as its description, quantity, unit price, and total cost.
- Delivery Information: The desired delivery date, shipping address, and any special instructions for the vendor.
- Accounting Information: The budget code, cost center, and any project or account codes associated with the purchase.
- Approval Workflow: The list of approvers who need to review and authorize the purchase requisition.
- Additional Notes: Any additional information or comments that may be relevant to the purchase request.
The purchase requisition form may vary depending on the organization’s specific requirements. Some organizations may require additional fields or customization based on their industry or internal processes.
Steps in the Purchase Requisition Workflow
The purchase requisition workflow involves several steps from the initial request to the final purchase. Here are the typical steps in the process:
1. Request Creation:
The employee creates a purchase requisition form, providing all the necessary details about the requested items, quantities, and any special requirements. They also specify the budget code, cost center, and project if applicable.
2. Review and Approval:
The purchase requisition is then sent for review and approval. The document is routed to the appropriate approvers based on the organization’s hierarchy and approval workflow. Each approver reviews the requisition and decides whether to approve, reject, or request modifications.
3. Budget Check and Availability:
Once the requisition receives all the necessary approvals, the procurement team performs a budget check. They ensure that sufficient funds are available in the specified budget code and cost center to cover the purchase. If there are any discrepancies, the requisition may be sent back for revisions or further approval.
4. Vendor Selection and Negotiation:
After the budget check, the procurement team proceeds with vendor selection. They identify potential vendors, obtain quotes or negotiate prices, and evaluate the best options for the organization. This step ensures that the organization gets the best value for the requested items.
5. Purchase Order Creation:
Once the vendor is selected, the procurement team creates a purchase order based on the approved requisition. The purchase order includes all the relevant details, such as the vendor’s information, item description, quantities, prices, and delivery instructions. The purchase order is then sent to the vendor for confirmation.
6. Goods Receipt and Inspection:
When the vendor delivers the items, the receiving department checks the goods against the purchase order to ensure accuracy and quality. Any discrepancies or damages are documented and reported to the procurement team for resolution.
7. Invoice Processing and Payment:
Once the goods are received and inspected, the vendor submits an invoice to the organization. The invoice is matched against the purchase order and goods receipt information. If everything is in order, the invoice is approved for payment, and the procurement team initiates the payment process.
Free Purchase Requisition Form!
A purchase requisition form is an essential tool for organizations to manage their purchasing activities efficiently. It helps maintain budget control, establish an approval process, and ensure proper record-keeping.
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Purchase Requisition Form Template – Excel
