In any organization, managing and controlling expenses is crucial for maintaining financial stability. Purchase requisitions are an essential part of this process, as they enable businesses to track and control their purchasing activities. A purchase requisition is a formal request made by an employee to their supervisor or purchasing department to purchase goods or services. This document outlines the details of the purchase, including the item or service, quantity, cost, and any other pertinent information. In this blog, we will explore what purchase requisitions are and why they are important for businesses.
What is purchase requisition?
- A purchase requisition is a formal request to purchase goods or services.
- It is usually initiated by an employee who needs something for their work, such as a new computer or supplies.
- The requisition is then reviewed and approved by a manager or supervisor who has the authority to authorize purchases.
- Once approved, the requisition is sent to the purchasing department, who will then order the requested item from a vendor.
- Purchase requisitions help organizations control their spending and ensure that purchases are necessary and authorized.
- They also help prevent fraud and unauthorized purchases by requiring approval from a higher-up.
- Purchase requisitions can be done manually or through specialized software, which can streamline the process and make it more efficient.
- Overall, purchase requisitions are an important part of any organization's procurement process and help ensure that purchases are made in a responsible and efficient manner.
Also read: How to Monitor & Keep Track of Each Purchase Order Efficiently?
Why Is Purchase Requisition Important?
Purchase requisition is an essential process for an organization that wants to maintain effective procurement. The purchase requisition process enables organizations to control their spending and track expenses while ensuring that purchases are necessary for the operation of the business. below we have discussed why purchase requisition is important for an organization
- Purchase requisition make sure that purchases are made in accordance with the organization's procurement procedure. It establishes a clear process for obtaining approval and authorization for each purchase which helps to prevent unauthorized and personal purchasing. Only essential procurement is done.
- It provides complete visibility and control by allowing organizations to track and monitor expenses. It helps to ensure that the organization stays within the budget and spending is aligned with the organization's strategic process.
- It offers an audit trail for all purchases which helps to ensure that the organization compiles with regulatory requirements and standards. In the case of audit purchase requisition can be used to demonstrate that all purchases were authorized, necessary and properly accounted for.
- overall purchase requisition is important for all organizations that want to maintain effective procurement practices. It provides several benefits such as controlling & tracking expenses, streamlining process of procurement and compliance management.
Is Purchase Requisition the Same as a Purchase Order?
Purchase requisition and purchase order are two terms that are often used interchangeably but they are not the same thing. Both documents play important roles in the procurement process, but they serve different purposes.
- A purchase requisition is a formal request for the procurement of goods and services which is submitted by an authorized person or department within the organization. The purpose of the purchase requisition is to initiate the procurement process by identifying the need for a particular product or service. The requisition typically includes details such as the item or service being requested, quantity estimated cost, delivery timeline, and the project that will be charged for the purchase. The form is usually submitted to the purchasing department for review and approval before the purchase is made.
- A purchase order is a legally binding agreement between a buyer and a supplier or seller for the purchase of goods or services. It is generated by the purchasing department after the requisition has been approved and contains specific details such as quantity description price delivery date of goods. The purchase order served as a contract between the buyer and the supplier outlining the terms and conditions of the purchase.
But overall purchase requisition and purchase order are not the same thing. The main difference between a purchase requisition and purchase order is that requisition is a request for procurement whereas purchase order is a legally binding document. The requisition initiates the procurement process and purchase order is the outcome. However, purchase requisition and purchase order are a part of a process organization process it is helpful in minimizing miss utilization of organization's resources. It provides a systematic approach to get the product or service required by a department or any employee of the organization.
Also read: 4 Important Purchase Order Features That Can Help in Your Business Growth
Does Asset Infinity provide Purchase Requisitions & Purchase Order System? What are its prime features?
Yes, Asset Infinity provides purchase requisition and purchase order system. It has several valuable features that can be useful in an organization.
- You can define a workflow procedure that will assist in proper management of purchase orders. For example, if an item is requested by an employee, you can create multiple levels of workflow. The manager will check if it is required or not. The finance department will not quantity is ok, or it can be decreased and so on or if stock available or not.
- The system automatically converts purchase requisition into purchase orders once they are approved.
- Check the status of every purchase orders as open, partially received or closed
- Directly add assets into asset register through the GR (Good Received) process
- Check asset/inventory availability in stock & transfer if available
- All these activities can be done via cloud technology & accessible with mobile as well.
Purchase requisitions are a critical component of the procurement process in any organization. By using purchase requisitions, businesses can ensure that they have proper control over their purchasing activities, maintain accurate records of their expenses, and minimize the risk of unauthorized or unnecessary purchases. Additionally, purchase requisitions provide a streamlined and efficient way to manage purchasing requests and approvals, which can ultimately lead to cost savings and increased efficiency for the organization. By implementing a robust purchase requisition process, businesses can better manage their expenses and improve their overall financial stability. If purchase requisition & procurement is a vital part of your organization then Asset Infinity’s purchase order system can be extremely helpful.