Purchase Requisition Defined: Process & Practices

The starting point for the entire purchasing process is the purchase requisition, often known as the purchase request (PR). It’s crucial to comprehend what it is and how the procedure can help your company. Though they are not the same, a purchase order (PO) and a PR are frequently discussed in the same sentence. Each plays a unique part in the purchasing process.

What is a purchase requisition?

A purchase requisition is an internal document initiated by an employee requesting the purchase of goods or services for the company. It serves as a formal communication channel between departments and the procurement team, outlining the specific needs and justifications for the proposed purchase.

The purchase requisition process.

An official request for products or services prepared by an employee initiates the buy requisition procedure. Usually, it’s a straightforward form with all the data required to start the appropriate approval procedure. This comprises the item(s) being requested, the department and budget item that apply, the product description explaining the need for the purchase, and any associated documents, quotations, or agreements that approvers should consider.

The purchase requisition (PR) is sent to the relevant approvers after it is submitted. Usually, an automated requisition system is used for this. The purchase requisition eventually becomes an approved purchase order after that. This effectively becomes a legally enforceable agreement for the purchasing department, and it will be utilized in the approval processes that follow.

Benefits of utilizing purchase requisitions.

Implementing a well-defined purchase requisition process offers a multitude of benefits for businesses:

• Enhanced transparency and accountability: Purchase requisitions provide a clear record of purchasing requests, fostering transparency and preventing unauthorized spending. By establishing approval workflows, companies can ensure responsible use of resources.
• Streamlined procurement: PRs create a standardized process for requesting and acquiring goods and services. This eliminates confusion and delays, promoting efficient procurement cycles and improved operational effectiveness.
• Improved budget control: PRs act as a mechanism for budget monitoring and control. By reviewing justifications and estimated costs, managers can make informed decisions about spending and avoid unnecessary purchases.
• Reduced risk of errors: Requisitions help minimize errors and discrepancies. Detailed information on requested items ensures vendors receive accurate purchase orders, leading to fewer order fulfillment issues.
• Stronger vendor relationships: Clearly defined communication through PRs allows for better collaboration with vendors. Sharing precise requirements up front facilitates accurate quotes and fosters a more reliable supplier network.

Best practices for maintaining effective purchase requisitions.

To maximize the benefits of purchase requisitions, here are some best practices to consider:

• Standardize purchase requisition forms: Develop a clear and consistent PR format to ensure all necessary information is captured.
• Define approval workflows: Establish a clear hierarchy for PR approvals, involving relevant personnel based on budget thresholds or item categories.
• Set spending limits: Implement spending limits that trigger higher-level approvals for larger purchases, enforcing financial discipline.
• Encourage vendor selection: Allow flexibility for departments to suggest preferred vendors while ensuring alignment with company policies.\
• Utilize technology: Leverage software solutions to automate PR workflows and integrate seamlessly with purchasing and accounting systems.

Streamlining purchase requisitions in the digital age with Airbase.

Traditional paper-based PR processes are cumbersome and time-consuming. Airbase, a modern spend management platform, offers a comprehensive solution to revolutionize your company’s approach to purchase requisitions.

It streamlines the entire PR lifecycle, allowing employees to submit electronic requisitions with ease. Intuitive interfaces guide users through the process, ensuring all necessary details are captured. Automated workflows facilitate efficient approvals, eliminating delays and bottlenecks. Approvers can review PRs electronically, provide feedback, and grant approvals quickly and easily.

Real-time budget tracking and reporting capabilities within Airbase empower informed decision-making. Department heads and budget managers gain valuable insights into spending trends and can proactively manage budgets based on PR data. Additionally, Airbase seamlessly integrates with leading accounting and ERP systems, ensuring all purchase data flows effortlessly across your financial ecosystem. This eliminates the need for manual data entry, reducing errors and saving valuable time.

Airbase can transform the traditional PR process into a streamlined and digital experience, empowering employees, streamlining workflows, and propelling your business toward greater financial agility.