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Purchase requisitions can play a critical role in a company¡¯s financial planning processes because they increase visibility to spend before it happens.?

What Is Purchase Requisition??

Purchase requisition is a process that creates a formal request within an organization to buy goods or services. The requisition process includes a detailed submission of the desired purchase and the approvals and routing of information to budgets.?

The requisition usually includes a detailed description of the good or service requested, the business reason for the purchase, the quantity, price, vendor, and other important details. This information helps authorized staff to approve or deny the request.?

The purchase requisition is usually a step taken within an organization before a purchase order is issued to a supplier allowing the transaction to proceed.?

The purchase requisition process is an important method for managing expenses, ensuring visibility into pending transactions so that budgets are managed appropriately.?

Purchase Requisition Processes?

While each company¡¯s purchase requisition process will be different, the fundamental steps include the following:?

1. Create the Purchase Requisition Form?

An employee will complete a purchase requisition form. Ideally, this form will be available online and, once completed, be routed appropriately for consideration.?

2. Line Manager Approval?

Internal approvals are at the heart of the purchase requisition process. The line manager is responsible for ensuring that the request is necessary, the information is accurate, and that the department has the budget needed to pay for the requested products or services.?

Additional approvals may be required, based on the company¡¯s internal processes. Often, higher amounts require additional approvals before proceeding.?

3. Inventory Verification?

A requisition form may be routed to the person or team who manages inventory to confirm that the items aren¡¯t already in stock.?

4. Purchasing Department Approval?

Purchasing team members will review the approved requisition and ensure that there¡¯s a valid business need. If the form is incomplete, the officer may complete it themselves or return it for more details.?

5. Purchase Order Generation?

Once all the approvals are in place, a purchase order is generated, allowing the requestor to proceed with the purchase.?

6. Order Delivery and Acceptance?

The vendor will send goods to the company, where they will be reviewed to ensure that the items, quantities, and quality are what was ordered. Typically, details are confirmed among the purchase order, packing slip, and invoice to ensure that correct materials have been sent.??

7. Invoice Payment?

If the received materials are accepted and accurate, the purchase order is marked complete and the invoice is paid, usually by the finance department, and the details are entered into appropriate budget ledgers.?

Advantages of Purchase Requisitions?

Having a strong purchase requisition process has many benefits to a company and is a critical component of a robust procurement operation. Among the core benefits are:?

• Efficiency. As part of a centralized procurement process, a purchase requisition builds efficiency into the finance operation. It allows for better organization and tracking of materials, reduced ordering delays, and better inventory management.?
• Cost savings. With efficient purchase requisitions, a company can save time and money throughout the operation.?
• Fraud reduction. Clearly defined protocols reduce the risk of fraud, such as employees purchasing items for personal use or reselling bought items. The purchase requisition process can deter fraud before it starts and ensure that goods and services cannot be ordered without the proper approvals in place.?
• Transparency. A solid purchase requisition workflow adds layers of transparency and clarity. The hierarchical nature of the process ensures that documents are verified for accuracy and the request is needed. It provides documentation that a purchase was submitted and approved with consent of the appropriate managers and that budgeted funds are available.?
• Accountability. Using purchase requisitions provides proof that orders were necessary. It can also be used to confirm that delivered goods were those requested. This accountability is important for internal controls and audit procedures.?
• Fewer duplicate orders. A good purchase requisition system means fewer mistakes, such as duplicated orders. Purchasing departments can track what¡¯s ordered and question if a duplicate request comes through before a purchase order is issued.?

Why Automating Purchase Requisitions Makes Sound Business Sense?

Purchase requisitions can help improve the operations of businesses, but they are an added step in the purchasing process. Fortunately, there are options for automating this important process, which can make it viable for businesses of any size.?

Automation can replace unreliable and error-prone manual requisition processes. Automation takes a company¡¯s existing paper forms and processes and translates them to cloud-based solutions, with intuitive, accessible tools for users and approvers.?

Automated purchasing requisitions help maintain budget control across departments. The controls built into an automated requisition process ensure that money is spent appropriately and accurately.?

Automation also ensures that your company maintains compliance with regulatory mandates governing purchasing. It allows for better response times and timely acquisition of necessary goods and services critical for success.?

With the right solution, a company can ensure data related to purchase requisition is synchronized across business systems, with real-time data integration and sharing. There¡¯s also lower risk of data entry errors and more accuracy in finance operations. There¡¯s better cash flow management and budget reconciliation, too.?

Choosing the Right Solution to Automate Your Processes?

When you¡¯re looking for automation solutions that can help improve your spend processes, consider technology that gives your managers more control over spending with a user-friendly system that gives approvers the visibility they need. For example, learn how »ÆÉ«¶ÌÊÓƵ Request uses automation to simplify requests and approvals, drive policy compliance, and control company spending.?

SAP »ÆÉ«¶ÌÊÓƵ solutions for travel and expense management also automate processes ranging from employee travel reimbursements to invoice generation.?

Discover how SAP »ÆÉ«¶ÌÊÓƵ solutions can enhance your operations.?