As a business owner, you probably know that establishing a standard for the ordering process within an organization necessitates documentation. Implementing a standard system reduces expenses and provides a paper trail for easy auditing. Obtaining a purchase requisition vs purchase order are both essential steps in procuring the supplies the company needs.

Each purchasing policy and method is unique; thus, it is essential to understand how these two systems may expedite your operations even if you are comfortable with both terms – it’s never too late to learn about purchase requisition & purchase order.

Purchase requests and purchase orders are needed paperwork for a business to acquire goods and services. Nevertheless, order requisition and purchase order are distinct. A purchase requisition is an internal document for requesting approval to buy. Still, a purchase order is for actually acquiring the items.

What is a Purchase Requisition?

The purchase requisition procedure begins with the purchaser submitting a purchase requisition form or purchase request form to the purchasing department in charge of the finances. Each purchase request will be granted a unique requisition number so it can be traced with a complete audit trail throughout the process (or paper trail).

Consider this the phase of the buying procedure when you are given the green light to purchase the desired products and services. You are not placing an order; you are receiving permission to do so. This internal document is the first step in an effective procurement audit trail.

Frequently, purchase orders are necessary for commodities that exceed a specific price level. For instance, the purchasing department of a big construction corporation requires consumers to file a purchase request for products and services costing more than Rs 1,000,000.

While purchase requisitions might vary based on business requirements, they normally include the following information: the location or department of the purchaser, the amount and broad description of the requested supplies, the name of the vendor delivering the items, and the price.

Why Do You Need Purchase Requisitions?

Purchase requisitions specify every aspect of an order that your business must place. Why not skip the purchase request and get directly to the purchase order?

They aid in establishing a transparent procurement process. You may simplify the organization’s workflow by using purchase requisition forms to reroute approval to purchase to a common manager when there are clear guidelines for who may purchase what and when; the process is considerably simpler to manage and codify.

They aid in detecting and preventing fraud inside a business. The greater the number of procurement procedures, the greater the likelihood that someone will detect a fraudulent purchase if it occurs.

They provide Finance with more direct authority over purchases. Suppose an individual from outside the department has to make a purchase. In that case, they may submit a purchase request to the head of procurement. Thus, a single purchasing department will purchase all of your organization’s purchases.

What is Included on the Purchase Requisition Form?

Each organization has its specifications for submitting purchase requisitions for approval. The following information should be included as a minimum on the purchase requisitions form

  • Date of Preparation / Receipt
  • Name of the Vendor (If finalized)
  • Name of the Employee, division, or requestor
  • Details of the Vendor
  • Purchase Requestion Number
  • Location of Delivery
  • Detailed item and quantity information
  • Approximate Cost of Purchase
  • Any information necessary for accounts payable processing

You may be required to give a list of possible vendors from whom to get the necessary hardware, software, or services, depending on the nature of the transaction and the established protocol within your business. You may also be asked to submit a preliminary review of these vendors as a prerequisite for the negotiation and purchase.

How Does a Purchase Requisition Work?

The purchase requisitions process is generally the same regardless of the industry. Depending on the nature and scale of the enterprise, the specific actions to be taken and their sequence of execution may change.

Organizations should use a formalized buy request and purchase order procedure to maximize efficiency. The requestor, the buying agent, and the management or Finance team are the parties engaged in the internal purchase requisition and order procedure.

The procedure for making a purchase request includes the following steps:

1. Initiate the Purchase Requisition

The purchase requisitions may be submitted whenever there is a demand for supplies from purchasing department. The specifics of the needed goods or services are often recorded on a request form. The requisition form requires specific and correct information. The individual requesting to acquire products or services is called the “requisitioner.”.

2. Review of the Details by a Higher Authority

The next stage after the purchase requisitions request has been entered into the system by the requisitioning department is for a more senior procurement team member to evaluate the request’s specifics. The buying agent will double-check the details of the purchase request.

The reviewer may either complete the purchase requisitions form themselves or return it to the requestor with a note asking for further information if it lacks necessary fields. Once the reviewer confirms that the PR is complete, it is sent to the next reviewer for final approval.

When no more approval is needed, the reviewer may create a PO using the information provided in the PR form.

3. The Final Approval

The requestor’s manager or the Finance team must approve the PR. Once the PR form has been reviewed, it may be sent to the requestor’s manager for final approval. At this point, the management will check the request against the department’s expenditure limit.

If the cost is within budget and all other information is correct, the manager may either forward the PR to the finance department to create the PO or send it back with the rejection reasons written on it.

What is a Purchase Order?

The purchasing process takes place in the purchase order (PO). A buy order number is issued, and the purchase order is sent to the vendor after the purchase request has been authorized by the purchasing department, symbolizing that the purchase is acceptable.

This external document is the foundation of your legal relationship with the supplier. Electronic buying systems, such as PLANERGY, are often used to generate purchase orders, allowing organizations to monitor and submit POs electronically.

Again, the specifics may differ, but a buy order will often include the following: the name of the organization placing the order, the item’s description and quantity, the price, the shipping address, the conditions for making payment, the invoice address, and a purchase order number.

How Do Purchase Orders Work?

Verbal assurances are never enough for a corporation. There is a high potential for legal trouble. The ordering of goods and services officially commits them to paper. Duplicate purchases are less likely to occur because fresh messages are posted. As your company expands, this becomes more crucial. Without a centralized identifier, like a PO number, it will be more difficult to monitor transactions.

It is also necessary to submit purchase orders for certain financial audits. This may be used as proof that a superior has sanctioned a purchase. Finding what you need is far easier and faster than rummaging through a drawer full of receipts. It prevents money from going missing and simplifies bookkeeping processes.

Get Your Purchase Orders Approved In a Minute!

Moon Invoice lets you design accurate purchase orders for your small business. So, send it quickly to start working on the project/deal.

Sign Up Today!

Putting in place purchase orders helps protect a business against unanticipated price hikes. A purchase order (PO) will specify the agreed-upon price, even if the supplier’s costs have changed between the order and the time of delivery or invoicing. A Purchase Order (PO) is a legally binding document; therefore, the supplier must follow its terms. By eliminating room for misunderstanding or financial mismanagement, this problem is solved.

Your orders and bills will be in order thanks to the PO system. It helps inventory management since it shows what items are delivered and when. Invoicing may be a pain. Therefore it’s good to organize your orders if you place several transactions.

Purchase Requisition Vs Purchase Order

Purchase Requisition Purchase Order
The employee’s desire to purchase is documented on a purchase requisition. A purchase order represents the departmental head’s official word of order.
A purchase order form is often passed around inside a company between several employees. An individual places the purchase order with a vendor and sends it externally.
The purchase requisition is a formal request for necessary supplies submitted to the appropriate office for fulfillment. A purchase order indicates that the requesting department has given its consent for the requested products to be purchased from the supplier.

Major Key Differences Between Purchase Requisition & Purchase Order

The act of formally requesting items from the buying department is a purchase requisition. When inventory is becoming low, the store’s department writes up a request to buy more.

On the other hand, a purchase order is a formal written request to a supplier to deliver goods. A confirmation of the supplier’s stated supply terms.

A Purchase Requisition is a kind of internal paperwork used to request approval to purchase from another department. The purchase order, on the other hand, is an external document. In addition to being legally binding, this document is also formal. Consequently, both the firm doing the purchasing and the company doing the selling is legally bound by the terms of the agreement.

An authorized worker writes the purchase requisition of the relevant department. At the same time, the company’s buying division is responsible for drafting purchase orders.

The department will submit a purchase request when materials and supplies are needed. However, when there is a need to obtain materials and supplies, the corporation issues a purchase order.

The order form is sent to the purchasing manager. Alternatively, the seller is the one who gets the order to buy.

Although there are significant distinctions between a buy order and a purchase request, both are essential elements of any well-run organization. Both forms are useful for keeping track of a company’s expenses and stock levels. Because of their openness and protection during audits, your firm and your suppliers will be safe.

Streamline your Procurement Process

It’s clear that these days, the debate isn’t about purchase requisition & purchase order but rather “purchase requisition & purchase order” for a streamlined and organized procurement procedure.

Paper-based documentation of buy requisitions and purchase orders may become laborious in administration and processing when an organization grows in size and the frequency and quantity of its purchase activities increase.

The purchase process may be simplified with the use of automation. Electronic buying systems, such as enterprise resource planning (ERP) software, may instantly transform a purchase request into a purchase order. Integrating certain software with a company’s current inventory monitoring system is one way to guarantee precision and time/cost savings.

The Future of the Purchase Ordering Process

Automation increases productivity and may reimagine full-cycle purchase order procedures to extract value over time better. Businesses might get an edge in vendor and customer relationships with the help of digitally enabled sourcing and procurement. With the development of artificial intelligence, blockchain, and the internet of things, automation systems have been created to manage the complete procure-to-pay cycle efficiently.


Many firms, from startups to multinational conglomerates, may use buy requisition and purchase order (PO) forms to their advantage. These documents can help with cost savings, better financial planning, and protection in the event of an audit.

Moon Invoice can help you streamline your business processes regarding purchasing requisitions and purchase orders.