A purchase order PO and a purchase requisition PR are two documents required for any efficient procurement process. These documents allow finance departments and accounts payable teams to adequately plan budgets, streamline purchases and provide proof of spending in case of audit trials.
Despite the significance of PR and PO documents in procurement planning and management, many business owners are unfamiliar with their specific roles in the procurement channel. Due to this, people either misuse these documents or don’t use them.
What’s a Purchase Requisition and How Is It Useful?
A purchase requisition is an official document that an employee within your organization creates to request the purchase of services or goods. When you fill out the purchase requisition, you are not requesting to purchase anything. You are essentially beginning the process of purchase by asking for internal authorization and/or permission.
This document makes an order request if the need arises for certain goods or services. Anyone responsible for procurement is notified of what a particular employee has requested once they receive the purchase requisition.
Purchase requisition captures the relevant details required to complete a transaction or close a purchase order. These details include:
- Product description and quality
- Product quantity
- Name of the vendor
- Name and department of the purchaser
Surprisingly, purchase requisitions hardly (if ever) leave the business premises. These documents are purely internal and used to ask for permission to purchase particular goods or services. Employees use these documents for procurement requests, and therefore PRs are not legally binding.
Not all companies or organizations use purchase requisitions in their routine procurement processes. In some cases, companies require a purchase requisition for orders going over a certain dollar amount. The accounts payable department depends on these documents to plan for the future. The principle behind a purchase requisition is that it’s easier to avoid costly mistakes if you review the budget before authorizing a purchase.
Why You Need Purchase Requisitions
The purchase requisitions detail all the information of an order for products or services. But you may ask: why not skip the purchase requisition and delve straight into the purchase order? Well, here’s why a purchase requisition is crucial for any procurement exercise.
- Clear procurement process. By rerouting authorization to purchase to a common procurement manager using purchase requisition forms, you streamline your organization’s procurement pipeline. The purchasing process is much easier when there are clear rules for what you can purchase and when.
- Fraud detection and prevention. The more steps captured in the procurement process, the more likely someone will identify a fraudulent purchase if it occurs in the organization. The purchase requisition may cast light on purchase loopholes and expose vulnerabilities in the procurement planning and management processes.
- Direct control over purchasing. If someone outside your department wants to purchase anything, they can find the PR and submit it to the relevant authorities for approval. This way, the finance department oversees every purchase your organization makes. So, the purchase requisition forms give the finance direct control over the purchase.
Simplifying Your Purchase Requisition
The purchase requisition software helps to optimize purchase and procurement processes. For most modern purchasing departments and finance teams, overcoming the traditional obstacles accompanying a manual purchase request form is as easy as integrating automated purchase order management.
Implementing automation solutions in your purchase requisition processes enables you to overcome issues related to traditional requisition processes. These problems include wasted money and time, opaque and inaccurate spend data, and low spend visibility. With an intuitive, digital purchase requisition software, you can simplify and streamline your PR in the following ways:
- Touchless PO management. With centralized data management and automation processes, not only are pen and paper out of the picture but so are human error and manual data entry. Purchase requisitions are created in many different formats, either from scratch or through many different templates.
- Customizable ordering control. Process customization makes it easier to fine-tune every aspect of the PO process, from approval workflows to limiting access to specific items for users working in certain departments, locations, or budgets.
- Optimized approval workflows. Automation optimizes contingency workflows, so orders never stall in an unattended inbox or mail. Purchase requests that require approval or special attendance are flagged and automatically rerouted to ensure accessibility to relevant authorities and to prevent redundant labor.
- Spend visibility. Automated purchase request tracking ensures different stakeholders enjoy leveled, on-demand, real-time visibility on the status of any given purchase, whether they’re offline or online. All data related to one transaction is collected and collated for easy and mobile-friendly access for spending visibility, review, presentation, and forecasting.
- Audit trail. Thanks in part to comprehensive data management and spend visibility. With purchase requisition software, financial controls are much easier to deploy and are more accurate and comprehensive. The PR software enables finance teams to provide a complete audit trail on-demand, improving spend analysis and forecasting.
When you simplify your purchase requisition by using purchase requisition software, you get to enjoy additional benefits like staff-driven savings. Process automation provides huge savings through productivity and efficiency – and frees staff from the burden and confines of low-value tasks, improving morale and productivity across the board.
ProcurePort – Your Leading Partner In Requisition Automation Solutions
In addition, the PR software seamlessly integrates with other business process management software like customer relationship management CRM, enterprise resource planning ERP, accounting (QuickBooks and NetSuite), and other application software. And now, with ProcurePort, you can enjoy superior automation solutions with intuitive PR software.
Contact ProcurePort to know exactly how you can deploy and optimize data management.