What is a Purchase Requisition?

When I worked in the finance office of a mid-sized company, we often dealt with purchase requisitions. I was surprised to learn that many of my fellow employees didn’t fully understand the purpose of a purchase requisition – they just looked at it as one more annoying step in getting what they needed. So what, exactly, is a purchase requisition?

A purchase requisition is a request to make a purchase using company funds. Some companies require a purchase requisition for all purchases and others only require them for certain types of purchases. Purchase requisitions allow a company to track expenses before they are made in order to remain within their budget. They also allow a company to see which departments or employees are spending more than others, which can help with budget planning or cost reductions. Purchase requisitions can be used for both items and services.

The Basic Purchase Requisition Form

There are basic elements that should be on every purchase requisition form. These include the description, price and amount of the requested item or service, the name of the person making the request, and the name and signature of the person approving the request. Supervisors or department managers are normally the person who would approve a purchase requisition, although some companies may have the purchasing department grant approval.

Optional Fields on a Purchase Requisition

There are other categories that can be included depending on the type of information your business needs in order to track the purchase. Some larger companies include department and expense coding information so once the purchase has been processed, the accounts payables department knows which department is responsible for the expense. The date by which the requested purchase needs to be received can be included on purchase requisition forms so the purchasing department knows what level of shipping to request for items ordered.

Some purchase requisition forms have a section for the name of the company from whom the requester wants the item or service to be purchased. This can be an optional field on a purchase requisition if a company deals with several vendors and the purchasing department is in charge of finding the best price. It is most often used when contracting services with a specific provider, such as an electrician or consultant.

Types of Purchase Requisitions

Companies may wish to use different purchase requisition forms for different types of purchase. They may have different purchase requisition forms for material expenses (items that are inventory based), non-material expenses (items that are not inventory based), and capital expenses (items that are over a certain dollar amount and are fixed assets or improve a fixed asset).

Benefits of Using Purchase Requisitions

Purchase requisitions save time for the purchasing department because it gives them all the information they need to create a purchase order. Having as much information as possible before a purchase is made reduces expenses related to returned items that were not what the requester expected or which a supervisor did not approve. Purchase requisitions also create a paper trail for departments trying to discover who authorized certain purchases.