A purchase requisition form serves as a formal request from an employee to the purchasing department or management to authorize the purchase of specific items or services. It includes details such as the description and quantity of the items needed, the purpose of the purchase, the estimated cost, and any other relevant information.
The form is usually filled out by the employee who requires the items or services, and it is then reviewed by the appropriate department or personnel for approval.
The Importance of a Purchase Requisition in an Organization
A purchase requisition form plays a crucial role in the procurement process of an organization.
Here are some reasons why it is important:
- Control and Accountability: By requiring employees to fill out a purchase requisition form, organizations can establish control and accountability over the purchasing process. This ensures that purchases are justified, necessary, and in line with the company’s budget and policies.
- Budget Management: Purchase requisitions help organizations manage their budgets effectively. By reviewing and approving purchase requests, management can assess the financial impact of each purchase and make informed decisions to allocate resources efficiently.
- Streamlined Procurement: Using a standardized purchase requisition form streamlines the procurement process. It creates a clear and consistent method for requesting and approving purchases, reducing the chances of errors or miscommunication.
- Approval Workflow: Purchase requisitions provide a structured workflow for approvals. By requiring multiple levels of authorization, organizations can prevent unauthorized or unnecessary purchases. This ensures that all purchases are authorized by the appropriate personnel and align with the company’s hierarchy and policies.
- Vendor Management: Purchase requisitions provide valuable information about vendors and suppliers. By including vendor details in the form, organizations can track the performance, reliability, and pricing of different vendors, helping them make informed decisions and negotiate better contracts in the future.
- Record Keeping: Purchase requisitions serve as important records for auditing and compliance purposes. They provide a documented trail of the purchasing process, including approvals, justifications, and any supporting documents. This helps organizations demonstrate transparency, accountability, and adherence to regulatory requirements.
Purchase Requisition vs. Purchase Order: What is the Difference?
While a purchase requisition and a purchase order are both essential documents in the procurement process, they serve different purposes:
- A purchase requisition is a request for authorization to purchase goods or services. It is initiated by an employee and goes through a review and approval process before a purchase order is created.
- A purchase order, on the other hand, is a legally binding document issued by the buyer to the seller. It specifies the details of the purchase, such as the quantity, price, and terms of payment. Once a purchase requisition is approved, a purchase order is created to formally authorize the purchase and initiate the transaction with the supplier.
Contents of a Purchase Requisition Form
A purchase requisition form typically contains the following information:
- Requester Information: The name, department, and contact details of the employee making the request.
- Description of Items or Services: A detailed description of the items or services needed, including specifications, quantities, and any other relevant details.
- Justification: The reason for the purchase, explaining how it aligns with the company’s goals and objectives.
- Budget Information: The estimated cost of the purchase and the budget code or account to which it will be charged.
- Vendor Information: If known, the name and contact details of the preferred vendor or suppliers.
- Approval Signatures: Spaces for the required approvals and signatures from the appropriate personnel.
When is a Purchase Requisition Form Needed?
A purchase requisition form is needed in the following situations:
- New Purchases: Whenever an employee needs to request the purchase of goods or services that are not currently available in the organization.
- Replenishing Inventory: When existing stock or inventory needs to be replenished to ensure uninterrupted business operations.
- Capital Expenditures: For major capital expenditures, such as equipment or machinery, that require management approval before purchase.
- Services or Contracts: When engaging external services or entering into contracts with vendors or suppliers.
- Special Projects: When specific projects or initiatives require additional resources or materials.
By using a purchase requisition form in these situations, organizations can ensure that all purchases are necessary, authorized, and by their policies and procedures.
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