Purchase requisitions are used when a procurement staff needs to make a purchase or an order request on behalf of their organization. It is a request raised to inform department managers or the purchasing officer of the decision, so that the procurement department can start the buying process. The finance department will also use this requisition to manage reporting procedures with the accounting team as well.
In any company, there is always the need for goods and services. When departmental managers are allowed to place orders directly with the suppliers, there is a possibility of fraud.
To prevent fraud, the purchasing team is required to place orders with the suppliers and to manage purchase requisition workflow. A purchase requisition process within the procurement department ensures that fraud is prevented, and the organizations get the value for their money.
With this process in place, the purchasing department does not order goods directly from the suppliers. Instead, there has to be a formal request from a specified department. When the team receives the requisition request, they are supposed to go through it and take the necessary action.
The action can be approval, alteration or even rejecting the request, but in this case, they must give reasons as to why they have arrived at this decision. Approval of the requisition gives the purchasing department the right to create a purchase order; which is basically an order to be sent to the supplier notifying them of the intention to make a purchase.
When departments in organizations need goods from time to time; a requisition request will begin the buying process. The procure team will be acting on the strength of the requisition form. If there are any problems, the form will serve as proof that a given communication was made.
With a formal requisition request, there are measures in place to ensure that no fraud is practiced. The request must go through a number of approvals to ensure its accuracy as well as need.
The departmental manager will have a look at it before sending it to the procurement team where it then undergoes more analysis before a purchasing order is sent to the supplier.
It is a formal way of issuing a notice that specified goods are required, and with it there is proof that a department requested the goods.
With a requisition request (as a proof), it becomes easy to trace goods in case there are any issues regarding organization assets. When a company requires that all requisitions be made centrally through the purchasing department, it becomes easy to handle the entire procurement process.
A centralized procurement system streamlines the complete buying process and reduces the delays, something that greatly benefits the company’s efficiency levels.
A purchase requisition plays a key role in the buying process of an organization. It is an important component in authorizing purchases and controls fraud.