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Why purchase requisitions are important in business

Purchase requisitions are important in business because they provide a structured way for departments to procure what they genuinely need to function and perform effectively. They're typically the first step in the buying process and help prevent duplicate orders, fraud and unnecessary expenditure. This guide covers why purchase requisitions are useful and the steps involved in the process.

What is a purchase requisition? 

A purchase requisition is an internal request made by an employee who needs to buy goods or services for the business. It typically includes a detailed description of the items or services required, the quantity and price. Then, it gets sent to the procurement team or an authorised manager for approval. Once a purchase requisition is approved, a purchase order (PO) is issued and sent to the relevant suppliers. 

Dashboard of Purchase order flow for MYOB Advanced

Why use purchase requisitions? 

Many businesses use purchase requisitions to formalise who can purchase what, when and from whom. They also help you get the best value for your money and prevent fraudulent activity, among other things. 

Streamline procurement processes

Streamlining procurement processes happens when businesses digitise purchase requisitions. Automation allows procurement teams to track and manage them. At the same time, standardisation helps simplify and accelerate the task of buying goods and services. 

Aid in fraud prevention and order duplication

Preventing fraud and order duplication is a major reason organisations use purchase requisitions. They let departments track their orders and avoid duplicate requests. For procurement teams, they help ensure the right stakeholders give their approval. Both of these things happen before a PO is issued. 

Improved accountability and security 

Improved accountability and security in the purchase requisition process lets you see what employees and departments are buying — and why — giving you greater control over your budget. The process ensures that the correct documentation is submitted, approval from the appropriate managers is received and the purchase aligns with your procurement strategy — all important for internal controls and audit procedures. 

Reduced costs

Reduced costs come from standardising the purchase requisition process. Following this best practice procedure helps reduce one-off, costly purchases, and consolidating requests in one system gives procurement teams the data to negotiate with vendors for bulk purchases and volume discounts. 

What does a purchase requisition include?

A purchase requisition includes all the information you need to make a purchase, making it easy to turn into a purchase order once approved. 

Requester name and department

The requester's name and department refer to the person filling out and submitting the purchase requisition and the business division in which they work — for example, marketing or facilities management. 

Purchase requisition date

The purchase requisition date is the day, month and year the purchase requisition is created. Also, include the date you require the goods or services. 

Products or services requested

The products or services requested should be listed clearly, alongside a preferred vendor — if that's part of your purchasing policy. 

Description, quantity and unit price 

Include a description, quantity and unit price for each item or service you request. The more detail, the better — this will help your procurement team identify the right items. 

Total price

The total price is the estimated cost of all requested items or services. 

Steps involved in the purchase requisition workflow

These are the steps involved in the purchase requisition workflow: 

Requirement identified 

The requirement identified refers to assembling the information of the goods and services you need. This includes a description of the items or services, technical specifications, quantity, estimated cost, expected delivery date and location, and sometimes, the preferred vendor. For example, an office manager needs to replace some broken hardware like keyboards or monitors. 

Purchase requisition form submitted

A purchase requisition form is submitted manually or through procure-to-pay software. Technology for this part of the process significantly speeds it up. It also stops finance managers from having to manually input the information into spreadsheets — where even the slightest error can delay purchase approval and impact spend management

Manager approval 

Manager approval is essential – it's their job to review the purchase requisition to ensure it's a legitimate purchase and there are funds to cover the expense. Additional review and approval may be required for high-value purchases over a certain spend threshold, such as a new work vehicle. With procurement software, the appropriate managers automatically get notified and reminded about pending purchase requisitions. 

Inventory checks 

Inventory checks are the best way to ensure your business doesn't already have existing stock the requester can use. The request gets forwarded to the purchasing department if there isn't any stock. 

Screening and approval from purchasing department

Screening and approval from the purchasing department is the final review of the purchase request. It checks for any missing, incorrect or inadequate information, that the purchase complies with internal purchase policies and that the requisition has the correct approvals. The purchasing department makes the final decision on whether the purchase requisition is approved or denied. 

Generation of purchase order 

A purchase order is generated once the purchase requisition is approved. The PO is issued to the vendor for fulfilment. 

Purchase requisition FAQs

What is the difference between a purchase requisition and a purchase order?

The difference between a purchase requisition and a purchase order is that a purchase requisition asks permission to buy goods or services. A purchase order is only issued after a purchase requisition is approved. It provides details about the goods and services required from your supplier. 

Get started with purchase orders by downloading MYOB’s free PO template. 

Does a purchase requisition come before a purchase order?

A purchase requisition comes before a purchase order in the procurement process. POs and purchase requisitions are separate documents, but they include similar information.

Is a purchase requisition mandatory?

Purchase requisitions aren't mandatory. However, many organisations choose to make them compulsory in their procurement process. That's because skipping the purchase requisition stage makes tracking business expenses and purchasing compliance extremely challenging, increasing the risk of fraud or order duplication. 

Track all purchase requisitions from one system

Starting your procurement process with a purchase requisition is best practice, especially when the process integrates with your accounting using procure-to-pay software. Purchase requisitions let employees and departments track their spending and manage their budgets better. For procurement teams, they're an internal control tool to ensure the appropriate managers give approval and that the goods and services are genuinely required. 

With MYOB Advanced Business you can create, submit and track purchase requisitions. With workflows and automated reminders, purchase requisitions get approved quickly — without manual intervention slowing things down. Find out more; speak to an ERP expert today. 


Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.

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