HomeAccount PayableAll You Need to Know about Requisition Number in Procurement

All You Need to Know about Requisition Number in Procurement

Procurement and purchase managers face the daunting task of managing multiple employees’ demands to purchase goods and services. As representatives of the organization, these managers must exercise accountability and carefully evaluate the need for spending.

To help procurement managers begin the procurement process on the right foot and facilitate effective communication, the concept of purchase requisition plays a crucial role. A purchase requisition is a formal document that enables employees to request the purchase of goods or services on behalf of the organization.

In this blog post, we will delve deeper into the concept of purchase requisition and its significance in procurement.

What Is a Purchase Requisition?

A purchase requisition, also known as requests for quotations (RFQs) or requisition order, is a document used by employees within an organization to request the purchase of goods or services.

There are different types of purchase requisition forms depending on the purpose, such as for procuring office supplies, buying inventory, or manufacturing.

This form is an essential part of the purchasing process as it provides the financial department with a record of what is being requested and the associated costs.

What Is a Requisition Number?

A purchase requisition number is a unique identifier assigned to each purchase request made by an employee in an organization. It allows procurement managers to track requested goods and services with a full audit trail.

The purchase requisition number helps to prevent duplication of orders, overordering, or unauthorized purchases, leading to more efficient and cost-effective procurement.

While paper-based purchase requisition numbers were used in the past, many companies now automatically generate a purchase requisition, facilitating more efficient accounting and business reporting.

What Is the Content of a Purchase Requisition Form?

A purchase requisition usually contains:

  • The department’s name
  • The requester’s information (name, location, and address)
  • The requested items’ details (descriptions and quantity)
  • The date of the request
  • The requisition number
  • The reason for the purchase
  • The requested delivery date
  • The estimated costs of the purchases
An example of a purchase requisition form
Source: SampleForms

Why Is a Purchase Requisition Important?

As we already understand, a purchase requisition order is integral to the purchasing flows of organizational procurement processes. Here are its advantages:

  • Easier tracking: Each requisition is assigned a unique number, allowing managers to quickly identify and locate specific requests when needed.
  • Better financial management: The purchase requisition number provides a standardized method for managing purchase requests.
  • Control budget: Managers can review and approve purchase requests before they are made, allowing companies to control their spending.
  • Improve supplier relationships: Purchase requisitions can help companies manage their relationships with suppliers by providing clear communication channels and ensuring that suppliers are paid in a timely manner.
  • Save time: Having purchase requisition reduces the time frame for the procurement process by shortening the period for quotation submissions, streamlining the supplier selection process, and eliminating the need to prepare solicitation documents or advertise requirements.

Different Types of Purchase Requisitions

Let’s take a closer look at the different types of purchase requisitions:

  • Open Bid: This procurement method allows any interested supplier or vendor to submit a bid for the requested goods or services. It’s typically used for low-value purchases or when there’s no established relationship with suppliers.
  • Invited Bid: This procurement method involves inviting a select group of suppliers or vendors to submit a bid for the requested goods or services. It’s commonly used for higher-value purchases or when there’s an established relationship with suppliers.
  • Sealed Bid: This procurement method involves suppliers or vendors submitting their bids in a sealed envelope. The bids are opened at a predetermined time and evaluated based on predetermined criteria.
  • Reverse Auction: This procurement method involves suppliers or vendors competing to provide the lowest price for the requested goods or services. The auction is conducted online, with suppliers or vendors submitting bids in real-time. The lowest bidder is awarded the contract.

How to Create a Purchase Requisition Form

Here are the steps to create a purchase requisition:

1. Request a Purchase Requisition

Determine the goods or services that are needed and ensure that they are within the budget allocated for procurement. Afterward, fill out the purchase requisition form with the necessary information.

For a smoother RFQ filing process, consider the following details:

  • The type of RFQ to be issued
  • The deadline for the RFQ
  • The list of stakeholders who will receive the RFQ

When placing a purchase requisition, one of the most significant issues is the potential for data entry errors, which can have serious consequences if not caught and corrected. Businesses end up having to pay more for the goods or services they don’t actually need to purchase.

Another challenge is the inconsistencies in the format of purchase requisitions, which can make it difficult for vendors to decipher the goods and services the buyer would like to purchase. This can result in delays, which can have a ripple effect on other business operations.

OCR (Optical Character Recognition) technology can significantly improve the accuracy of data entry for purchase requests. OCR software can scan and extract data from paper-based or electronic documents, such as purchase orders or invoices, and automatically input the information into the company’s procurement system.

How OCR works
OCR not only saves time but also reduces the risk of manual errors in data entry, which can lead to delays and incorrect purchases.

Additionally, with accounts payable automation, purchase requests can be automatically generated with pre-defined templates, ensuring that all the necessary information is included in a standardized format.

This can also help vendors to better understand the company’s requirements and respond more efficiently to requests, resulting in a faster turnaround time.

Create a purchase order easily
AP (Accounts Payable) automation with built-in purchase request creation can reduce errors caused by inconsistent formatting

2. Approve the Purchase Requisition

Submit the purchase requisition form to the appropriate department or employee for approval. This may include department managers, budget holders, and procurement managers.

They will need to verify the details of the request, such as the quantity, item description, and cost, to ensure they are accurate and complete.

One of the main pain points that companies face when approving purchases is the complex internal hierarchical structure, which can make it difficult to get aligned on purchases. This can lead to delays in the approval process, resulting in missed deadlines or missed opportunities.

With automated approval processes, you can ensure that all requisitions are reviewed and approved in a timely manner, without having to rely on manual processes that can be slow and error-prone.

Automating the purchase requisition approval process can help you improve efficiency, increase visibility and control, and ensure compliance, ultimately leading to better procurement outcomes for your company.

Accounts payable audit trail
Bypass the most complex approval by setting custom approval workflows, assigning multi-level approvers, and tagging your purchase to the right budget

3. Issue a Purchase Order

If the purchase requisition is verified and approved, the procurement issue a purchase order to the supplier to initiate the procurement process.

Issuing a purchase order manually can be a cumbersome process for companies. Converting the purchase requisition into a purchase order. Converting the purchase requisition into a purchase order can lead to inconsistencies in the ordering process. It can be difficult to keep track of which orders have been placed and which ones are still pending.

AP automation can convert a purchase requisition to a purchase order automatically and send it to the vendor once approved. This allows for better visibility into the process, ensuring that there are no bottlenecks or delays. It also provides a centralized system for tracking and managing vendor contracts, pricing, and other important information.

Automatically send the purchase order for approval
Automation software can extract the necessary information from the purchase requisition and automatically create a purchase order, ensuring consistency and accuracy in formatting.

Ready to take your procure-to-pay process to the next level? Check out Peakflo, the AP software that provides end-to-end procure-to-pay automation.

With Peakflo, you can reduce manual labor costs, minimize errors, and negotiate better terms with suppliers, resulting in significant cost savings and improved profitability.

Try Peakflo today and experience the benefits of streamlined procure-to-pay processes.

Get started today with AP automation

Lulu, as a content marketer in Peakflo, is passionate about educating users on accounts payable and receivable management to help businesses maximize their cash flows. When not glued to the screen, she has her attention either on her annoying brother or five adorable cats.
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