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Ultimate Guide to Purchase Requisitions

A purchase requisition is a critical but time-consuming task in the procurement process. Ready to start your procurement automation journey?

The purchase requisition, or purchase request (PR), is the launchpad of the whole purchasing process. As such, it’s important to have a true understanding of what it is and how the process can benefit your business. A PR often gets mentioned in the same breath as a PO, or purchase order; however, they are not the same. Each has its own specific role in the purchasing process. 

Here, we elaborate on the role of the purchase requisition and discuss the purchase requisition process, as well as illustrate the difference between a purchase requisition and a purchase order. We also explain why more organizations are deploying a proper requisition management system and why this is arguably the most important part of the procure-to-pay process.

So, let’s dive in!

What is a Purchase Requisition?

A purchase requisition is a formal request prepared by an employee to purchase goods or services. It usually includes a form containing a description of the purchase need (product description), the relevant department and budget item, the specific item(s) being requested, and any key documents that are related, like files/quotes/agreements that approvers should review. The PR typically comes before the creation of a digital purchase order.

The Purchase Requisition Process

The purchase requisition process starts with a formal request prepared by an employee to purchase goods or services. It’s usually a simple form that contains all of the information needed to trigger the right approval process. This includes a description of the purchase need (product description), the relevant department and budget item, the specific item(s) being requested, and any related files/quotes/agreements that approvers should review.

Once submitted, the purchase requisition (PR) is routed to the appropriate approvers. This typically happens through an automated requisition system. Eventually, the purchase requisition gets approved and turned into what’s called a purchase order (PO). In essence, this becomes a binding contract for the purchasing department and will be used later on in approval workflows.

Examples of a Purchase Requisition

A typical purchase requisition form will contain general information as well as item information. A purchase requisition can include any of the following:

  • Requester Information
    • Name of requester
    • Department or cost center
    • Contact information
  • Date of Request and Delivery or Completion Date
  • Vendor/Supplier Information
    • Name and contact details
    • Alternative vendors (if applicable)
  • Description of Goods or Services
  • Specifications or requirements
  • Quantity
  • Unit Price
  • Total Cost
    • Budget Code or Cost Center for expenditures
  • Budget Approval
    • Space for department manager or purchasing manager to approve the budget allocation
  • Justification explaining why the purchase is needed
  • Additional Comments
  • Attachments and External Documents
  • Urgency Level
  • Authorization from Department Head or Supervisor
  • Requisition Number
  • Tracking Number

A multitude of free templates for creating your own purchase requisition can be found online. You can also create a simple form in Excel as long as it contains the data mentioned above. Here are a few examples of what a purchase requisition looks like:

sample purchase requisition form template

Sample purchase requisition form, image credit: Investopedia


Sample purchase requisition form, image credit: Frevvo

Attachments included with a purchase requisition may be a quote or agreement, a question, or any other note or file. 

The information entered in the requisition form will be logged in the purchasing system. All subsequent actions on the requisition—such as approvals, or questions being asked—take place within the system, ensuring that approvers have all of the context they need to make a decision, and that no misconduct is done by any stakeholder. 

Once the requisition is approved, a PO is issued. A PO is a legally binding document that is sent to the vendor. It lists the high-level details of the purchase. The purchase order form is generally formatted in the exact same way as a purchase requisition, save for the title of the document.

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Steps in the Purchase Requisition Workflow

The steps of a purchase requisition workflow vary depending on the company’s size, structure, and business needs. Here’s a general outline of the typical steps in a purchase requisition workflow:

#1) Identifying a Need

The PR process begins with an employee or department identifying a company need for a purchase, and initiating the request.

#2) Creating the Purchase Requisition

The requester fills out a purchase requisition form, providing details like a description of the goods or services needed, quantity, specifications, and justification for the requested items.

#3) Review and Approval

The purchase requisition is then routed to the relevant department or manager for initial internal approval. This ensures that the purchase aligns with the department’s budget and needs.

After departmental approval, the requisition may also need to go through a finance or budget manager to ensure it aligns with the overall budget.

#4) Compliance Check

At this stage, the requisition is reviewed to ensure compliance with company policies, procurement regulations, and any legal requirements.

#5) Supplier Selection

The procurement team or the requester may also be responsible for identifying suitable vendors, obtaining quotes, and selecting the vendor that offers the best value and cost savings for the company.

#6) Negotiating Prices

Negotiation with the selected vendor may be necessary to secure the best possible pricing and payment terms for the business.

#7) Final Approval

Once all necessary checks, verifications, and negotiations are complete, the PR is sent for final approval to the appropriate parties, which could be a higher-level manager, procurement officer, or other important roles.

#8) Creating the Purchase Order

Upon final approval, the PR prompts a PO request. In this case, a purchase order (PO) is generated (which follows the same format as the purchase requisition), formalizing the commitment to the supplier. The PO includes details such as item description, quantity, price, delivery date, purchase order number, and any other relevant terms.

Purchase Requisitions vs. Purchase Orders

When it comes to a purchase requisition vs purchase order, what’s the main difference? The purchase requisition is the formal request to purchase goods or services, whereas the purchase order is a legally binding document that gets issued to suppliers or vendors once the purchase requisition has been approved. The purchase order is usually referred to as a PO and is typically generated on the PO module of the company’s ERP or on a P2P suite. 

Beyond its function as a formal document, the PO is important for budget planning and management since it acts as a “lock” on a budget or spending limit before an invoice is received from the vendor.

Some businesses run their purchasing approval process on the PO itself, rather than on a purchase requisition. This procurement system is problematic for a number of reasons, including

  • Not all employees or relevant users have access to the system that generates POs. This breaks the process into several platforms and creates data silos, resulting in friction, errors, and processing delays.
  • POs usually require a vendor to get approved. If the requester isn’t sure about which vendor they want to use, this poses a problem. On the other hand, “vendorless” purchase requisitions offer a great opportunity to guide purchases to preferred vendors, increase buying power, and lower the risks and time involved in onboarding new vendors.
  • PO systems usually support rigid and limited approval flows, and are relatively technical and difficult to use. This results in low adoption, which keeps the purchase order process happening in a manual, siloed fashion, that isn’t easy to track.

Common Challenges of Purchase Requisitions

Various challenges can arise during the creation, approval, and fulfillment of purchase requisitions. Some common ones include:

Incomplete or Inaccurate Data

Submitters may provide incomplete or inaccurate details in the requisition, leading to delays and misunderstandings.

Poor Communication

Ineffective communication between the requester, approvers, and procurement team results in delays, mistakes, and misunderstandings.

Delayed Approvals

Long approval cycles lead to delays in obtaining necessary items, impacting project timelines and productivity.

Lack of Standardization

Inconsistencies in format and data across different requisitions can complicate the approval and processing stages.

Vendor Issues

Issues in identifying and sourcing reliable suppliers will lead to delays and complications in fulfilling purchase requisitions.

Budget Constraints

Ensuring that a PR will adhere to budgetary constraints can be challenging. Overspending or failure to align with budget guidelines will cause financial problems.

Manual Processes

Companies rely too much on manual methods for creating, approving, and tracking purchase requisitions. This can be a time-consuming workflow that is prone to errors.

Employee Adoption

Deploying any new process can make the organization seem “heavier,” with yet another formal procedure employees need to follow. This can frustrate people who don’t love change. Research shows that people are generally change averse.

Deploying a new process—regardless of how valuable it is—can be challenging. But if the process is easy to understand and user-friendly, it will be a lot easier to encourage adoption from the start.

Additional Challenges

  • Lack of visibility into the status of PRs
  • Ensuring PRs comply with company policies
  • Integrating PRs with other types of ERP systems
  • Inadequate training for employees on the PR process
  • Handling urgent requisitions that disrupt normal systems

Why are Purchase Requisitions So Important to the Procurement Process?

The P2P (procure-to-pay) process is one of the two core processes of any business (the second being quote-to-cash), and it begins with the purchase requisition. Because the PR is the first step of the P2P process—and, like the popular phrase “good data in, good data out”—the quality of the entire P2P process relies on the quality of the requisition. 

If we take a closer look at the other areas of the P2P process, it becomes clear that the purchase requisition stage is where:

  • In some organizations, a large portion of employees have the ability, or authorization, to submit purchase requisitions. This includes requesters (employees), approvers (supervisors), the legal team, the finance department and accounting department, the procurement department, IT, and others.

    With so many stakeholders involved, having a more effective and streamlined process in place is paramount. Note that a requisition process is used for both direct and indirect procurement needs—from machines to transportation, to computers, software, office supplies, and beyond. Learn more about the stakeholders of a purchasing process here.
  • The highest-value decisions happen. To buy, or not to buy? From which vendor? And from which department’s budget should the cost be deducted?
  • Real budget transparency can be achieved. Businesses aiming to optimize their finance management must start with achieving visibility into their spend pipeline. This means knowing what they’re going to spend and where there is wiggle room. This type of visibility can only be achieved at the requisition stage.

Key Benefits of the Purchase Requisition Process

Although many businesses choose to skip the purchase requisition process, there is a myriad of benefits to including this critical component in the procurement workflow. Here are a few of the key benefits of owning a purchase requisition process:

Early Involvement

Unlike purchase orders, requisitions can be submitted without a vendor listed. This means that a vendor can be assigned after the purchase need has been approved. It also means that the procurement department gets involved early on, helping to source the right vendor. This enables them to achieve better terms, negotiate beneficial contracts, and continue working with them into the future. 

Another advantage of early involvement is that even if the requester chooses a vendor, procurement or finance still has the ability to change to a better one while the requisition is still pending approval. 

Detailed Approval Process

A PR approval process typically includes:

  • Budget owners who ensure there is a sufficient budget for the request
  • Security or infosec who make sure the vendor is compliant
  • The legal team that establishes an appropriate contract

Flexible Budget

Purchase requisitions add dimensions to your budget. Without a purchase order issued, the budget has only two layers: planned and used. This only allows for very limited planning and often results in budget goals not being met. 

A PO adds a third dimension. This is typically referred to as encumbrance, which is money pending future payment but not yet invoiced (in the case that a PO has already been generated). This allows for better planning, budget control, and more concise financial audits.

With a requisition process, a fourth dimension is added: pending approval. This layer is extremely valuable, since the requisitions that are not yet approved are a savings opportunity. This is the only a portion of the budget that the procurement and finance team can immediately impact, since it’s not committed yet.

Vendor Management

Allowing requesters to submit purchase requests is a great way to achieve early involvement for procurement and avoid a multitude of email threads that aren’t directly associated with a PR.

Faster Processing and Improved Tracking

Another important element that a proper purchase requisition process enables is that teams can request a new vendor be onboarded in parallel with submitting their purchase request. In this scenario, a vendor onboarding process is always triggered from the purchase request. As such, it should be treated as a sub-process of a purchase request which leads to faster processing and improves tracking.

A great requisition management tool should offer vendor onboarding capabilities, allowing requesters full visibility into their purchases. It gives finance, procurement, IT, and other approvers, a command center of all processes going on, before they reach the ERP.

Purchase requisitions also provide the organization with complete documentation and audit history of who requested or approved what, when, and why. This is a valuable defense mechanism against misconduct and fraud. A requisition process removes the need for broad company access to the PO tool (often the ERP’s PO module). This smartly serves as a barrier preventing non-finance and procurement team members from entering the ERP system and generating binding documents like POs. If you’re using NetSuite POs or another cloud-based ERP, read more about managing requisitions here. 

How to Tell if You Need a Purchase Requisition Process

You may be unsure about whether your business really needs to transition to purchase requisitions. Fortunately, there are some clear signs indicating that your organization is in need of a purchase requisition process using a proper, purpose-built solution. These include: 

  • It’s becoming difficult to plan and monitor budgets company-wide
  • Purchase requests and approvals are clogging up employees’ inboxes
  • There is a growing number of stakeholders involved in purchasing and approving
  • Employees are frustrated with the time it takes to get a purchase approved
  • There is a lack of context when approving purchases
  • Legal and security get involved too late in the game, stalling processes
  • Procurement isn’t able to source and negotiate the way they would like, so money-saving opportunities are wasted
  • Finance lacks visibility into the spend pipeline

Great purchase request experiences are crucial for proper purchasing processes. They make the purchasing process easier and faster for those needing to buy, while granting more control and involvement to those needing to approve. Healthy growing businesses experience an increasing number of stakeholders regularly needing to approve an increasing number of goods and services. In order to keep the business running smoothly, they need to be making these approvals fast. 

Launching an official way to make purchase requisitions also protects your organization from misconduct and fraud with an easy-access record of each purchasing activity. Likewise, sensitive data and actions are kept inaccessible to non-finance and procurement team members.

Deploying a purchase requisition process, especially one that’s founded on a purpose-built requisition system like Tipalti, results in higher and quicker employee adoption, accelerated approval cycles, greater visibility and control over the organizational spend pipeline, and overall optimized financial management. 

Automating the Purchase Requisition Process

The best way to modernize purchase requests is to integrate automation. The right tools can significantly improve efficiency, reduce errors, and enhance overall procurement performance. Here are a few steps and considerations for automating the purchase requisition process:

Implement a Procurement Solution

Invest in an intelligent procurement software solution that supports purchase requisition automation. Tools like Tipalti Procurement can help a business modernize purchasing and enhance overall spending. It offers a user-friendly interface, custom options, global integration capabilities, intake management, approval workflows, and more.

Standardize Requisition Forms

Make sure to standardize requisition forms to ensure consistency and streamline the approval process.

Automated Approval Workflow

Design an automated approval workflow that aligns with your company’s hierarchy. This ensures that all requisitions move seamlessly through the approval chain.

Advanced Integrations

Integrate procurement software with existing ERP systems, accounting software, and other relevant tools to eliminate manual data entry and ensure consistency. This will also streamline purchase order creation and the payables process.

User Training

Provide thorough training to users on how to use any new automated systems. This includes creating requisitions, tracking the status, and understanding any new processes.

Automated Budget Checks

Implement workflows for automated budget checks within the system. This ensures that requisitions adhere to budgetary constraints. It also helps to prevent overspending and financial discrepancies.

Supplier Management

Integrate your procurement system with supplier databases to streamline the selection and engagement of vendors. This helps in obtaining more accurate pricing and supplier availability.

Additional Considerations

When automating the purchase requisition process it’s also important to consider mobility and visibility into status. You may also want to look at:

  • Data security
  • Audit trail and compliance
  • Electronic signatures
  • Regular system updates and maintenance
  • Continuous improvement

By incorporating these PR automation methods, companies can streamline and optimize the purchase requisition process, resulting in reduced costs, increased efficiency, and improved compliance.


What is a purchase requisition?

How do I make a purchase request?

Who approves the purchase request?

Summing it Up

In modern business, the purchasing process must be treated seriously. This starts with the choice to embrace the process of purchase requisitions. The benefits of PRs include:

  • Early involvement from key stakeholders
  • Better control and visibility into the spend pipeline
  • Elimination of fraud and misconduct
  • Better financial and budget planning capabilities

Understanding and optimizing the purchase requisition process is crucial for effective procurement and financial management. The process plays a pivotal role in decision-making, budget planning, and stakeholder involvement.

Recognizing the signs that signal the need for a purchase requisition process, such as email clutter, budgetary challenges, and growing stakeholder involvement, is critical. Deploying purpose-built procurement solutions, like Tipalti, addresses these challenges and leads to higher employee adoption, accelerated approvals, and optimized payables management.

Automating the purchase requisition process has emerged as a transformative solution, eliminating errors, enhancing efficiency, and contributing to a more agile and responsive procurement function. To begin the process of modernizing purchase requests, companies should explore comprehensive spend management systems and leverage technology for sustained growth.

Interested in implementing a spend management system that simplifies and streamlines your business’s existing process? Explore Tipalti Procurement today.

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