What is a Purchase Requisition? Examples and Best Practices

Brands manage countless purchase decisions daily, and without proper systems, these purchases can drain your cash reserves, create budget inconsistencies, and even lead to inventory mismanagement. 

Many companies struggle with

• Unexpected cash flow shortages from unplanned purchases
• Difficulty tracking departmental spending
• Duplicate orders across teams
• Little visibility into upcoming expenses

A purchase requisition process helps you address these challenges by creating accountability and control before money leaves your account. 

What is a Purchase Requisition?

A purchase requisition is a company’s internal document used by an employee to request the acquisition of goods or services for the organisation. 

It is the first step in a structured procurement process, where your team formally documents what they need to purchase before any actual buying occurs.

Unlike a purchase order (which is sent to suppliers), a purchase requisition remains within the company and requires proper approval before moving forward in the buying workflow. 

It essentially functions as a request for permission to purchase rather than the actual purchase itself.

Coming to what is the purpose of a purchase requisition document, its basicallt is to establish internal control over purchasing activities. 

When employees identify a need for specific goods or services, they use a purchase requisition form detailing what they want to buy, the estimated cost, preferred vendor (if applicable), and business justification. 

This form is then routed through the appropriate approval channels before a purchase order is created and sent to a supplier.

A typical purchase requisition form includes

• Name and department of the requester
• Date of request
• Detailed description of goods or services needed
• Quantity required
• Estimated cost or price range
• Suggested supplier (if known)
• Business justification for the purchase
• Department budget codes
• Delivery or completion date requirements
• Approver information

Purchase Requisitions vs. Purchase Orders

While both documents share several similarities, they serve different purposes in the purchasing process.

Key Differences Between Purchase Requisitions and Purchase Orders

A purchase requisition initiates the purchasing process, while a purchase order formalises a commitment to buy from a supplier. This distinction defines everything from their purpose to their legal standing.

Sequence in the Procurement Process

The procurement cycle typically follows this sequence

1. An employee identifies a need and submits a purchase requisition
2. The requisition goes through internal approval processes
3. Once approved, the purchasing department creates a purchase order
4. The purchase order is sent to the supplier
5. The supplier accepts the purchase order, creating a binding contract
6. Goods or services get delivered according to the terms
7. The invoice is processed, and payment is made

This sequence ensures total control and authorisations before financial commitments are made to external parties.

Documentation Details

Both documents contain information about the requested purchase, but they differ in their specific content requirements.

Common Misunderstandings

Some brands, particularly smaller ones, may skip the requisition process and go straight to purchase orders. It might lead to risks, for example

• Without formal requisitions, purchases may not receive proper internal review
• Budget impacts might not be considered before commitments are made
• There's less opportunity to consolidate purchases for better terms
• Audit trails are weakened when purchases lack proper documentation of approvals

Other companies might use requisitions but fail to convert them to proper purchase orders, which creates separate issues

• Without formal purchase orders, the terms of the agreement with suppliers may be unclear
• Legal protection is reduced without a properly documented order
• Receiving and accounts payable processes become more complicated
• Supplier relationships may suffer from unclear communication

The Importance of Purchase Requisitions in Business

Purchase requisitions enable you to structure and control the procurement process effectively though.

Financial Control and Budget Management

One of the core benefits of using a purchase requisition process is its ability to help you control and monitor your spending. 

Because it requires approval before any purchase, brands can ensure that expenses stay under budget. 

Your finance team can review requests against available funds and prevent potential overspending.

Purchase requisitions also give you visibility into upcoming expenses, allowing for improved cash flow management and financial planning. 

As it helps your finance department see pending requests in the pipeline, so they can prepare for future expenditures and allocate resources better.

Prevention of Unauthorised Purchases

Without a formal requisition process, your team might make purchase decisions without proper authorisation, causing uncontrolled spending and potential misuse of funds. 

This is where a purchase requisitions document helps establish accountability by creating a record of who requested what items and why, along with who approved the purchase, which helps

• Reduce the risk of fraud and abuse
• Ensure purchases have legitimate business purposes
• Create clear responsibility for spending decisions
• Document approval chains for audit purposes

Centralised Procurement and Improved Efficiency

Purchase requisitions centralise procurement activities, leading to

• Better negotiation capabilities with suppliers through consolidated purchasing
• Identification of opportunities for bulk purchasing and volume discounts
• Prevention of duplicate orders from different departments
• Standardisation of purchasing procedures across the organisation
• More effective vendor management and relationship building

Enhanced Transparency and Audit Readiness

A well-documented purchase requisition process creates a transparent trail of all procurement activities. This is invaluable during internal reviews or external audits, as it provides

• Clear documentation of business needs and justifications
• Evidence of proper authorisation for purchases
• Records of estimated versus actual costs
• Proof of compliance with procurement policies

Risk Mitigation and Quality Control

It also allows you to build and implement quality control measures and mitigate risks. 

Relevant departments (such as IT for technology purchases or legal for contracted services) review requisitions to identify potential issues before money is spent, which helps you ensure

• Products meet company specifications and quality standards
• Purchases comply with legal and regulatory requirements
• Contracts contain appropriate terms and conditions
• Technology purchases integrate with existing systems
• Suppliers meet company standards for reliability and quality

Examples of a Purchase Requisition

Best Practices for Effective Purchase Requisitions

Following these best practices will help your company maximise the benefits of purchase requisitions and minimise administrative burden.

1. Include all required fields, such as item descriptions, quantities, estimated costs, delivery requirements, and business justification
2. Define clear approval thresholds based on purchase value (e.g., purchases under ₹10,000 require one level of approval, while those over ₹50,000 require additional approvals)
3. Identify backup approvers when primary approvers are unavailable
4. Create escalation procedures for urgent requests
5. Establish service level agreements for approval timeframes (e.g., standard requests processed within 48 hours)
6. Ensure approvers understand their responsibilities and evaluation criteria
7. Implement e-procurement software that routes requisitions automatically based on established rules
8. Create automated notifications to alert approvers of pending requests

Common Challenges of Purchase Requisitions

Here are the main obstacles you might face with purchase requisition processes.

Approval Delays

Multiple approval layers, absent approvers, and manual routing create bottlenecks that delay purchasing and impact operations.

Information Problems

Requisitions with incomplete or missing product details, unrealistic cost estimates, missing justifications, and incorrect budget codes slow down the process.

Employee Pushback

Staff often try to bypass the system for urgent purchases, submit after-the-fact requisitions, or create intentionally vague requests to avoid detailed reviews.

Budget Visibility

Limited real-time information about pending expenses makes it challenging to track departmental spending and adequately allocate costs.

Technology Limitations

Disconnected systems, outdated platforms, and poor interfaces create duplicate work and prevent smooth requisition management.

Balance Issues

Finding the right balance between necessary controls and operational flexibility remains an ongoing challenge for most organisations.

To Wrap It Up

Documenting and approving purchases before they get processed prevents budget surprises and builds accountability.

While implementing this process requires initial effort, the results speak for themselves 

• Fewer unnecessary purchases, 
• Better supplier terms, and 
• Smoother operations. 

Even with limited resources, start small with basic approval workflows, then build your system as your business expands.

FAQs (Frequently Asked Questions On Purchase Requisition)

How to review a purchase requisition document?

Check all product details, justification, budget codes, and cost estimates when reviewing purchase requisitions. Verify the request aligns with company policies, has reasonable delivery timelines, and the suggested vendor meets your quality standards. 

How to process a purchase requisition?

Processing involves five key steps, verifying that all information is complete, checking budget availability, sending to appropriate approvers, tracking the approval status, and converting to a purchase order once approved. Communication with requesters throughout the process prevents delays and frustration.

What is purchase requisition in billing?

In billing, purchase requisitions are pre-approval documentation that helps you allocate costs correctly, plan for upcoming expenses, and maintain budget discipline. You create a verifiable paper trail that connects approved purchases to eventual invoices, simplifying reconciliation and expense tracking.