Purchase requisitions and purchase orders are key documents in procurement and purchasing to help manage costs and offer a greater transparency in the organisation’s buying policies and procedures.
A purchase requisition refers to the obtaining of permission to order new stock, while the purchase order is where the buying or stock purchase happens. It is important to understand the difference between the two in the spend management process.
The purchase requisition is the document submitted by the purchaser to the financial department. The purchaser asks for permission to buy the products or service stipulated in the document.
The purchase requisition process is necessary and required to enforce purchase approvals over specific thresholds, and ultimately manages the company budget more efficiently.
If the procurement department has a threshold value of ZAR2000, for example, it means that it is obliged to submit a purchase requisition for any goods or services over ZAR2000.
The purchase requisition document specifies the quantity and description of the requested supplies, the acquisition price, the vendor that provides the product, and the buyer’s department or location.
The purchasing department forwards the purchase requisition for approval or rejection.
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The procurement department issues the purchase order (PO) to the vendor only after it has approved the purchase requisition documentation. It means that the organisation can now purchase the required products or services from the vendor.
The purchase order includes the purchase order number, the buyer’s details, invoice address, the description and quantity of the goods purchased, the price agreed on, as well as the payment terms and conditions.
The Purchase order is submitted to the vendor, who ships the order and sends the invoice to be paid by the purchaser. A purchase order document allows vendors to process payments and fulfil orders efficiently.
Organisations need to handle both purchase requisitions and purchase orders efficiently to avoid mishandling, duplicates, or missing orders.
Most companies use an electronic system to create and generate, submit and track the relevant documentation to vendors.
It is essential to integrate your procurement system with other financial systems to enjoy the benefits of fast and streamlined processing, transparency, as well as significant cost reductions.
As important as it is to manage the external ordering and purchasing of stock, we should not neglect the internal ordering of stock.
Stores Requisition Management (SRM) for Dynamics AX, or otherwise known as internal requisitions, has been designed to improve the functioning of stores within an organisation.
The Stores Requisition Management (SRM) or internal stock requisition extension integrates with the inventory and warehousing management module within Dynamics AX to support and streamline your organisation’s internal stock requisition processes.