The various departments are unable to make direct purchases from vendors for anything related to office supplies, consumables, raw materials, or other products for the workplace. The task of locating vendors, managing the purchasing procedure, and delivering the invoices to accounts is handled by a distinct purchasing department. This reduces the likelihood of fraud and poor management.
What Is A Purchase Requisition?
An official document is required whenever a representative of an organization wishes to place an order. The purchase requisition is the name of this paper. It alerts the purchasing division to the demand for the specified good or service and compels them to start the procurement procedure.
Making an application, getting it accepted, and keeping track of all buy requests submitted inside an organization are all part of the purchasing requisition process. Transferring requisitions to the appropriate parties, notifying the finance and accounts departments, and working with the purchase departments to ensure that the request is met are all part of the purchasing requisition procedure.
How the Purchase requisition process Affects Procurement
To organize the funds and maximize spending in an organization, a purchase request is necessary. Here are a few ways that purchase requests have an effect on procurement.
- Prevent Fraud: Avoiding dark purchases is arguably the most crucial task of purchasing requests. Fraudsters send bogus invoices from suppliers or vendors they employ to organizations with holes in their procurement procedures.
- Better Communication: Purchase orders serve as documentation that a certain request was made and fulfilled. Additionally, since the request’s specifics are documented, there is no potential for future controversy, either internally or between the organization and its providers.
- Avoid Duplicate Orders: Two different department heads may occasionally innocently seek identical goods or services. The use of purchase requisition processes aids businesses in avoiding placing duplicate orders. Such situations are prevented since the purchases are approved and made by a single person or department.
- Centralization of Purchases: Because purchases are bundled, procurement is made simpler by assigning responsibility for approval and purchase to a single department. Additionally, it strengthens the organization’s negotiation position and enables them to obtain more favorable terms from suppliers.
- Creates A Trail For Auditing: Purchase requisitions are more than just written requests; they are also documentation of the request, approval, and purchase of a specific item. This is beneficial when an organization’s accounts and finances are being audited.
- Transparency in the procurement process: You can see how the steps in the workflow for a purchase requisition process create hierarchical approval levels and guarantee that the document is verified for accuracy and authenticity. This process yields proof that a department issued and submitted a form, and that the department making the supply request genuinely needed them for a legitimate business purpose.
Most businesses mention the applicable budget and purchase limits on the purchase requisition form to let the requestor know before a purchase is made. This guarantees that goods and services are acquired with the line manager’s approval and that enough money is available for the transaction.