what is a purchase requisition

A purchase requisition is a formal request initiated within an organization to procure specific goods or services. It is an internal document used by an employee to request the purchasing of goods or services on behalf of their firm. The purchase requisition typically outlines the description, quantity, and price of the items or services requested and serves as an internal authorization before a purchase order is issued to suppliers. It is important for several reasons, including avoidance of unauthorized purchases, forecasting and planning, financial management, and risk mitigation. The purchase requisition process acts as a gatekeeping mechanism, ensuring only approved and necessary purchases are made, and it helps companies predict future spending trends, aiding in budgeting and forecasting exercises. This document is used when an employee in an organization makes an order request if a need arises for certain goods or services, and it rarely, if ever, leaves the organization. It is not a legally binding document and is used to obtain internal permission for a purchase, providing the accounting department with information to plan for future spending and avoid costly mistakes. The purchase requisition form includes the applicable budget and purchase limits to inform the requestor before a purchase is made, ensuring that products and services are purchased with the consent of the line manager and that sufficient funds are available for the purchase. Overall, a purchase requisition is an essential tool for modern businesses, aiding in financial management, planning, and risk mitigation.