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Purchase Requisition vs Purchase Order: Key Differences

What are the key differences between purchase requisition vs purchase order? While both documents are critical to the procurement process, they serve different purposes and have unique characteristics that set them apart. This article by Viindoo Enterprise Management Software will provide a detailed explanation of the key differences between purchase requisitions and purchase orders to help readers understand their role in the procurement process.

Understanding Of Purchase Requisition vs Purchase Order

What is Purchase Requisition?

A purchase requisition is a formal request made by an employee to the procurement department to purchase goods or services required to carry out their job. It is typically submitted through an internal system or a form that includes detailed information such as the item or service requested, the quantity required, and the estimated cost.

The procurement department then reviews the purchase requisition and verifies that the requested item or service is necessary and within the budget. If approved, the purchase requisition is then used as the basis for creating a purchase order.

Key characteristics of a purchase requisition are:

  • Internal document
  • Used to request goods or services required to carry out a job
  • Includes detailed information such as item, quantity, and estimated cost
  • Reviewed and approved by the procurement department
difference between purchase order and purchase requisition

What is a purchase requisition? 

What is a Purchase Order?

A purchase order is a legal document issued by the procurement department to a supplier to order goods or services. It includes all the details of the purchase requisition, such as the item or service requested, the quantity required, the delivery date, and the agreed-upon price.

Once the purchase order is issued, it becomes a legally binding contract between the buyer and the supplier. The supplier then fulfills the order, and the procurement department verifies that the goods or services received match the purchase order.

Key characteristics of a purchase order are:

  • External document
  • Legally binding contract between the buyer and supplier
  • Includes all details of the purchase requisition
  • Verified by the procurement department upon receipt of goods or services
purchase requisition vs purchase order

What is a Purchase Order?

Key Differences Between Purchase Requisition and Purchase Order

In this section, we will delve deeper into the differences between purchase requisition vs purchase order.

Purpose

A purchase requisition is a formal request made by an employee to the procurement department to purchase goods or services required to carry out their job. It is an internal document used to request goods or services from employees. 

On the other hand, a purchase order is an external document used to order goods or services from external suppliers. It is an order for goods or services made by the procurement department to an external supplier.

Document Type

A purchase requisition is an internal document used within a company, while a purchase order is an external document used outside the company. Purchase requisitions are used to request goods or services by employees, while purchase orders are used to order goods or services from external suppliers.

Legality

A purchase requisition is not a legally binding contract between the buyer and the supplier. It is a formal request made by an employee to the procurement department to purchase goods or services required to carry out their job. 

However, a purchase order is a legally binding contract between the buyer and the supplier. Once issued, it becomes a legal agreement between the two parties.

Review Process

A purchase requisition is reviewed and approved by the procurement department. It undergoes a verification process to ensure that the requested item or service is necessary and within the budget. The procurement department can use the purchase requisition as a basis to create a purchase order once approved.

On the other hand, a purchase order is issued by the procurement department. The procurement department creates a purchase order using the information from the purchase requisition and sends it to the supplier.

Verification

A purchase requisition is not verified upon receipt of goods or services. Once the procurement department approves the purchase requisition, it is used to create a purchase order. The supplier then fulfills the order, and the procurement department verifies that the goods or services received match the purchase order. 

In contrast, a purchase order is verified by the procurement department upon receipt of goods or services. Once the supplier fulfills the order, the procurement department verifies that the goods or services received match the purchase order.

purchase requisition vs purchase order

It is important to know the differences between purchase requisitions and purchase orders

In summary, purchase requisitions and purchase orders are both essential documents in the procurement process. Understanding the key differences between purchase requisition vs purchase order is crucial to ensuring a smooth and efficient procurement process. By clearly defining the purpose of each document, confusion can be avoided and procurement is ensured to run smoothly. 

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Purchase Requisition vs Purchase Order: Key Differences
Viindoo Technology Joint Stock Company, Trinh Thi Ngoc Anh April 27, 2023

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