Home Business Purchase Requisition vs. Purchase Order: Major Difference Between Them

Purchase Requisition vs. Purchase Order: Major Difference Between Them

by KEN
Purchase requisition vs purchase order

There is a lot of misunderstanding between these two terms (purchase requisition and purchase management). Several people use them interchangeably. In this blog, we will understand the difference between purchase requisition and purchase order!

What is a Purchase Requisition?

A purchase requisition is an official document where an employee or department fills a requirement in order to complete office work.

Then purchasing requisition form is approved or rejected by requisition and purchasing department or some changes are done such as quantity as per budget then it is approved. It is the initial step toward obtaining goods and services from the vendor.

What is The Process Of The Purchase Requisition?

The process begins to purchase requisition when an employee or department wants to bring new stock or current stock is about to finish.

So, the employees fill the purchase requisition form and submit it to the manager then manager looks into the form and approves or rejects the form. If the requirement is valid then the manager approves considering budget and quantity.

After manager approval, the form goes to the next level which is purchase or requisition department. When everything is in order then department finds it OK then they approve. This is where purchase requisition ends and the purchase order begins.

What is The Purchase Order? How it is Processed?

When everything in purchase requisition is in order then purchase order is created. The purchase order is the document in which all the specific details are mentioned such as quantity, quality and when it must be delivered!

Then it is the choice of vendor either to approve, reject or some changes need to be done. Then the vendor makes change in the purchase order such as delivery date or price. If both parties agree then this purchase order becomes legal binding contract and both parties will do the needful. The vendor supplies the required product as per the date defined in the contract.

After that, the team check the quality of the product & checks if any product is broken or not working then it is returned. After that, the account team ensures that the organization pays only for an item which is ordered & product received.

When all the requirements are met as per the purchase order then purchase order is closed. At last, the vendor generates the invoice and payment are done according to the contract.

This whole process may seem simple but when it is done manually it is time-consuming and prone to errors. It might take weeks from purchase requisition (beginning) to purchase order (closing)!

However, with automated software, this complete procedure becomes simple, keeps everyone in the loop. It is effective and saves time and alerts the person whenever any update takes place.

What is The Difference Between Purchase Requisition and Purchase Order?

Purchase Requisition Vs Purchase Order

  1. The difference between purchase requisition and the purchase order is that purchase requisition is the initial stage of purchasing product or service whereas purchase order after purchase requisition.
  2. A purchase requisition is the request for purchase and purchase order is the confirmation.
  3. The purchase requisition is made by any employee or department whereas purchase order is made by purchase department only.
  4. In purchase requisition changes can be made by organization only (employee and department) whereas in purchase order changes can be done by vendor.

What is The Need of Purchase Order Process?

If managers directly order to the vendor there are chances of fraud occurrence that is why there is a need of process where internal departments and employees are included in order to check authenticity & avoid fraud.  This is why purchase order process is required.

How Purchase Order Management Software Can Help?

Purchase order management software can help in managing purchase requisition and purchase order as well. It alerts managers whenever the new purchase requisition or purchase order is created it is helpful for the purchasing department.

This software eliminates the paperwork and saves time as the departments does not have to look or find papers and documents.

Furthermore, it is also helpful in reducing human errors for example if there are two invoices for the work order then it will alert the team and team will know which invoice is better one, plus it also avoids making payment twice.

Moreover, it keeps everyone on the same page. It is helpful when managers are out for a meeting they can look into their smartphone and get updates about events. So that no information is left that need to be shared.

Employees can fill requisition form quickly as templates are available in the software. It saves time of other departments as files do not need to move from one place to another physically and if the manager is not available in the office then employees would have to wait so this software spares time. This software keeps track of each purchase order in real-time. It keeps track of purchase order status such as purchase order is open, partially received, closed and so on!

In this era of technology, cyber-crime, hacking & data theft is not a new thing! The worst part is small business are most affected by this issue. But the good thing is, purchase order management software is based on cloud technology. It means the organization does not have to worry about data security.

It will be the responsibility of the service provider. Data can be crucial, critical, sensitive or classified but they keep data in an encrypted way and at several places so data is protected. Furthermore, data is secured with multiple security levels.

Conclusion

When your organization is not equipped with a purchase order management software your purchase order process will be lengthy. Moreover, it may affect the productivity of the employee as well as the department. This software simplifies the process, save times, helps in creating procedure and enhances the productivity of employees.

This asset management software provides a better way to communicate with each other and the best part is managers can approve purchase order from anywhere with their smartphones. This software keeps track of purchase order history as well. It will be helpful to your business growth and it can task your business to another level.

Author Details:

Name: Nishtha Kumari

Bio: Nishtha Kumari is the content specialist as well as digital marketer. She writes up well-researched content over the latest technology trends for various industries. Her priority is to cover up new technologies in the industry of asset management and tracking. New technologies like depreciation tracking software, inventory management software, Utility management, facility management, asset tracking technologies, remote monitoring, maintenance management software, asset audit software, purchasing requisition software and many more. When she is not writing, she love to read novels.

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