Purchase Order vs. Purchase Requisition

Attribute	Purchase Order	Purchase Requisition
Initiated by	Buyer	Requester
Approval required	Yes	Yes
Legal document	Yes	No
Contains specific details	Yes	Yes
Issued to	Supplier	Procurement department

Introduction

When it comes to the procurement process in a business, two key documents play a crucial role - the Purchase Order (PO) and the Purchase Requisition (PR). While both documents are essential for the purchasing process, they serve different purposes and have distinct attributes that set them apart. In this article, we will compare the attributes of Purchase Order and Purchase Requisition to understand their differences and similarities.

Definition

A Purchase Requisition is a formal request made by an employee or department within a company to the purchasing department to acquire goods or services. It outlines the details of the items needed, quantity, estimated cost, and the justification for the purchase. On the other hand, a Purchase Order is a legally binding document issued by a buyer to a seller, indicating the type, quantity, and agreed-upon price of products or services to be purchased.

Approval Process

One of the key differences between a Purchase Requisition and a Purchase Order is the approval process. A Purchase Requisition typically requires approval from the relevant department head or budget manager before it can be processed further. This ensures that the requested items align with the company's budget and purchasing policies. In contrast, a Purchase Order is generated after the Purchase Requisition has been approved and serves as the official authorization to proceed with the purchase.

Legal Implications

Another important distinction between a Purchase Order and a Purchase Requisition is the legal implications associated with each document. A Purchase Requisition is an internal document that does not create any legal obligations between the buyer and the seller. It simply serves as a request for goods or services. On the other hand, a Purchase Order is a legally binding contract that outlines the terms and conditions of the purchase, including payment terms, delivery schedule, and warranties.

Information Included

When comparing a Purchase Order and a Purchase Requisition, it is essential to consider the information included in each document. A Purchase Requisition typically includes details such as the item description, quantity needed, estimated cost, and the reason for the purchase. It may also include any relevant approvals or signatures. In contrast, a Purchase Order includes more detailed information, such as the agreed-upon price, payment terms, delivery instructions, and any applicable discounts or taxes.

Communication

Communication is another key aspect to consider when comparing a Purchase Order and a Purchase Requisition. A Purchase Requisition is primarily used for internal communication within the company, as it serves as a request for goods or services. It is typically sent to the purchasing department for further processing. On the other hand, a Purchase Order is used for external communication with the seller. Once a Purchase Order is issued, it is sent to the supplier to initiate the purchase process.

Tracking and Monitoring

Tracking and monitoring the status of a purchase is essential for effective procurement management. A Purchase Requisition allows companies to track the request from the initial submission to approval and processing. It provides visibility into the purchasing process and helps ensure that the requested items are acquired in a timely manner. In contrast, a Purchase Order enables companies to track the status of the purchase from the order placement to delivery. It helps monitor the progress of the purchase and ensures that the agreed-upon terms are met.

Conclusion

In conclusion, both Purchase Orders and Purchase Requisitions play a vital role in the procurement process of a business. While they serve different purposes and have distinct attributes, they are both essential for efficient purchasing management. Understanding the differences between a Purchase Order and a Purchase Requisition can help companies streamline their procurement processes and ensure compliance with purchasing policies and regulations.