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The departments in some small businesses have to order supplies through the financial arm of the company instead of buying the supplies on their own. This process includes the use of requisition orders and purchase orders, which represent different stages of the same purchase process.
Requisition order
A requisition order is a way in which a department must submit to any department that controls the company’s financial activities. Although individual forms vary by company, general requisition orders require certain information, including materials from the requesting department, the exact number of requested supplies, a general description of the supplies for the legal name of the supplier and the expected price. of the purchase. A requisition order will then be approved or denied by the company’s financial department.
When are the requisitions necessary?
For small purchase orders, it is often a standard procedure for departments to purchase materials directly from retailers using a business credit card and bypassing the requisition process and purchase orders together. In general, companies and organizations require a requisition order when a purchase proposal exceeds a certain monetary value. For example, Tufts University requires a requisition order for most purchases of more than US $ 2,000. Other companies require requisition orders for much smaller purchases.
Types of requests
The requisition orders are most frequently presented so that a department can obtain approval for the purchase of necessary materials from an entity that operates outside the company. However, sometimes a department of a company wishes to acquire equipment or materials from another department, in which case, many companies require the purchasing department to submit an interdepartmental requisition order. Interdepartmental requisition orders can be useful to financial and accounting offices in large companies where departments have separate operating budgets.
Purchase Orders
Once the financial office of a company has approved the requisition order submitted by a department, a purchase order is issued to the supplier of the requested goods. Purchase orders must contain certain information, such as the name of the purchasing office, supplies purchased, shipping address, payment terms, billing instructions and purchase order number. To assist in maintaining records, purchase orders will have the same number as the requisition order that generated them.