Purchase Requisition vs. Purchase Order: What's the Difference?
Edited by Janet White || By Harlon Moss || Updated on November 28, 2023
A purchase requisition is an internal request for goods or services, while a purchase order is an official order to a supplier to provide those goods or services.
Key Differences
A purchase requisition is a document generated within an organization to notify the need for goods or services. It starts the purchasing process. In contrast, a purchase order is a formal and binding agreement with a supplier to purchase the specified goods or services under agreed-upon terms.
Purchase requisitions are used internally to seek authorization for a purchase. They often require managerial approval. Purchase orders, on the other hand, are external documents sent to vendors, indicating official confirmation to proceed with the order after internal approvals have been obtained.
The purpose of a purchase requisition is to request authorization and ensure budget availability. It's a control mechanism. A purchase order serves as a legal agreement with the supplier to deliver the requested items, indicating quantities, prices, and delivery terms.
In the procurement cycle, purchase requisitions come first, as they initiate the need for a purchase. Once approved, they lead to the creation of a purchase order, which is the next step in the procurement process, formalizing the purchase with the vendor.
Purchase requisitions are part of the internal record-keeping, helping in budgeting and auditing. Purchase orders, once accepted by a supplier, become a contractual obligation, and are crucial for legal, financial, and inventory records.
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Comparison Chart
Nature
Internal document
External document
Purpose
Request for approval
Confirmation of order
Issued By
Employee or department within organization
Purchaser to the supplier/vendor
Represents
Internal need and authorization request
Official commitment to buy
Role in Procurement
Initiates purchase process
Finalizes purchase agreement
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Purchase Requisition and Purchase Order Definitions
Purchase Requisition
A document to validate the necessity and budget availability for a purchase.
The manager approved the purchase requisition for the marketing materials.
Purchase Order
A binding legal document between buyer and seller.
Upon receiving the purchase order, the vendor began processing the shipment.
Purchase Requisition
A precursor to a purchase order in the procurement process.
Before issuing a purchase order, the company requires a completed purchase requisition.
Purchase Order
A formal agreement with a vendor to supply specified goods or services.
The company sent a purchase order to the supplier for new office chairs.
Purchase Requisition
A formal request for goods or services within an organization.
The IT team sent a purchase requisition for software upgrades.
Purchase Order
A document confirming the terms of the transaction.
The purchase order included delivery dates and payment terms.
Purchase Requisition
A document requesting approval for a planned purchase.
The department submitted a purchase requisition for new computers.
Purchase Order
An official confirmation of an order to a supplier.
The purchase order detailed the quantity and price of the laptops ordered.
Purchase Requisition
An internal control mechanism for spending.
To control expenses, all office supplies must be ordered through a purchase requisition.
Purchase Order
An external procurement document following internal approval.
After the budget approval, a purchase order was issued for the training services.
FAQs
Who typically creates a purchase requisition?
Employees or departments within an organization needing goods or services.
Can a purchase requisition be used to order goods directly?
No, it's for internal approval and doesn't place an order with suppliers.
Is a purchase order legally binding?
Yes, it becomes a binding contract once accepted by the supplier.
Can a purchase requisition be modified after submission?
Yes, but it often requires a new approval process.
How does a purchase order differ from a purchase requisition?
A purchase order is a formal agreement with a supplier, while a requisition seeks internal approval.
What happens after a purchase requisition is approved?
It usually leads to the creation of a purchase order.
Can a purchase requisition be declined?
Yes, if it's deemed unnecessary or over budget.
What is a purchase requisition?
It's an internal document requesting authorization for a purchase.
What information is included in a purchase order?
It includes details like quantities, prices, and delivery terms.
What happens if a supplier doesn’t comply with a purchase order?
It may lead to legal disputes as it’s a binding agreement.
Does every purchase need a purchase requisition?
Policies vary by organization, but it's generally recommended for significant purchases.
Are purchase orders necessary for all businesses?
While not mandatory, they are recommended for clear, legal procurement processes.
What role does a purchase order play in inventory management?
It helps in tracking orders and managing inventory levels.
Are purchase orders public documents?
No, they are commercial documents between buyer and supplier.
Who approves a purchase requisition?
Typically, a manager or someone in a supervisory role within the organization.
Does a purchase requisition involve financial commitment?
No, it’s a request for approval, not a financial commitment.
Is a purchase order valid without a vendor’s acceptance?
No, it requires acceptance to be legally binding.
How do digital systems affect purchase requisitions and orders?
They streamline and automate the approval and ordering processes.
Can a small business operate without purchase orders?
Yes, but it increases the risk of miscommunication and disputes.
What is the importance of a purchase requisition in budgeting?
It ensures expenses are pre-approved and budgeted.
About Author
Written by
Harlon MossHarlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
Edited by
Janet WhiteJanet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
