Getting from Point A to Point B
…should be a simple process. But when that process involves getting approvals, checking inventory and budget, getting from A to B has become a lot more complicated. The Purchase Requisition to Purchase Order process involves all these complexities that cause businesses to lose hours of their time just to get from one point to another.
In these cases, it may seem tempting to skip the PR to PO process altogether and to purchase straight from the supplier without any paper trail. However, the PR to PO process is important and will cause businesses to think twice before opting to purchase without having approvals.
Making the Most Out of the Purchase Requisition to Purchase Order Process
The PR to PO process is important for many reasons. It can definitely provide a more transparent way of spending by maintaining the budget, helping with cash flow and reducing maverick spending.
While it has to go through multiple levels of approvals, the Purchase Requisition is important to maintain accuracy as well as to accurately identify the need.
More often than not, businesses tend to purchase more than what is needed, which adds a lot more hassle that no one has the time for. Therefore, having a systematic line of approvals improves the quality of the purchasing process by saving time and money.
Also, having a Purchase Order clarifies the buyer’s expectations from the seller and ensures the purchasing process with the supplier is formalized and has a paper trail of evidence to keep track of.
Your coworkers will definitely thank you for the ease in having a designated Purchase Requisition and Purchase Order process that provides both efficiency and effectiveness to the business’s purchasing process.
Purchase Requisition to Purchase Order: Step-by-Step
The Purchase Requisition to Purchase Order process can be customized to suit business’ needs, however, generally, the basic steps of the PR to PO process are as follows:
- Create the purchase requisition
The purchase requisition is created once an employee from that company has a need to procure goods or services.
- Request Approval of Purchase Requisition
Once the purchase requisition form is filled, the form is to be approved by several departments within the business such as:
- the head of department that is asking for the goods or services
- the procurement department that will double-check to ensure it is necessary for the business.
In the event that the request is rejected (e.g. due to a lack of funds), then the process will restart at step no. 1.
- Source for Quotation
The procurement department will then source for different quotations from different suppliers which will need to be reviewed to ensure that they are getting their money’s worth. Some companies even have a requirement to generate a minimum number of quotations.
- Selecting Quotation
A few aspects of the quotations to look out for are the Price and the Payment terms and after a careful evaluation of the quotations, a final vendor will be selected.
- Issue Purchase Order
Once the business has chosen the quotation they deemed the best, a Purchase Order will be issued to confirm the quotation and proceed to process the order.
In some cases, the Purchase Order may need to be amended due to human error. With a manual Purchase Order, this means having to amend, reprint and resubmit the PO to the supplier which is a hassle that can easily be fixed with an e-Procurement platform.
Once the Purchase Order has been accepted by the supplier, the next step in the procurement process will commence and you can click here to read on the 7 stages involved in that process.
Let’s Speed Things Up
Forbes announced that with the height of the pandemic, more and more people are turning to online shopping for a more effective purchasing experience.
Businesses are not exempted from the issues that arise from the pandemic. Alternatively working from home and working from office means you may miss out on asking your superiors for approval, which will delay as to when the item will be delivered.
The solution to all this is to mirror consumers and go digital. Teams often struggle with having to convert PR to POs and this is something ADAM can quickly create by exporting through CSV or using ADAM’s functions.
With a digitalized Purchase Requisition to Purchase Order flow, businesses can rest assured that their Purchase Requisition to Purchase Order process is still going smoothly.
Purchase Requisition is an internal document that outlines the requested goods or services by an employee in an organization.
Purchase Order is an external document issued by the buyer to the seller as a confirmation of purchase of goods or services.
The Purchase Requisition is meant to request goods or services and generally does not leave the business premises while the Purchase Order is a legally binding document between the buyer and the seller to proceed with the purchase.
1. Create the purchase requisition
2. Request Approval of Purchase Requisition
3. Source for Quotation
4. Selecting Quotation
5. Issue Purchase Order
A software that manages the Purchase Requisition and Purchase Order process through an online platform.