Purchase Requisition vs Purchase Order: How is it different?

All About the Purchase Requisition and Purchase Order

Both the Purchase Requisition (PR) and the Purchase Order (PO) are essential documents in the procurement flow. It is a step forward after identifying the need for a product or service and involves various departments in the business. 

However, there are various other documents that are involved in the procurement flow and you can read more about them by clicking here. 

Now back to the PR and the PO,

Purchase Requisition at its core is an internal document that outlines the request for supplies, products or services and Purchase Order is an external document used to confirm the buyer’s request for an order and is also legally binding.

In a way, the Purchase Order stands in for the cash by confirming the order without having to make payment. Once the order has arrived in stellar condition, the buyer will then proceed to pay for the purchase.

These documents allow businesses to plan out their purchases, budgets and maintain transparency in spending that will be beneficial for the operation in the short and long run. 

The Big Difference

…is more than just a difference in words as there are four main aspects of the Purchase Requisition and the Purchase Order that can be differentiated.

1. It’s All in the Details

The Purchase Requisition and the Purchase Order are two different documents that contain different things. The Purchase Requisition will generally include these details:

• the requester’s department
• the vendors’ information
• the description, quantity and price of the goods or service.
• the reason for the purchase

Meanwhile, the Purchase Order will include these details:

• the PO number
• the buyer and vendor information
• the billing and shipping address
• the description, the quantity and the agreed-upon price of the goods or services
• the expected delivery date
• the invoice address
• the payment terms

2. The End Goal

The main goal of these two documents is perhaps the biggest difference of the two. The Purchase Requisition is intended to ask permission to acquire certain goods or services while the Purchase Order helps to solidify the agreement that the buyer will be ordering from the vendor as businesses could not afford to take confirmation from word of mouth.

3. The Mastermind

The person in charge of creating these documents also varies as with Purchase Requisitions, the person filling it will be the employee of the business who is requesting the order.

Contrarily, the person administering the Purchase Order will either be the purchasing department or the head of the department. 

4. To Whom It May Concern

The Purchase Requisition goes through a long internal process as it needs to be sent to the head of the department, the purchasing department and the finance department.

The Purchase Order, being an external document, will be sent from the buyer to the supplier for fulfillment. 

Purchase Requisition & Purchase Order Working Together

How these two documents relate is that a Purchase Order is created once a purchase requisition is approved and the corresponding quotations are created and accepted.

With all the various complexities involved in the Purchase Requisition and Purchase Order, the question that stands in these situations is “how on earth do I track all these documents?”

The best solution to this is to go digital!

A purchase requisition and purchase order software like ADAM eliminates the hassle of having to keep up on who’s turn it is to give approval, where that document was last placed and whether the order that arrived is really what you ordered.

And with that, your process of requesting for goods and submitting Purchase Orders just got easier!

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