Purchase Requisition vs Purchase Order: How is it different?

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.

Table that depicts the difference between a Purchase Requisition and Purchase Order

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 vendors’ information
• the requester’s department
• the reason for the purchase
• the description, quantity, and price

Meanwhile, the Purchase Order will include these details:

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

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.

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. 

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!

FAQ

What is a Purchase Requisition?

A purchase requisition is an internal document filled by an employee to request for an item. This document will be reviewed by the head of department, the purchasing department and the finance department who can either approve or reject the request.

What is a Purchase Order?

A purchase order is an external document that legally binds the buyer and the seller. It outlines the terms and conditions of the order which the buyer and the seller can negotiate on. Once both parties are happy with the price, the order for the item can proceed.

What is the difference between a Purchase Requisition and a Purchase Order?

The main differences between a Purchase Requisition and a Purchase Order are:

• The creator
• The function
• The information
• The receiver

What is the difference in information between a Purchase Requisition and a Purchase Order?

The information in the purchase requisition includes the requester’s department, the vendor’s information, the details regarding the goods or services and even the reason for the purchase. 

The information stored in the Purchase Order is more in regards to the order such as the PO number, the buyer and vendor information, the details regarding the goods or services, the expected delivery date, the invoice address as well as the payment terms for the order.

What is an automated Purchase Requisition and Purchase Order?

An automated Purchase Requisition and Purchase Order is an online e-procurement platform such as ADAM, that digitalizes the PR to PO process from start to finish.