In any enterprise that offers with buying items or providers, you’re prone to encounter the phrases “buy requisition” and “buy order.” Whereas each relate to the procurement course of, they discuss with distinct steps with totally different roles and necessities. Understanding the acquisition requisition vs buy order distinction is vital for sustaining an environment friendly and compliant buying course of.
To make clear the important thing distinctions, let’s begin by defining every time period:
Buy Requisition
A purchase order requisition is an inner doc that kicks off the procurement course of. It’s a request from an worker to the buying division to accumulate particular items or providers. The requisition contains particulars just like the requested gadgets, portions, required supply dates, price estimates, and the rationale for the acquisition.
Buy Order
A purchase order order is a business doc issued by the customer to a provider or vendor after the acquisition has been authorized internally. It’s a binding contract that authorizes the seller to supply the services or products outlined within the order and obligates the customer to remit fee in accordance with the acquisition order phrases.
Now that we’ve lined the fundamental definitions, let’s dive deeper into buy requisitions vs buy orders differ throughout a number of key areas:
Submission and Approval
Buy requisitions are initiated by staff inside the group who determine a necessity for sure items or providers. The requisition then goes by way of an inner approval workflow earlier than being transformed into a purchase order order that will get despatched to a vendor.
The approval course of is an important a part of the requisition stage. It permits administration to evaluate purchases for necessity, pricing, price range allocation, and compliance with buying insurance policies. Implementing a proper documentation evaluate course of with spending controls helps stop unauthorized purchases, overspending, and misuse of funds.
Authorized and Monetary Commitments
One of many largest variations is that a purchase order requisition carries no authorized or monetary dedication for the customer. It’s merely an inner request that outlines the specified buy. The authorized obligation happens when a validated buy order is issued to and accepted by the provider.
The acquisition order represents a contractual dedication by the customer to pay the seller upon success of the order phrases. It specifies all particulars like product descriptions, portions, pricing, supply dates, fee phrases, and different situations which might be binding on each events.
Function of Buying Division
The buying division doesn’t get entangled till the requisition stage is accomplished and it’s time to transform the authorized inner request into an official buy order to ship out to distributors.
On the requisition section, the buying staff could help with offering provider suggestions, product specs, and estimates in the course of the documentation evaluate course of. Nonetheless, their main function is managing the acquisition order course of – evaluating provider quotes, negotiating phrases, and issuing authorized buy documentation to distributors.
Doc Movement and Processing
Buy requisitions observe an inward-facing workflow, originating from staff inside the group earlier than going by way of administration’s approval course of. Buy orders circulate outward, getting issued to exterior suppliers by the buying division as soon as all inner approvals are obtained.
As requisitions are fulfilled by issuing a purchase order order, there must be a decent integration between the 2 doc sorts and processes. Corporations implement procurement options and doc administration programs to streamline and automate the circulate between inner requisitions and externally issued buy orders.
Order Monitoring and Document-Holding
Whereas requisitions set up the preliminary request and approvals for a purchase order, the acquisition order is the doc referenced for order monitoring, accounts payable processing, and spend record-keeping.
The requisition request itself doesn’t get shared externally. It exists solely as an inner report to justify the acquisition and supply an audit path of the approval course of. The acquisition order is the important thing reference doc that suppliers use to satisfy the order precisely and generate invoices for fee.
As this comparability illustrates, buy requisitions and buy orders are interrelated however distinctly totally different documentation tied to separate roles and course of phases inside the buying cycle.
Requisitions seize and vet buying wants earlier than any commitments are made, whereas buy orders symbolize the formal settlement with suppliers to execute the authorized buy. Having a transparent buy requisition vs buy order course of with the correct documentation evaluate controls is important for buy transparency and procurement finest practices.
Whether or not you’re a small enterprise or a big enterprise, sustaining management over buying begins by understanding and correctly implementing each requisition and buy order processes. With the efficiencies of digital procurement options, you may streamline and combine the circulate between each phases for optimum spend administration.