Understanding Requisitions- A Comprehensive Guide

What Is a Requisition?

A requisition is a formal request or demand for services or items, initiated typically by businesses through standardized documents such as purchase requisition forms. This process serves as an organized method for tracking and managing requests within an organization, ensuring accountability and oversight in procurement activities.

Key Takeaways

• A requisition is primarily a formal request for obtaining goods or services.
• The requisition process usually involves standardized forms, which maintain an audit trail, with most companies transitioning to electronic formats.
• Requisitions aid in the procurement of additional supplies or services, enhancing inventory control and operational efficiency.
• Modern procure-to-pay (P2P) systems fully automate the purchasing process, from the initial requisition to vendor payment.

How a Requisition Works

The requisition process serves two primary functions: it initiates a request for an item or service and records that request for future reference. The process typically begins when an employee identifies the need for additional supplies. Traditionally, this process was managed through paper forms, but many organizations now utilize digital systems that enhance tracking capabilities and inventory management.

Through an automated requisition system, employees can submit their requests online, and the system can automatically update inventory levels. This helps prevent over-ordering and ensures that stock levels are maintained accurately.

Example in Practice

In the medical field, requisition forms are particularly important. For instance, when a doctor requests laboratory tests, they fill out a requisition form that includes essential patient details to ensure accurate testing results.

Components of Standardized Requisition Forms

Typically, a requisition form will contain the following essential elements:

• Requester Information: Name and department of the individual making the request.
• Request Date: When the requisition was submitted.
• Item Details: Description of the items or services requested.
• Delivery Specifications: Required delivery date and location.
• Approval Process: Space for signatures from necessary approvers and dates of completion.

In businesses with multiple locations or centralized purchasing divisions, standardized requisition processes can significantly enhance productivity and traceability.

Purchase Requisition vs. Purchase Order

Understanding the difference between a purchase requisition and a purchase order is crucial in a corporate environment:

• Purchase Requisition: This is an internal document used by employees to initiate a request for supplies or services. It does not carry any contractual obligation.

• Purchase Order: In contrast, a purchase order is a binding agreement between a company and a vendor. It lists all the details of the purchase, including terms of payment, delivery dates, and pricing.

Transition from Requisition to Purchase Order

Consider a scenario in an educational institution's Learning and Development department. If they need training materials, the department head would begin by drafting a purchase requisition through their automated system. After managerial approval, the request is forwarded to a purchasing department that verifies details before generating a purchase order that finalizes the terms with the vendor.

Special Considerations in Requisition

Procure-to-Pay Systems (P2P)

P2P systems play a vital role in streamlining and automating the requisition process, encompassing three main stages: requisitioning, purchasing, and payment. By utilizing P2P systems, organizations can drastically improve efficiency and financial accuracy. Studies have shown that automation can reduce procurement costs by approximately 80%.

In a typical P2P scenario:

1. Users select items from a digital catalog and add them to their shopping cart.
2. The requisition request is routed for managerial approval.
3. After approval, the order is processed, and payments are made upon the receipt of goods or services.

Types of Requisition

1. Requisitioned Property: This term refers to properties that a government seizes, typically under laws like eminent domain. The Fifth Amendment of the U.S. Constitution mandates compensatory payment to the owner based on the fair market value.

2. Job Requisition: In human resources, a job requisition is a formal request to fill a vacancy. It generally includes information on qualifications, job requirements, and sometimes salary ranges.

3. Requisition Reconciliation in Accounting: This process involves comparing two sets of financial records to ensure accuracy and consistency. This is essential for identifying discrepancies, maintaining accountability, and complying with Generally Accepted Accounting Principles (GAAP).

Conclusion

Essentially, a requisition is a structured and formal request for goods or services, significantly enhancing the efficiency and accountability of procurement processes within organizations. As businesses continue to evolve with technology, electronic requisitioning and P2P systems have revolutionized how requests for supplies and services are made, approved, and fulfilled, ultimately contributing to the streamlined functioning of organizations. Whether in healthcare, education, or corporate settings, understanding and implementing effective requisition processes is crucial for operational success.