What Is a Requisition?

What Is a Requisition?

Let me explain what a requisition is: it's essentially a demand or request for a service or item, and you typically handle it using a purchase requisition form or some other standardized document. In a business setting, the requisition process is your standardized method for tracking and accounting for all those requests you make internally.

Key Takeaways

You should know that a requisition acts as a formal request to get a product or service, usually started by someone in a business. This process relies on standardized documents called requisition forms to keep an audit trail, and these days, most are electronic. You'll often use requisitions to get extra supplies, raw materials, or even working hours, which helps with better inventory control. Also, procure-to-pay (P2P) systems can fully automate your purchasing from requisition right through to paying the vendor.

How a Requisition Works

A requisition kicks off the request for a specific action and records it for any reporting you might need later. For instance, if you're an employee in a company and you need more supplies, you'd use a purchase requisition to ask for them.

Back in the day, these were all paper forms, but now most companies use digital processes that make tracking easier, including accounting for inventory. These digital requisitions often update your inventory automatically for tighter control.

Having a formalized requisition process boosts efficiency and accountability at every step. Instead of employees just grabbing supplies whenever they want, a purchase requisition gives you a controlled, documented way to manage internal inventories and plan for future needs.

Note that in the medical field, doctors use requisition forms for lab tests. These digital forms include patient ID and other details to ensure the right tests are done.

Standardized Requisition Forms

Your typical requisition forms include details like the name of the person or company making the request, the date of the request, the items you want, the delivery date, the delivery location and contact info, and the department handling it.

Continuing with Standardized Requisition Forms

These forms usually need the signature of the person fulfilling the request and the completion date. In big corporations with multiple sites and centralized purchasing, these processes are vital for keeping employees productive.

Another example is in finance, where shareholders can requisition a company's board to vote on resolutions. At its core, a requisition process is a formalized procedure that improves efficiencies in your business.

Purchase Requisition vs. Purchase Order

A purchase requisition is an internal form you use for getting goods and services, and it doesn't carry any legal or binding obligations. It's what employees fill out to request supplies for their department or themselves, often needing a manager's approval.

On the other hand, a purchase order is a contractual agreement when you're ordering from an external vendor. For example, if your company is buying supplies from an office store, you'd issue a purchase order with details on items, prices, payment terms, delivery dates, and any discounts for early payment.

Example of a Requisition

To see how this works, consider a health insurance company's Learning and Development team needing new supplies for training. The team lead requests them through the automated system.

The lead searches a catalog, picks products, completes the form, and submits it to management for approval. The manager reviews and approves, then sends it to purchasing.

Purchasing reviews and approves too. If there are errors, it goes back for fixes. In this case, everything's good, so they create a purchase order with specifics like product type and quantity.

The purchase order goes to the supplier, who accepts and contracts for the products. The supplier delivers, and payment follows. The purchase order acts as the contract.

Special Considerations

Purchase-to-pay (P2P) systems streamline and automate your requisition and procurement. They handle requisitioning, purchasing, and payment, boosting efficiency and accuracy in accounting.

These systems can cut costs by about 80%. The process starts with requisitioning: you see a catalog, select items, save them in a cart, route for approval, then it moves to purchasing and ends with payment.

What Is Requisitioned Property?

Requisitioned property is what the government takes, like through eminent domain. In the U.S., the Fifth Amendment requires fair compensation at full market value.

What Is a Job Requisition?

A job requisition is your formal request to hire someone. It includes job details, qualifications, requirements, and sometimes the salary range.

What Is Requisition Reconciliation in Accounting?

Requisition reconciliation compares two sets of records for accuracy, completeness, and consistency. It identifies discrepancies. Under GAAP, double-entry accounting helps spot errors.

The Bottom Line

In summary, a requisition is your formal request for a product or service, submitted manually or electronically. A structured process improves your business's efficiency and accountability. P2P systems automate from requisition to payment, enhancing accuracy and efficiency.