A purchase requisition is the step most small businesses skip, and skipping it is why the invoice is so often the first anyone hears about a purchase. It is an internal request: what is needed, roughly what it costs, which budget it comes from and when. Nothing has been promised to anybody yet, which makes it the last moment a purchase can be stopped without cost or embarrassment.
Internal, and before the money is committed
A requisition is a request inside the business: somebody says what they need, roughly what it costs, which budget it draws on and when they need it. Nothing has been promised to a supplier at this point, which is exactly why it is the only cheap place to say no. Once a supplier has been told to proceed, stopping costs goodwill and sometimes money.
The budget check is the point, not the paperwork
An approver shown only a request total is being asked to guess. On the worked example a $1,200 request against a line with $5,000 remaining leaves $3,800 and takes 24% of what was left. The same request against $1,300 remaining is a different decision, and showing the after figure is what turns approval from a formality into a judgement.
Route by value, so the rule applies itself
A threshold beats a policy document, because it is applied every time rather than when somebody remembers it. On the worked example the request sits $200 above a $1,000 threshold and so needs the second approver. Most small businesses land somewhere between $500 and $2,000, and the test is what size of surprise on an invoice would have annoyed you last year.
The approved requisition should become the order
The commonest failure is approving a request and then keying the purchase order separately. That re-typing is where the number, the price and the quantity drift apart, and it is precisely what the requisition step was supposed to prevent. Approved request in, numbered order out, with nothing typed twice.
Questions people ask about purchase requisition
What is a purchase requisition?
An internal request to buy something, stating what is needed, the estimated cost, the budget line and when it is needed, approved before any commitment is made to a supplier.
What is the difference between a requisition and a purchase order?
The requisition is internal and asks permission; the purchase order is external and commits you to a supplier. The requisition comes first, and the order should only exist once it is approved.
Does a small business need requisitions at all?
Only once more than one person can commit money. Below that the owner is the control. Above it, the requisition is what stops duplicate orders and budget overruns.