Purchase Requisition vs Purchase Order: Difference and Comparison

A purchase requisition is a preliminary document that is used to request goods or services from a supplier. A purchase order is a legally binding document that is used to formally request that confirms the details of the purchase and authorize the purchase of goods or services from a supplier.

Persons who make purchase requisitions are; Storekeepers, plant engineers, and department heads. Purchase requisitions start the purchase process, also contain written details of the materials to be ordered, and have reference dates. A material requisition note is a formal document that is used to issue and utilize materials for use.

Immediately after a requisition approval and sorting of the supplier to whom the order is to be given, a purchase order is prepared. It is a form that the department officials use to authorize the supplier to supply the materials written at agreed terms of business and price.

Key Takeaways

  1. Purchase requisitions are internal documents that request authorization to procure goods or services.
  2. Purchase orders are legally binding documents issued to suppliers detailing the items to be purchased, prices, and delivery terms.
  3. Purchase requisitions precede purchase orders in the procurement process, with the latter serving as a formal agreement between the buyer and the supplier.
Purchase Requisition vs Purchase Order

Comparison Table

Parameters of ComparisonPurchase RequisitionPurchase Order
MeaningFormal requests by department headsA form that dictates purchase requisition
Document TypeInternalExternal
Generated byAn authorized employee who needs to purchase goodsDepartment
Copies preparedThreeFive
ReceiverPurchase departmentVendor

What is Purchase Requisition?

It is a formal written request by the department that needs to purchase goods. After it has been approved, a purchase process is initiated. It contains details of the materials to be purchased and the reference dates. It also dictates the terms of business and the prices of the goods to be purchased.

It is only drafted when there is a need for purchasing goods and products and supplies. It is initiated by:

  • Store Keeper- They prepare purchase requisitions for normal and daily goods and products that need to be in the store. This happens when the items are about to reach their minimum level or replacement of the perishable goods.
  • Plant Engineer- This is specialized personnel needed for the professional maintenance of assets and making sure the system flow is steady and without fault.
  • Departmental heads- These are heads of given sectors within a business, they come up with a purchase requisition whenever they run short of certain products in their departments.
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In general, three copies of purchase requisition are prepared, one remains with the department heads, the other is given to the supplier, and the last one to the wholesaler.

A material requisition note is an official document that is used to authorize materials for use. It acts as an instruction to the wholesaler to issue materials. The department creates three copies for:

  • Stores department
  • Costing department
  • Department which created the note

What is Purchase Order?

It is an official form that the purchasing department uses to authorize a supplier to supply goods and products at the agreed terms of business and price. It states clearly the materials required and at clear prices.

It states that the supplier has to deliver goods and send the bill. It also has a serial number, therefore, it helps in implementing control over the issue of purchase orders, thereby making sure the right quantity and state of goods are delivered.

A purchase order is a legitimate contract between the purchase and the supplier hence it has to be prepared with great care. Therefore, the people who are trusted with signing the purchase order are a few selected responsible officers.

Copies of the order generated go to:

  • Accounting department
  • Receiving department
  • Finance department

A purchase order acts as proof of contract between the purchaser and the supplier. It also allows a supplier to supply specified materials and authorizes the receiving department to receive the materials ordered.

Main Differences Between Purchase Requisition and Purchase Order

  1. A purchase requisition is a formal request to the purchasing department to set aside goods and products. It is prepared by departmental stores when the goods have reached a reorder level, while a purchase order is a written request to a supplier to supply specified materials and it confirms the supply terms quoted by the supplier.
  2. Used as an inter-departmental permit document for purchases of goods and products, a purchase requisition is an internal document, whereas a purchase order is a binding document between the purchaser and the supplier therefore, it is an external document.
  3. An authorized person who is an official of a department that wants to order materials prepares the purchase requisition while the company’s purchasing department prepares a purchase order.
  4. A firm prepares five copies of the purchase order: The original copy goes to the supplier, and the duplicates are sent to the receiving department, cost accounting department, and the department that requires the materials. The purchasing department retains the last copy, whereas, in purchase requisition, only three copies are prepared, one is sent to the purchasing department, and the other two are retained.
  5. A purchase manager receives the purchase requisition, while a vendor receives the purchase order.
Difference Between Purchase Requisition and Purchase Order

Last Updated : 13 February, 2024

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