Purchase Requisition vs. Purchase Order: Know the Difference
By Shumaila Saeed || Published on January 29, 2024
A Purchase Requisition is an internal document requesting the procurement of goods, while a Purchase Order is an official agreement sent to a vendor to buy.
Key Differences
A Purchase Requisition is an internal request used within an organization to express the need for specific goods or services. It's a document that starts the purchasing process. In contrast, a Purchase Order is an external document, formally issued by a buyer to a vendor, signifying an official intent to purchase the goods or services specified in the order.
Shumaila Saeed
Jan 29, 2024
The Purchase Requisition serves as a proposal or a formal request for goods or services within a company, often requiring approval from various departments. Conversely, a Purchase Order is the confirmation of an order, detailing the types and quantities of goods or services, agreed prices, and delivery terms, thus binding the seller to the terms once accepted.
Shumaila Saeed
Jan 29, 2024
Purchase Requisitions are primarily used for internal control purposes, helping organizations manage their purchasing needs and budget effectively. On the other hand, Purchase Orders are legally binding documents that provide detailed instructions and terms for the vendor, including payment terms and conditions.
Shumaila Saeed
Jan 29, 2024
Before any Purchase Order is generated, a Purchase Requisition is often necessary to initiate the procurement process. The Purchase Order follows, finalizing the transaction and providing the legal framework for the exchange of goods and services.
Shumaila Saeed
Jan 29, 2024
In summary, Purchase Requisitions are about requesting and gaining approval for a purchase internally, while Purchase Orders are about formalizing that purchase with an external supplier, legally binding them to supply as per the order's terms.
Shumaila Saeed
Jan 29, 2024
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Comparison Chart
Purpose
To request approval for a purchase within an entity
To order goods/services from external vendors
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Jan 29, 2024
Use in Procurement Process
Initiates the buying process
Finalizes the purchase agreement
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Jan 29, 2024
Approval Requirements
Requires internal approvals
Sent as a confirmation and commitment to purchase
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Jan 29, 2024
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Purchase Requisition and Purchase Order Definitions
Purchase Requisition
A precursor document to a Purchase Order within an organization.
Before ordering laptops, a Purchase Requisition was approved by the finance team.
Shumaila Saeed
Jan 09, 2024
Purchase Order
A legally binding agreement with a supplier for goods/services.
The Purchase Order for the new computer systems was confirmed.
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Jan 09, 2024
Purchase Requisition
A document for requesting approval to purchase goods internally.
The manager filled out a Purchase Requisition for new office chairs.
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Jan 09, 2024
Purchase Order
A document confirming terms of purchase with a vendor.
A Purchase Order detailed the delivery schedule for the furniture.
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Jan 09, 2024
Purchase Requisition
An internal request form for goods or services needed.
The IT department submitted a Purchase Requisition for software upgrades.
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Jan 09, 2024
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Purchase Order
A formal commitment to buy from external suppliers.
The Purchase Order for the annual software license was renewed.
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Jan 09, 2024
Purchase Requisition
A formal request within a company for procurement.
A Purchase Requisition was issued for the annual team retreat.
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Jan 09, 2024
Purchase Order
An official order document sent to a vendor for procurement.
The company issued a Purchase Order for office supplies.
Shumaila Saeed
Jan 09, 2024
Purchase Requisition
An internal control tool for planned purchases.
The Purchase Requisition was reviewed to ensure budget alignment.
Shumaila Saeed
Jan 09, 2024
Purchase Order
External confirmation of a purchase after internal approval.
Following internal approval, a Purchase Order was sent for marketing materials.
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Jan 09, 2024
Repeatedly Asked Queries
What is a Purchase Requisition?
It's an internal document requesting approval for a purchase.
Shumaila Saeed
Jan 29, 2024
What is a Purchase Order?
A formal document sent to a vendor to order goods or services.
Shumaila Saeed
Jan 29, 2024
Is a Purchase Order legally binding?
Yes, it becomes binding when accepted by the vendor.
Shumaila Saeed
Jan 29, 2024
Do all purchases require a Purchase Requisition?
Not always, it depends on the organization's policy.
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Jan 29, 2024
Can a PR be modified after submission?
Yes, PRs can be modified before they are converted into Purchase Orders.
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Jan 29, 2024
Who creates a Purchase Requisition?
Usually, department heads or employees needing goods or services.
Shumaila Saeed
Jan 29, 2024
What's the purpose of a PR?
It helps streamline procurement processes, track expenses, and gain management approval.
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Jan 29, 2024
Can a Purchase Requisition be denied?
Yes, based on budget constraints or other reasons.
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Jan 29, 2024
What happens if a supplier doesn't fulfill a PO?
Non-compliance may lead to penalties, disputes, or termination of the supplier contract.
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Jan 29, 2024
Why is a Purchase Requisition important?
It ensures controlled and authorized purchasing within a company.
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Jan 29, 2024
Is a PR used for recurring purchases?
Yes, it's commonly used for regular or repetitive purchases to ensure consistency.
Shumaila Saeed
Jan 29, 2024
What details are included in a Purchase Order?
It includes types, quantities, prices, and terms of goods/services.
Shumaila Saeed
Jan 29, 2024
Who approves a Purchase Requisition?
Typically, managers or department heads.
Shumaila Saeed
Jan 29, 2024
When does a PR become a Purchase Order?
A PR becomes a Purchase Order (PO) once it's approved and processed by the purchasing department.
Shumaila Saeed
Jan 29, 2024
What happens after a Purchase Order is issued?
The vendor prepares and sends the ordered goods or services.
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Jan 29, 2024
Can multiple POs be issued for one PR?
Yes, multiple POs can be generated from a single PR for different items or suppliers.
Shumaila Saeed
Jan 29, 2024
What's the difference between a PR and a PO?
A PR is a request, while a PO is a legally binding document issued to a supplier for procurement.
Shumaila Saeed
Jan 29, 2024
How does a PO affect the budget?
A PO reserves budget funds for the specific purchase, helping manage expenses and avoid overspending.
Shumaila Saeed
Jan 29, 2024
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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