Automated Purchase Requisition Form – Importance & Benefits

Streamlining Purchase Requisition Form Processing with Workflow Automation

Smooth and effective procurement dictates the efficiency of the business. Therefore, it is crucial to have a standard and systematic setup where requests and deliveries can be administered without any hassle. A purchase requisition form is an official document that begins the process of procurement and is the backbone of the process. 

According to a study conducted by The Hackett Group, 75% of the respondents reported that manual data entry is a significant cause of errors and delays. To improve the process efficiency, optimization becomes necessary.  

Read this article to understand what a purchase requisition form is and how automation is an effective solution for streamlining procurement.

What is a Purchase Requisition?

Every department in a business works with the resources and supplies that are procured from different sources. Eventually, these resources and supplies must be restocked for the work to continue. This restocking is the procurement process. Purchasing through procurement is an essential process in any organization but the difference lies in the way it is handled. 

Picture a scenario where the IT department of your organization requires new laptops to replace a few old ones. The head of the department might have to just randomly pick it from the inventory without any protocol to monitor this. With no arrangements made to note the inflow and outflow of the resources/supplies. 

This is why companies have a streamlined purchasing process that begins with a purchase requisition. When a need for supplies is noticed, a purchase requisition is initiated where the head of a department notifies their need to begin the purchasing process.

What is a Purchase Requisition Form?

A purchase requisition form (PR form), is the internal document that marks the beginning of a purchasing process. Once the head of the department initiates the process through the form on behalf of the company, this requisition goes through different levels of approvals like IT hardware, software, office supplies, and inventory.

This form is often referred to as a purchase request. It supplies details like the product model, the total number of products required, and all other specifications. When the need is recognized, the purchase requisition template can be created by the initiator which will be eventually submitted to the department manager and the finance head for approval which is the first step of beginning an audit trail. 

Similar to purchase orders, purchase requisition forms have unique requisition numbers making it easier for the finance team to manage all the requests. Once the approval is received from the respective departments, a purchase order is sent to the vendor for ordering the requested supply.

Contents of a Sample Purchase Requisition Form

The purchase requisition form format consists of all the important details regarding the product/service being requested, information about the department that has initiated it, and details like quantity, price, and other additional notes. A purchase requisition form format will include the following form fields.

1. Purchase Requisition Number

Every requisition form will have a unique form number that acts as an identifier for the purchase order. This unique identity number is assigned by the business’s purchasing department and enables easy tracking of the same.

2. Name and Department of the Requestor

The name and department of the person who initiates the request are included. Moreover, their contact information is also added so that the vendor can contact the buyer directly for any queries.

3. The Date of Request

The date when the purchase requisition form was initiated will be added to the form which will help in tracking. The date is an important parameter as in any case if your vendor fails to receive your request, the team can follow up with the vendor.

4. The Products or Services Requested

The initiated purchase request form will have a detailed description of the product or service. This will ensure that the vendor completely understands what the request is. The detailed description has to be concise yet clear.  The quantity of the goods ordered must also be mentioned.

5. Quantity and Price

The quantity of the order is highly crucial when it comes to purchase requisition. The vendor needs to know the exact quantity to ship. Along with this, the price of each product has to be specified so that the vendor knows how much to charge. The total price of the product or service must be mentioned for the vendor to generate an invoice accordingly.

What are the Different Types of Purchase Requisition Forms?

The purchase requisition form can come in several types for catering to different purchasing needs. Each type of form serves specific needs and a clear of it will allow you to have a smooth procurement process. There are majorly four types of purchase requisition forms.

Standard Purchase Requisitions

Best suitable for any low-value purchases made. This type of requisition forms are the standard and basic and are like the go-to ones. A standard purchase requisition is better for day-to-day operational needs.

Pre-approved Purchase Requisitions

This type of purchase requisition process can be used for high-value or important purchases that are done. An additional level of scrutiny is performed considering the importance of the requisition made. In these requisitions, it is mandatory to mention the reason for the request that is placed.

Blanket Purchase Order

A blanket purchase order is used for repetitive or long-term procurement requests. This creates standard terms with the supplier where the quantity and price will be pre-determined. This helps in developing a long-term relationship and can acquire all the services that are required. Huge industries like BPO companies generally follow this type of purchase requisition forms that allow them to ensure consistency at the inventory level.

Contractual Purchase Requisition

The contractual purchase requisition, as the name suggests, is specifically used in cases where the business engages with the suppliers/vendors on a contractual basis. This type of form consists of details regarding the contract such as the contract number, vendor details, and contract expiration date.

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What is a Requisition Form used for?

The basic need for a purchase requisition form is to have a systematic and standardized procedure for procuring different resources/supplies for the business. Here are some more common cases where the purchase requisition forms can be used. 

1. To Request the Procurement of Goods or Services

As the most basic function, the purchase requisition form is used for requesting any procurement purposes. Here the form will include all the necessary details regarding the resources that a department requires.

2. Track the Purchase Process of the Goods and Services

A requisition form is an effective tool to track the request from start to end. This allows the procurement department to ensure that all the requests are processed with efficiency and it is authorized. Moreover, it also ensures that the products or services are delivered on time and within the stipulated budget.

3. To Ensure that Every Purchase made is Authorized

With proper tracking, the procurement department can check whether all the initiated requests are authorized and approved by all the respective people before the purchase is made. In this way, processing unauthorized purchases will be eliminated.

4. To Keep a Record of the Purchase for Documentation Purposes

A purchase requisition form is always documentation that a company can have as a record. This becomes handy when there is any clarification required from any previous requisitions made.

Steps involved in Purchase Requisition Form Template Workflow

Here are the ten steps involved in the purchase requisition form workflow. 

Step 1: Requirement for Goods or Services

The first stage is where the need for resources or what good is required is identified. This procurement process can be initiated by a person in the department. For the approval chain, the organization can appoint the manager, team leader, etc. which will be further moved to the purchasing department.

Step 2: Filling and Submission of Requisition Form

Once the need is identified, the next stage is to initiate the process requisition form. The concerned person from the department has to fill out and submit the requisition form to the purchasing department. All the essential information has to be given to provide the maximum understanding to the vendors about your request.

Step 3: Approval from Department Manager

After the submission, the requisition form has to go through the process of internal approval. This is where it has to be approved by the department manager. Getting the line manager’s approval authenticates the needs of the department. The line manager is responsible for looking at the legitimacy of the request and checking if everything lies within the allotted spending limit.

Step 4: Stocktaking by Inventory Department

This is where the requisition form moves to the inventory department. There the demand is cross-checked with the stocks in the inventory. If the inventory does not hold any stock of the material requested, they will forward the form to the purchasing department.

Step 5: Screening by the Purchasing Department

The purchase request will be processed at this stage. Once the form reaches the purchasing department, the manager will begin the process. The manager here identifies the need for the goods and checks if the initiated form is legitimate and authorized. If all the details are not available on the form, the manager can fill it by themselves or revert the form to the department asking for more information.

Step 6: Approval from the Purchasing Department

This is the stage where it is determined whether the request is appropriate or not. If it is not, the manager can reject the raised requisition providing them with the justification. On the other hand, if the request is appropriate, then the purchasing department manager moves the process to the next stage of generating a purchase order.

Step 7: Generation of Purchase Order

Once the purchase requisition form has all the approval necessary, the purchase order can be generated that has to be sent out to the vendor to acquire the product/service. When the purchase order is accepted by the vendor, it officially establishes a legal contract between the two parties.

Step 8: Invoice Generation and Payment 

Once all the documentation has been done, the vendor closes the purchase order with the items ready to deliver. At this stage, they generate the invoice for receiving the payment which is sent to the finance department.

Step 9: Receipt of Goods or Services

Here, products/services finally are delivered to the company along with the invoice. The company inspects if the right items have been delivered.

Step 10: Three-way Matching and Invoice Payment

The final stage is where the three-way matching is performed which checks the details across three different components, first, the items received in the order, second, the invoice, and lastly, the purchase order that was approved. Once the three-way matching is a success, the finance department finally pays the invoice to the vendor.

Purchase Requisition Software and its Benefits

Now we can understand that purchase requisition and procurement is a complex process as it involves several departments and external factors like vendors. Therefore, manually handling this process is not beneficial to the business. This is where procurement automation software can ease up and improve the efficiency of the process.

Cost Savings

Procurement software can save you from all the complexities and reduce expenditures drastically. Hence, cost savings are the common advantage that organizations gain from using procurement software. Manual tasks are removed and hence it requires only limited resources.

Streamlined Process

Automation software streamlines and optimizes the complete process of procurement. All the employees and external factors will be collectively available on one platform allowing them to move forward without any delay. Moreover, all the information that they need is available on the platform which also speeds up the process of approvals.

Eliminates Paperwork

Starting from the purchase requisition form to the invoice and the payment receipt, everything can be maintained online eliminating paperwork. Maintaining paper-based documents is risky as there is a chance of them going missing or damaged.

Reduces Manual Input

Automation software for procurement automates every repetitive and data-related task, where only the rules have to be set accordingly. Hence, it makes the process faster without any limitations.

Improves Accuracy

As software takes over most of the work in the workflow, errors are minimized improving accuracy. The end goals can be achieved as expected.

Offers Real-time Visibility of Purchase Requisitions

Automating the procurement brings you more control over the process. The users will be able to track and monitor all the stages of the process and see if it is working as expected. Additionally, the team will be able to have graphical reports and analytics to monitor the efficiency of the process.

Reflects your Purchasing Process

Having software makes it easy for the department to have e-documents for every purchase that is made. Gradually, an online record is created for easy future reference. This enables the business to have easy budgeting as well as have control over spending.

Faster Approval Process

The software moves to every step without creating much delay. Regular notifications and reminders will be sent to the user at whose stage the process is at the moment. Hence, there will be reduced delay in the process. The department that requested will not have to wait for long periods. Moreover, approvals can be acquired faster, since employees do not have to wait for long with paper documents.

Integration with other Processes and Systems

It is important to understand that requisition and its form only play a small part in the procurement process. So, it has to be integrated into the bigger process. Workflow automation software has properties that enable the integration of processes with other applications, systems, etc.

Software Makes Requisitions a Streamlined Part of Your Greater Process

Purchase requisition is the process that marks the beginning of the procurement in any business. As a standard step in the process, it is essential to ensure that it goes streamlined with all the other stages. Only automation software can do that with easy and simple steps. So, how does procurement software do that?

In the procure-to-pay process, the requisition is made simple with pre-approved suppliers with fixed budgets. Using software, all the different entities will be automatically tied together. This way each stage is streamlined, making the approvals faster. 

Resources like money and time are saved by eliminating manual processes. It also brings enough flexibility and helps businesses scale according to the rising trends.

Procurement through Manual processing Vs. Automated Processing

Here is a comparison table for procurement done through manual processing and automated processing. 

Feature Manual Processing Automated Processing
Speed of the process Due to human involvement, the process will take more time to finish. On top of that, this is a process that travels across different departments for approval. Manual processing is eliminated. Hence, reducing human intervention negates any delays in the process. 
Tracking and control Manual tracking is difficult when it comes to physical papers or Excel sheets. There is a high chance that no effective control can be exercised.  E-documents are easy to track and retrieve. These will be stored on the cloud on the software. This enables the users to have control over document management.
Compliance  Compliance management is a challenging task when it comes to manual practice. Tracking of any noncompliance will be difficult. In a digital purchase requisition, all the tasks are standardized. Since tracking is simple, compliance can be maintained well. 
Purchase Request Cycle Time Manual form processing increases the life cycle of the complete process.  Digital forms can be processed quickly by the software. This cuts down the time taken. 
Communication Manual form processing will have the challenge of communicating effectively.  In an automated process, communication is also streamlined. 
Standardization Paper-based and manual working setups will lack standardization of the process. Digital forms can be easily standardized and tracked. 

Centralize your Purchase Requisition Form and Procurement with Cflow

If you are looking for a powerful tool that can handle a complex procurement process, then our answer is Cflow. Cflow is a procurement automation software tool that can be used by any organization. With fast review and approval processes, Cflow allows an easy navigation of the process. The platform does not require any coding hence, it provides a deep sense of clarity and utility. The tool also lets the users integrate the processes with external applications and business tools. 

Some perks that Cflow offers – 

  • Starting from generating a requisition form to receiving the requested product, everything can be automated. 
  • Create, store, and retrieve requisition forms, invoices, purchase orders, and receipts whenever necessary. Simultaneously, keep track of all your dealers and the billings.
  • Achieve seamless review and approval of forms, purchase orders, and invoices.  
  • Plan, manage, and optimize the inventory and vendors for your procurement process.
  • Effective management of vendors and suppliers, with automated features like contract negotiation, mitigating vendor risks, etc. 

Final Words

Streamlined procurement can be accomplished with effective management of all the involved factors. It is ideal to invest in a platform like Cflow that would elevate the efficiency of the process. With the amount of work that goes into the layers of the process, it is impossible to keep track of everything and monitor it. Automation becomes the best solution when facing this challenge.

Cflow is a potent workflow automation tool that will reduce the overall time and effort that is put into the process. Engage your workforce with a profound and consistent solution. Sign up for free on Cflow now!

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