What is the meaning of Requisition?
An employee submits a requisition to the department at a company that is responsible for purchasing goods and services. When one department asks another for permission to purchase something, it is known as a purchasing requisition. Larger companies benefit from requisitions because they can better manage their finances and accounting.
Let’s understand the concept with an example:
- The tools used in the training of hospital employees need to be updated. These supplies must be requested through the company’s purchase request system.
- The lead searches through a catalog to provide a selection of products to the team. Upon completion of the requisition form, the form is submitted to management for approval. Managers review approvals and send them to the purchasing department.
- Purchasers review and approve requisitions in the same way that managers do. A purchase order is sent to the supplier. On the purchase order, there is information about the product type and the quantity needed. The supplier fulfills the order once the purchase order has been finalized.
- Providers receive orders and, if accepted, contract with purchasers for the requested products. Purchasing orders constitute contracts. Vendors deliver products according to orders and collect payments.