Large businesses use requisitions to keep tighter controls over their stock, equipment, hiring, purchases, and more. By formalizing the process of requesting resources, companies and other organizations can optimize the use of those resources and plan ahead for changing needs.
Types of requisitions may include:
- Requisitions for stock or supplies
- Equipment requisitions
- Hiring requisitions
- Purchase requisitions
- Expense reimbursement requisitions
What is a requisition?
Whether paper or digital, a requisition is a formal, internal request for just about anything, but it always comes down to managing resources.
You might need to fill out a requisition to use a company vehicle for a limited time and purpose. In that case, you don’t need your business to buy anything — you’re requesting the use of a resource that already exists.
Or a lab might fill out a requisition form for any chemicals they’re running low on. If those chemicals are stored offsite, approving the request could automatically initiate the transfer of those chemicals to your lab as well as a purchase order to replace them.
Hiring requisitions are also common. Requisitions for new employees might automatically trigger other requisitions for their start dates, such as work computers and access to various apps.
When should you use requisitions, and for what?
Although requisitions provide more control over company resources, they can also add to the cost of doing business in terms of both time and money. Companies have to balance the cost of those processes against their value and importance.
Requisitions are commonly used for things like vehicles, new hires, and expensive or potentially hazardous supplies or equipment. The value of that control far outweighs the extra time it takes to fill out and process requisitions.
For small, innocuous items, like office supplies, some businesses choose to skip the requisition process, simply using and replacing them as needed.
When deciding how tightly to control various resources, consider the effect that complex requisitions can have on your company culture. Using too many requisition procedures can make employees feel micromanaged and distrusted, which can affect your bottom line.
An automated requisition system can help ease that tension, tightening your resource control without burdening your employees or your day-to-day operations.
What is a requisition number?
Requisition numbers are unique identifiers that allow every requisition to be tracked.
They might literally be numbers, or they might include a combination of letters, numbers, and other symbols. Each department, for example, might have a unique 2-letter code embedded in their requisitions. Or each number might start with the year in which it was created.
This kind of system can add human readability to requisition numbers, but today’s automated digital systems can attach departments, date stamps, and other key requisition information to each requisition at the time it’s created, making them highly searchable without the need for account codes in the numbers themselves.
The difference between purchase requisitions and purchase orders
A purchase requisition is an internal process. It gets company permission to buy something.
A purchase order (PO), on the other hand, can be either internal or external. It documents the actual order. Internal purchase orders document orders for supplies or services from another department in the same company. External purchase orders document orders to or from an external supplier or vendor. POs tend to have terms and conditions associated with them.
Ideally, there should be a solid separation of duties between purchase requisitions and purchase orders, so the same person isn’t filling out both documents. Some companies send purchase orders from a separate purchasing department to help prevent unauthorized transactions.
Some companies also make exceptions for smaller orders so departments don’t have to wait for approval to make day-to-day purchases.
A spend management system can offer the best of both worlds, distributing authority to make everyday purchases while minimizing exposure with predefined budgets.
How is a job requisition different from a purchase requisition?
While purchase requisitions request new purchases, hiring managers use job requisition forms to request new hires. This usually requires a different set of approvals since the HR department runs the hiring process rather than the procurement department.
The job requisition number may appear in the job description or as a line item on job postings sent to recruiters. This helps the company track candidates correctly when there are multiple open positions.
Like the purchasing process, the hiring process will vary based on the position. Adding new positions or replacing high-level positions usually requires more approvals and oversight than filling entry-level positions with high turnover.
What information should be in a requisition form?
The information included on a requisition form depends on what’s being requested. Many companies use different templates for different forms, with drop-down options or check-boxes to limit the choices in certain fields.
Stakeholders may ask requesters to provide:
- The requester's name and job title
- The item or job requested
- The reason for the request
- Any related pricing
- The date of the request
- The desired delivery or start date
- Any sourcing information, such as a proposed vendor
Digital systems may fill some of these in automatically. For example, an automated digital system might time-stamp the request and fill in the requester’s name and job title based on their log-in. This provides a clear audit trail for requisitions.
What happens if a requisition gets denied?
Post-denial procedures depend on company policies, the item or amount being requested, and the reason for the denial. Some requisitions might be open for resubmission while others will be permanently closed upon denial.
Are requisitions needed for ongoing orders?
Policies for ongoing orders often depend on the item and amount being ordered. Relatively small orders for regular parts or supplies might be approved automatically, but recurring orders with large price tags might need to be approved — making sure the order is still needed every month before that money goes out the door.
Some ongoing requisitions may also have end dates, such as the end date of an underlying contract or the date of a contractual rate fluctuation. A requisition system may terminate automatic approval on or before that date to make sure subsequent requisitions are flagged for human oversight.
What is requisition reconciliation?
Requisition reconciliation is the process of verifying that invoices match up with underlying purchase orders and requisitions.
The exact process varies by company, but the purpose of the reconciliation is to make sure that the company's procedures were followed and that invoices are valid before paying them.
In an external audit, requisition reconciliation can help verify that company payments are valid.
How BILL can help
BILL’s automated bill pay platform streamlines the process of receiving and entering invoices, reconciling them to purchase orders, approving them, and paying them, all in one convenient system.
Here’s how it works:
- Purchase orders automatically sync from your accounting software
- When an invoice is received, BILL reads in the data using optical character recognition and links it to the purchase order, linking line items between the PO and invoice for human review
- Once the review is complete, the system automatically applies your payment approval workflows as soon as you hit ‘Save,’ sending the invoice to approvers if approval is needed
- Once approved, payments can be scheduled by ACH, BILL International Payment wire transfer, virtual card, Pay by Card (letting you pay by credit card even if your vendor doesn’t take credit cards), and even paper checks (BILL will print and mail them for you)
- The billing information syncs back to your accounting system once approved for payment, and the PO will automatically close out on the accounting system once it's paid in full
To learn more, read about automating your purchase order workflow, explore our convenient payment options, or schedule a personalized consultation.
