Purchase Requisition

A purchase requisition is an internal request an employee submits to ask for permission to buy something before any money is committed. It goes to a manager or finance for approval, and once approved it becomes the basis for a purchase order sent to the supplier. Think of it as the first control gate in buying: nothing gets ordered until someone with authority says yes. This guide explains what a purchase requisition is, how it differs from a purchase order, what goes on the form, and where it fits in the buying and accounts payable cycle. Written for US finance, procurement, and AP teams.

What is a purchase requisition?

A purchase requisition is a formal internal document an employee uses to request approval to purchase goods or services. It names what is needed, how much, the estimated cost, and why, and it routes to a manager or budget owner for sign-off. It is an internal request only: it authorizes the purchase inside the company but is never sent to the supplier.

The purpose is control and visibility. Requiring a requisition before a purchase means spending is checked against budget and policy before a commitment exists, not after an invoice shows up. It also creates a paper trail that ties every eventual order and invoice back to an approved request, which is exactly what auditors want to see.

What is the difference between a purchase requisition and a purchase order?

A purchase requisition is an internal request for permission to buy; a purchase order is the external document sent to the supplier that actually orders the goods. The requisition comes first and stays inside the company. Once it is approved, procurement turns it into a purchase order, which is a binding commitment to the vendor at an agreed price.

In practice the requisition feeds the purchase order. Because the approved requisition already carries the item, quantity, and budget code, converting it into a PO is mostly a copy step. Many teams run both inside the same system so nothing has to be re-keyed. A dedicated tool for managing purchase orders end to end can take the approved requisition and issue the PO without a second round of data entry.

What information goes on a purchase requisition?

A complete purchase requisition includes the requester and department, the date, a description of each item or service, quantity, estimated unit price and total, a preferred or suggested supplier, the budget or general ledger code to charge, and the business reason for the purchase. Larger organizations add a requisition number for tracking and the approver names required by policy.

The estimated cost and the budget code are the two fields that matter most for control, because they are what the approver checks against available budget. A requisition missing the cost or the account code cannot really be approved on its merits, so it bounces back. Getting those fields complete up front is the single biggest thing that keeps requisitions moving.

How does the purchase requisition process work?

The purchase requisition process runs in five steps: an employee identifies a need and fills out the requisition, submits it for approval, a manager or finance reviews and approves or rejects it, procurement converts the approved requisition into a purchase order, and the PO is issued to the supplier. From there the normal ordering and invoicing cycle takes over.

1. Identify the need and create the requisition

An employee documents what they need, the quantity, the estimated cost, and the reason, and assigns it to a budget line. This is where accuracy starts: a vague or under-costed requisition creates work at every later step.

2. Submit and route for approval

The requisition goes to the person with authority over that budget. Routing usually depends on the dollar amount, so a small request needs one manager while a large one escalates to finance or an executive.

3. Review, approve, or reject

The approver checks the request against budget, policy, and need, then approves it, rejects it, or sends it back for changes. An approved requisition is the internal authorization to spend.

4. Convert to a purchase order

Procurement turns the approved requisition into a purchase order, adding the negotiated price and terms, and issues it to the supplier. The PO is the binding order.

5. Receive, invoice, and pay

Goods or services arrive, the supplier sends an invoice, and accounts payable matches the invoice to the PO and the receipt before paying. This is where the requisition trail pays off, because every invoice traces back to an approved request.

Who approves a purchase requisition?

A purchase requisition is approved by the person with budget authority over the expense, which depends on the amount and the department. Small requests are usually approved by a direct manager or department head, while larger ones escalate to finance, a controller, or an executive. Many companies define these thresholds in an approval matrix so routing is automatic and consistent.

The logic mirrors the one used for invoice approval later in the cycle. If you have already set spending thresholds for your invoice approval workflow, the same matrix usually governs requisitions, since both are checks on the same budgets by the same owners.

Why are purchase requisitions important?

Purchase requisitions matter because they move spending control to before the commitment instead of after the invoice. They prevent unauthorized or off-budget buying, create an audit trail that ties every order and invoice to an approved request, and give finance visibility into committed spend before cash goes out. They are also a core segregation-of-duties control, separating the person who requests a purchase from the people who order and pay.

For smaller businesses, a lightweight requisition step still pays off. Even a simple approval before ordering stops the most common problems: surprise invoices no one recognizes, duplicate purchases across departments, and spending that blows the budget because nobody checked it first.

Do small businesses need a purchase requisition process?

Small businesses do not always need a formal requisition system, but they benefit from a lightweight version of one. Requiring a quick approval before any purchase above a small threshold gives the same core control, catching off-budget spend and unauthorized buying, without the overhead of enterprise procurement software. The right level of formality scales with spend volume and the number of people who can buy.

Where does the requisition fit in procure-to-pay?

The purchase requisition is the first step of the procure-to-pay cycle, the internal request that kicks everything off before a purchase order, a receipt, an invoice, or a payment exists. Everything downstream, the PO, the goods receipt, the matched invoice, and the payment, traces back to it. Our full walkthrough of the procure to pay process shows how the stages connect, and purchase order vs invoice explains the two documents the requisition eventually produces.

When the cycle runs cleanly, the payoff shows up at the accounts payable end. An invoice that matches an approved requisition and its purchase order can flow straight through, because the price and quantity were authorized long before the bill arrived. That is why purchase order data extraction and accurate invoice capture matter: they let AP match the invoice back to the request automatically instead of reconciling it by hand. For the wider picture, see our guide to accounts payable automation software.