Purchase Requisition

Purchase Requisition is a formal internal request from an employee or department to buy goods or services, which must be approved before a purchase order can be created and sent to a vendor. The requisition is the internal request and approval step. The purchase order is the external commitment issued to the supplier once that request is approved.

Category: Purchase Order SoftwareBest Purchase Order Software

When a department needs to buy something, such as software or professional services, the first formal step is asking for permission to place an order, not placing one. A purchase requisition is an internal document or system record a department submits to formally request the purchase of goods or services. It is the entry point of the procure-to-pay process and triggers budget checks and approval workflows before anyone commits to a supplier.

How it works

Once submitted, a purchase requisition routes through a predefined approval chain, typically the cost center manager, then finance, then procurement above a dollar threshold. Each approver checks that the request fits the budget, is coded to the right category, and either uses a preferred supplier or justifies sole sourcing. After approval, procurement converts the requisition into a purchase order and sends it to the supplier; purchase order software usually handles this conversion automatically. The requisition number typically carries forward as a reference on the PO, linking the internal approval trail to the external commitment.

Where it gets complicated

A requisition is an internal request with no legal standing outside the organization. A purchase order, once the supplier accepts it, is a binding commercial commitment. The difference matters for budget reporting: a requisition creates an encumbrance (a soft reserve against available budget), while a PO creates a hard obligation. Finance teams that track only POs for budget utilization will overstate available spend in the gap between requisition approval and PO issuance, and departments end up over-committing.

How platforms handle it

A marketing manager submits a requisition for a $12,000 annual SaaS subscription in October, three months before fiscal year end. The finance system checks the cost center's remaining budget: $9,000 available. Because the request exceeds available budget, it is flagged for CFO review. The CFO approves a partial commitment, $9,000 in the current fiscal year and $3,000 accrued into Q1 of the next year, and procurement issues a PO that reflects the split. The requisition audit trail records the budget exception and the basis for approval.

Questions to ask

At what dollar thresholds do approval levels change, and are those thresholds documented and consistently enforced in the system?
Does the system perform a real-time budget availability check at submission, or only after approval?
Is the requisition number automatically linked to the resulting PO so that AP can trace an invoice back to its original approval?
How are standing or recurring purchases handled? Does each renewal need a new requisition, or is a blanket requisition acceptable?
What information is required to submit a requisition: supplier name, GL account code, delivery date, business justification?
Can requestors track the status of their requisitions in real time, and who is notified if a requisition is pending beyond an SLA?
How are emergency purchases handled when the standard approval chain would cause unacceptable delay?

Common mistakes

The most damaging failure is letting purchases happen before a requisition is approved, often called 'maverick spend.' When employees buy first and submit paperwork afterward, approval becomes a rubber stamp with no budget control. Finance teams also underestimate the cost of requisition forms that ask for too much information upfront. Too much friction pushes requestors to route around the process entirely, which defeats the spend visibility and budget protection the requisition exists to provide.

Requisition, order, invoice

Three documents in sequence, often confused. The requisition is internal: someone asks to buy, and an approver agrees. The purchase order is external: the company commits to the supplier on stated terms. The invoice is the supplier's demand for payment against that order. Skipping the requisition is what produces invoices with no matching order, which is the most expensive exception type in accounts payable.

Comparing PO tools

PO tools are judged downstream: a requisition flow only pays for itself if it reduces the invoice exceptions that land in accounts payable. Once purchase requisition is settled as a requirement, read the Purchase Order Software category guide for how the market splits, then weigh the Airbase profile against the Tipalti profile on that requirement rather than on the feature list. Our Airbase pricing breakdown records what the vendor publishes and what is quote-based. The Airbase against BILL comparison sets two of them side by side on the same criteria. Before you book demos, put your own numbers through the purchase order savings calculator so the business case is written down before a vendor writes it for you.

Purchase Requisition questions

Does every purchase need a purchase requisition?

Most organizations set a minimum threshold, often $500 to $1,000, below which employees use a corporate card or petty cash instead. Above the threshold, a requisition is typically required so budget checks and an approval trail are in place before any supplier commitment is made.

What is an encumbrance and how does it relate to a requisition?

An encumbrance is a reserve against a budget line that reduces reported available spend before cash has been paid. An approved requisition creates an encumbrance so that the same budget dollars cannot be committed twice. Without encumbrance accounting, departments routinely over-commit budgets during the approval-to-PO gap.

Can a purchase requisition be rejected after it is submitted?

Yes. An approver can reject a requisition at any stage because of budget unavailability, missing information, or a procurement policy violation. The requestor is typically notified with a reason, and the encumbrance is released. Some systems allow the requestor to revise and resubmit instead of creating a new requisition from scratch.

Blanket Purchase Order and Goods Received Note (GRN) come up in the same workflow as purchase requisition, and the rest of the PO tools cluster is indexed in the finance operations glossary.