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In every business, having the right supplies and services at the right time is important for smooth operations. For small and medium-sized companies, managing procurement efficiently can save time, cut unnecessary costs, and avoid operational hiccups.
A well-prepared purchase requisition (PR) is a critical document in this process. It helps gather the necessary information before initiating purchases, ensuring purchases are made with clear approvals and budget alignment.
This post breaks down the essentials of a purchase requisition and shares practical tips tailored to the needs of smaller procurement teams. Let’s get into the core components of a solid PR and how it can help you out.
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The Purpose of a Purchase Requisition
A purchase requisition is a formal request to acquire goods or services. Think of it as the starting point in the procurement journey. It outlines everything from the description of the item to the estimated cost, which helps initiate the purchasing process smoothly. A well-structured PR minimizes back-and-forth questions, speeds up approvals, and keeps everyone informed, from accounting to department managers.
For smaller companies with tighter budgets, purchase requisitions ensure every purchase is justifiable, aligns with budget constraints, and has the necessary approvals. This process builds accountability and helps maintain transparent spending.
Key Benefits of a Purchase Requisition
Information Clarity: Having all the necessary details in one place minimizes errors and streamlines the approval process. Clear information means less backtracking and faster procurement.
Budget Control: PRs help monitor spending and keep purchases within budget. This is crucial for smaller companies that need to manage expenses closely.
Audit and Record-Keeping: Purchase requisitions create a clear record of each purchase request, aiding in future audits and making it easy to track spending patterns.
Risk Reduction: By defining the items, quantities, and specifications, PRs help avoid over-ordering, missed timelines, and miscommunications with suppliers.
Essential Elements of a Purchase Requisition
Each element in a PR serves a purpose. Here’s a breakdown of the core sections, along with practical tips to make each one work for your business.
1. Description of Item(s) or Service(s)
Item Name: Be precise. For instance, if you’re requesting office chairs, specify the model. “Ergonomic Office Chair, Model X12” is more helpful than just “Chair.”
Specifications: Include size, colour, material, or other relevant features. For services, outline the deliverables or scope. This prevents misunderstandings with suppliers.
Tip: Small companies often buy items in bulk for better pricing. If you’re purchasing equipment, mention compatibility requirements to ensure it aligns with current office setups.
2. Technical and Quality Specifications
Technical Requirements: Outline any specifics, like voltage or dimensions, to ensure compatibility.
Quality Standards: If applicable, add quality standards or certifications, like ISO for materials.
Tip: For critical items, work closely with a vendor to specify exactly what you need. This ensures you receive a product that meets safety and quality benchmarks.
3. Quantity and Unit of Measure
Quantity: This is key to staying within budget. Order just what you need to avoid overstocking or shortages.
Unit of Measure: Be specific—“boxes” instead of “units,” for example. This clears up any ambiguity during fulfilment.
Example: If your team uses paper frequently, specify “10 reams” instead of “10 units of paper.” This avoids confusion on quantity and saves you from unnecessary reorders.
4. Date Required
Set a realistic date. Rushed orders often come with extra costs, which can strain a smaller company’s budget.
Tip: Coordinate with departments to establish a timeline that balances urgency and cost. A planned PR can save significantly on expedited shipping fees.
5. Estimated Unit Cost
Estimate as closely as possible based on past purchases or quotes from vendors. This is essential for budgeting.
Tip: Keep a record of prior PRs with pricing to create a reliable reference for future estimates, especially if you purchase similar items frequently.
6. Operating Account to be Charged
Identify the budget line to track spending accurately and ensure budget alignment.
Optional Information for Enhanced Efficiency
Adding a few more details can optimize your purchasing process, especially when working with trusted vendors. Here are some optional elements to consider:
Vendor Preference: If you have a vendor relationship that offers competitive pricing or quality, include this info.
Justification for Purchase: Useful for non-routine purchases. A brief reason justifies why the item is necessary and prevents redundant approvals.
Delivery Instructions: Specify any special instructions, like preferred delivery times or methods, which can help streamline delivery.
Example: If you order specialized equipment, you might request delivery to a specific team member or department to avoid confusion and ensure immediate use.
Practical Tips for Small and Medium-Sized Businesses
Be Specific in Descriptions: Detailed descriptions avoid misunderstandings. Small companies may not have resources to deal with return or replacement delays.
Verify Quantities and Costs: Double-check quantities and costs to prevent budget overruns. Small errors can lead to significant, unexpected expenses.
Get Necessary Approvals First: Avoid delays by securing approvals in advance. This ensures the purchase aligns with the company’s budget and policies.
Keep a Record of Each PR: Recording completed PRs lets you track spending trends and manage future budgets more effectively.
A structured purchase requisition simplifies the procurement process, reduces errors, and provides transparency—all crucial for small and medium-sized companies. By focusing on clarity, accuracy, and the necessary approvals, companies can streamline their procurement process and keep spending in check.
How Prokuria Simplifies Purchase Requisitions for Small Businesses
For small and medium-sized companies, managing procurement effectively is key to saving time and avoiding extra costs.
Here’s how Prokuria can streamline your purchase requisition (PR) process:
Automated Workflows: Set up a streamlined PR approval process, reducing time spent on manual steps and ensuring faster approvals.
Centralized Documents: Store and access all PRs and related documents in one place, making it easier to track spending and review past purchases.
Real-Time Budget Tracking: Link PRs to budget lines to monitor expenses and prevent budget overruns, crucial for keeping costs under control.
Team Collaboration: Enable seamless communication between departments, reducing miscommunication and ensuring PRs reflect actual needs.
Data Insights: Use analytics to track PRs, approval times, and spending trends. Make better, data-informed decisions for future purchases.
Vendor and Spec Management: Keep preferred supplier details and specifications on file, ensuring consistency and meeting quality standards with every PR.
Prokuria makes purchase requisitions easier and helps you keep spending in check. Try a demo to see how it fits into your workflow.
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