The difference between a Purchase Requisition and a Purchase Order lies in their purpose, who uses them, and at what stage of the procurement process they come into play. Let's simplify these concepts:
Purchase Requisition
Purpose: It's essentially a request. When a department within a company needs certain goods or services, they fill out a Purchase Requisition. This document details what is needed, the quantity, and sometimes the specific requirements or preferences for the items or services.
Usage: It's used internally within an organization. An employee or a department initiates the requisition as the first step in the buying process, signaling the need for goods or services.
Process Stage: It's the beginning of the procurement process. The Purchase Requisition needs approval from the necessary managers or the procurement department. Once approved, it leads to the creation of a Purchase Order.
Purchase Order
Purpose: This is a formal agreement. After a Purchase Requisition is approved, the procurement department or the authorized personnel creates a Purchase Order. This document is sent to the vendor or supplier and includes detailed information about the products or services ordered, quantities, prices, and terms and conditions.
Usage: It's used externally, between a buyer (the company) and a seller (the supplier or vendor). It serves as a legal agreement for the supplier to deliver the specified goods or services at the agreed prices and terms.
Process Stage: It comes after the Purchase Requisition in the procurement process. Once the Purchase Order is issued to the supplier and accepted, it becomes a binding contract. The supplier then prepares and ships the order, and upon receiving, the company processes payment according to the terms of the Purchase Order.
In essence, a Purchase Requisition is an internal request for goods or services, while a Purchase Order is an external agreement with a supplier to purchase those goods or services under specified conditions.
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