Posted by: ahmedashfaque | October 1, 2015

Difference between purchase order and purchase requisition

Many people get confused about the difference between a purchase order and a purchase requisition. Let us discuss this topic today.

Purchase requisition:

A purchase requisition is created by a user who wants some material to be procured. The user will mention the material or service to be procured, material quantity, and when it is to be procured. The user then sends the purchase requisition to the purchase department. So in essence a purchase requisition is an internal purchasing document.

Purchase order:

Once a purchase requisition is received by the purchase department then they verify the purchase requisition document. Then they create a purchase order referencing the purchase requisition. The purchase order document contains information including the material or service required, quantity, delivery date, vendor information, price information etc. This purchase order is then sent to the vendor. Since the purchase order document is sent outside the company, it is an external purchase document. Once the vendor receives the purchase document, it ships the required material or does the required service. If it is material then a goods receipt will take place when the material arrives at customer premises. After invoice verification, the vendor is paid for the material by the customer. If it is service performed by the vendor then the vendor is paid after the invoice is verified by the finance department.

Checks and balances in SAP:

In SAP there are many checks to ensure that all purchasing activities are carried out in a manner so that accounting (both material and financial) is done without any possibility of errors or wrong practices coming into picture. First of all, every step in the purchasing activity is captured so that all information is available in the SAP system and can be verified at any time. For instance, there is a concept called 3 way match where material quantity and price is matched among purchase order, goods receipt and invoice receipt documents to ensure that there is no discrepancy. The system will not allow to post a invoice receipt if the material price or quantity do not match on purchase order, goods receipt and invoice receipt.

The other mechanism to check the purchasing activities is through using release procedures / release strategies. for example, a purchase requisition can not be processed by a purchase department unless it is authorized by a line manager at the user department. Similarly, a purchase order can not be sent to a vendor unless it is authorized  by a finance manager.

These release strategies can be achieved through customization in SAP.


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