# What Is a Requisition, and How Does It Work?

![Requisition](https://www.investopedia.com/thmb/20nuKChMlKPeW3jGYzQdOcTr4_0=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/requisition.asp_final-57e0abfc140942fe925e666f33444c46.png)

*— Investopedia / NoNo Flores*

## What Is a Requisition?

A requisition is a demand or request for a service or item, typically using a purchase requisition form or another standardized document. The requisition process is a standardized way of keeping track of and accounting for all requisitions made within a business.

### Key Takeaways

*   A requisition is a formal request for obtaining a product or service, typically initiated by a business.
*   The requisition process typically requires standardized documents, known as requisition forms, to maintain an audit trail, although most are electronic forms.
*   Requisitions are often used to procure additional supplies, raw materials, or working hours for better inventory control.
*   Procure-to-Pay (P2P) systems fully automate the purchasing process, from requisition to vendor payment.

## How a Requisition Works

A requisition initiates the request for a specific action and also records that action for subsequent reporting needs. For example, employees within a company would use a purchase requisition if they needed additional supplies.

At one time, requisitions were done via paper forms, but most companies now use digital requisition processes that enable easier process tracking, including accounting for relevant [inventory](https://www.investopedia.com/terms/i/inventory-management.asp). These types of requisitions often automatically update the inventory for better control.

A formalized requisition process improves efficiency and accountability across all points of contact. Compared to an approach where employees take supplies anytime, the purchase requisition provides a more controlled and documented method for managing internal supply inventories and [future demand](https://www.investopedia.com/terms/f/forecasting.asp).

### Note

In the medical profession, doctors complete a requisition form when requesting lab tests. These digital forms include the patient ID and other medical information, assuring patients receive correct lab tests.

## Standardized Requisition Forms

Requisition forms typically include line items such as the:

*   Name of the person or company making the request
*   Date of the request, items requested, the delivery date
*   Delivery location and contact information
*   Department responsible for fulfilling the request

![Requisition Form Sample](https://www.investopedia.com/thmb/w6ZByF12arOF5g7EHDBtHu-fGeA=/691x0/filters:no_upscale():max_bytes(150000):strip_icc()/Screenshot_2023-07-15_13-19-42-ed3f44d18fa84e71a08aebeb81bb6d9f.jpg)

**

The forms generally also include the signature of the individual fulfilling the request and the date completed. In large corporations with multiple locations and [centralized purchasing](https://www.investopedia.com/terms/c/central-purchasing.asp), these requisition processes are critical for maintaining employee productivity.

Another example of a requisition process occurs within the world of finance when shareholders choose to requisition a company’s board of directors to take a vote on proposed resolutions. At its essence, a requisition process is a formalized documented procedure key to improving [efficiencies](https://www.investopedia.com/terms/e/efficiency.asp) within a business setting.

## Purchase Requisition vs. Purchase Order

A purchase requisition is an internal form used for procuring goods and services and has no legal or binding contractual obligations. A company's internal purchase requisition form is for employees who wish to request supplies for their departments or themselves. Frequently, these forms require managerial signoff.

A [purchase order](https://www.investopedia.com/terms/p/purchase-order-lead-time.asp) is a contractual agreement companies use when ordering goods and services from an external vendor. For example, a company ordering supplies from an office store will issue a purchase order detailing the items purchased, their prices, payment terms, delivery dates, and any [special discounts](https://www.investopedia.com/terms/d/discount.asp) for early payment.

## Example of a Requisition

To better understand the requisition process, consider the following example. A health insurance company's Learning and Development team needs new supplies for its training program. The team lead must request these supplies through the company's automated requisition system.

The lead searches a catalog and selects an assortment of products for the team. After completing the requisition form, it is submitted to management for approval. The manager reviews and approves it, then sends the request to the purchasing department.

Like the manager, the purchasing department reviews and approves the requisition. If errors are present or if not enough information is included, the request may be returned to the manager or the requestor for updates.

In this example, no errors or omissions were found, so a purchase order was created. The purchase order lists the specifics of the order, such as the product type and the quantity needed. Once final, the purchase order is sent to the supplier for fulfillment.

The supplier receives the order, and, if accepted, contracts with the purchaser for the products requested. The purchase order serves as the contract. The supplier delivers the products as requested and receives payment.

## Special Considerations

[Purchase-to-pay systems (P2P)](https://www.investopedia.com/terms/p/purchasetopay.asp) streamline and automate companies' requisition and procurement processes. Three main processes are cared for by these systems: requisitioning, purchasing, and payment. By automating these processes, purchase-to-pay systems increase efficiency and accuracy in accounting.

> **Fast Fact**
>
> Purchase-to-pay systems can reduce costs by approximately 80%.

The automated process begins with requisitioning. Users are presented with a catalog of products or services. Items are then selected and saved in a shopping cart. The requisition is routed to management for approval, and once received, the system moves to the purchasing process and then finalized once payment is made to the vendor.

## What Is Requisitioned Property?

[Requisitioned property](https://www.investopedia.com/terms/r/requisitioned-property.asp) is property taken by the government, such as with eminent domain. In the U.S., the Fifth Amendment requires the government to compensate the owner of seized property for the property's full market value.

## What Is a Job Requisition?

A job requisition is a formal request to hire someone for a job. The requisition contains the job details, including desired candidate qualifications, role requirements, and job details. Some companies also post the target salary or salary range in the requisition.

## What Is Requisition Reconciliation in Accounting?

[Requisition reconciliation in accounting](https://www.investopedia.com/terms/r/reconciliation.asp) is the process by which two sets of records are compared for accuracy, completeness, and consistency. The comparison will help identify and explain discrepancies. Under generally accepted accounting principles (GAAP), the required double-entry accounting method helps to pinpoint when and where errors exist.

## The Bottom Line

A requisition is a formal request for a product or service and can be submitted manually or electronically. A structured requisition process improves a business's efficiency and accountability. Procure-to-pay systems fully automate the procurement process, from requisition to payment, further increasing accuracy and efficiency.

> **Article Sources**
>
> 1.  Medius. "[Purchase to Pay Process Explained](https://www.medius.com/blog/purchase-to-pay-process/)."
>     
> 2.  U.S. Department of Justice. "[History of the Federal Use of Eminent Domain](https://www.justice.gov/enrd/history-federal-use-eminent-domain)."