The Difference Between Purchase Requisition and Purchase Order : 2 Ways to Kick Off Purchasing in NetSuite

I once worked for a small tech startup that used NetSuite for its P2P processes. They didn’t understand the difference between Purchase Requisition and Purchase Order.

When a piece of kit was needed a task was raised against the vendor record containing all the details of the required purchase. This task was picked up by the Accounts Payable team (person!) who then raised the Purchase Order and sent it to the supplier.

Don’t do this.

It is a perfect example of reinventing the wheel. And not just reinventing it but reimagining it slightly worse.

The need that was being met in the process above was giving only the necessary personnel access to raise a Purchase Order.

So why can’t we simply add an approval process to Purchase Orders?

Adding an approval process will put a filter on which Purchase Orders are posted but it’s not suitable for all use cases. We assume the raiser knows, at a minimum, what vendor they need to use and what the cost price is. There is a danger you will be adding volumes of new approvals for senior members of the business to work through and there is the added risk that an unapproved Purchase Order might get in to the hands of a vendor.

The solution is Purchase Requisitions.

An example of a Purchase Requisition in NetSuite. Illustrating the difference between purchase requisition and purchase order

What is a Purchase Requisition?

A Purchase Requisition allows a user in the business to identify that they need to make a purchase but they can choose to enter as much or as little information as they have. The Purchase Requisition can then be converted in to a Purchase Order by a member of the procurement team.

The Requisition to Order process in NetSuite is a standard process and runs very smoothly. You may even choose to add a simple stripped back approval process to Requisitions and a more fleshed out approval process on Purchase Orders. This will help towards improving the quality of Purchase Orders in the system and the accuracy of those being sent to vendors.

An added bonus to this whole implementation is that the Purchase Requisition process can be triggered in the Employee Center role. This means that if you plan to roll requisitions out to a large number of people in the business who are not currently using NetSuite you only need to purchase the limited access Employee Center licenses.

The Requisition and Purchase Order are the first steps in the NetSuite Procure to Pay process. You can learn more about the full breadth of the Procure to Pay process here.

The Difference between Purchase Requisition and Purchase Order

A Purchase Requisition is an internal document that requests the raising of the external document known as a Purchase Order.

Discovering what a requisition is used for is the first step. You also need to understand how it differs to a standard Purchase Order.

The below table summarizes the key difference between Purchase Requisition and Purchase Order in NetSuite –

Purchase RequisitionPurchase Order
Internal Transaction – Requisitions will only ever been seen by people within the business.​External Transaction – A Purchase Order is intended to be sent to the vendor so is an externally facing transaction.
The Vendor does not need to be specified.The Vendor must be known.
Designed to be raised by anyone in the business.Normally raised by a purchasing or procurement team member.
Costs can be an estimate.Costs must be accurate.
Can be consolidated on to one Purchase Order.Cannot be consolidated.
Raised when the need for a good/service is identified.Raised when a good/service is ready to be ordered.

Confusingly, NetSuite also has a record called a Purchase Request. This is essentially a limited access Purchase Order.

The Purchase Request is available in most environments so can easily be mistaken for a Requisition. Don’t be fooled though. These are different records with different purposes and a Purchase Request will not meet the needs identified in the section below.

Do I Need NetSuite Purchase Requisitions?

Not every organization requires this optional starting point for their procure to pay process. There are, however, a number of indicators that would suggest you might want to investigate this enhancement to your procedure.

  • How many departments are raising Purchase Orders? If you have a dedicated purchasing or procurement team raising all Purchase Orders then the quality of these orders is probably sufficient. If you have employees across the business making requests then you may have a problem.
  • What volume of Purchase Orders get rejected or cancelled? If you have a significant percentage of you PO’s being rejected or cancelled then that is a sign that something in the process is not working. You will probably find the users who know the order needs to be made are not the best people to actually be ordering.
  • Are many of your Purchase Orders preceded by lengthy email trails? If there are long internal email trails prior to each Purchase Order being raised, your purchasing process is not working.

Enabling NetSuite Purchase Requisitions

Listing the features required to start using Purchase Requisitions in NetSuite

Purchase Requisitions are unfortunately not available in every environment. This feature comes with a purchase of NetSuite Advanced Procurement. If you do not have Advanced Procurement installed in your NetSuite instance, speak to your NetSuite Account Manager about the best route for your business.

If you have Purchase Requisitions available, you will need to enable it first before you can define your organizations process.

Navigate to Setup > Company > Enable Features. Under the Transactions tab check the box for Purchase Requisitions.

If it wasn’t already clear, you can only use Requisitions if you are also using Purchase Orders. Therefore you should also ensure the Purchase Orders featured is enabled on that same page.

If Requisitions are not the logical next step for your P2P process, take a look at how you can better understand the Purchase Order status and use it to manage your purchases.

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