The short answer
A purchase requisition is an internal request to buy something. An employee raises it, and it goes to an approver who checks the need and the budget. It isn’t sent to a supplier and doesn’t commit the business to anything.
A purchase order is the document you send to the supplier once the requisition is approved. It sets out what you’re buying, how many, at what price and when, and once the supplier accepts it, it’s usually binding. The purchase order is also what the supplier’s invoice is later matched against.
The key differences
| Purchase requisition | Purchase order | |
|---|---|---|
| Purpose | Asks permission to buy | Commits the business to buy |
| Audience | Internal: the requester and approvers | External: sent to the supplier |
| Raised by | The person who needs the goods or service | Purchasing or finance, from an approved request |
| When | Before anything is ordered | After the request is approved |
| Binding | No | Usually, once the supplier accepts |
| Checked against | Budget and approval policy | The supplier’s invoice and the goods received |
A simple test: if it hasn’t left the business, it’s a requisition. Once the supplier has it, it’s a purchase order.
How a requisition becomes a purchase order
The two documents are steps in one process. Each step adds a check before money moves.
Raise the request
The requester says what they need, why, roughly what it costs, which supplier if they know, and which entity and cost centre it belongs to.
Check the budget and approve
The approver confirms the need and that the budget can cover it. The request routes to the right person under your approval policy.
Create and send the purchase order
Purchasing or finance turns the approved request into a purchase order with a number, items, quantities, prices, delivery details and terms, and sends it to the supplier.
Receive the goods
When the order arrives, whoever takes delivery records what came in.
Match and pay the invoice
The supplier’s invoice is matched against the purchase order, and for goods against the receipt too, before it’s approved and paid. Our guide to three-way match covers this step.
When you can skip the requisition
Not every purchase needs both documents. Teams often go straight to a purchase order, or skip both, when:
- The spend is already approved under a contract, such as a subscription or a lease
- It’s below a value threshold your policy sets
- A purchasing team buys routine stock against an agreed plan
Keep the exceptions written into your policy, so skipping the request is a decision and not a habit.
Why it gets harder across entities
In a group, each entity has its own budgets, approvers and suppliers, so the gap between asking and ordering is where spend slips.
Requests reach the wrong approver
Each entity has its own approval limits. Without one place that knows them, requests go to whoever the requester thinks is right.
Approvers can’t see the budget
When budgets live in a different file for each entity, the approver says yes without knowing what’s left.
Orders and invoices drift apart
A purchase order raised in one entity and an invoice addressed to another won’t match, and someone has to untangle it later.
Requests to purchase orders across the group with Derive
In Derive, requests, approvals and purchase orders run across the group in one place. Each request routes by entity, amount or category, and the approver sees the budget impact before approving.
Purchase orders are tracked as commitments, approved before money moves, and sync with Xero. When the invoice arrives, Derive matches it against the approved purchase order. You can start with accounts payable and add purchase orders later.
Read more about procurement and budgets.
