What is Asset Requisition?
Asset requisition, sometimes known as a purchase order request, initiates the procurement process for assets within an organization. It serves as a formal request form that informs management about the need for specific goods and services.
The requisition includes details such as the quantity required, vendor preferences, and associated costs. This form not only informs managers but also involves the purchase requisition team and the finance department.
TL;DR
Asset requisition is a formal process for initiating the procurement of goods and services within an organization.
It helps prevent fraud, enables efficient vendor management, and ensures authorized approval for purchases, leading to better expense control.
It involves three main steps: filling the requisition form, manager approval, and finance department review.
Asset requisition offers expense control, streamlined procurement, compliance management, and efficient reporting for organizations, leading to cost savings and improved efficiency.
Why is Asset Requisition Important?
Effective procurement and expenditure control are essential for any organization’s financial stability. Asset requisition plays a pivotal role in achieving these objectives. Here’s why it’s crucial:
- Preventing Fraud: Asset requisitions ensure that purchases follow a defined procedure, preventing unauthorized or fraudulent acquisitions. By involving various departments in the process, a system of checks and balances is established.
- Vendor Management: Asset requisitions allow organizations to manage their vendor relationships more efficiently. If an employee suggests a new vendor or one not on the approved list, other departments can object or reject the requisition. Valid reasons for choosing a new vendor can lead to vendor inclusion.
- Approval Control: A designated authority must approve asset requisitions, ensuring that only necessary purchases are made. If approval is neglected, forgotten, or lacks proper documentation, the finance or accounts department can decline the request.
How to Implement Asset Requisition
The asset requisition process typically involves three key steps:
- Filling the Purchase Requisition Form: When an employee identifies the need for specific goods or services that aren’t readily available, they complete a purchase requisition form. This form outlines the exact requirements, including quantity.
- Manager Approval: Once the form is filled, it is forwarded to the employee’s manager for validation. The manager reviews the request for accuracy and completeness. If any errors are found, the form is returned to the employee for corrections. If everything is in order, the manager approves the request and sends it to the finance department.
- Finance Department Review: The finance department evaluates the purchase requisition, ensuring that it aligns with the budget and the organization’s procurement guidelines. Once approved, a purchase order is generated.
Real-Time Benefits of Asset Requisition
Implementing asset requisition provides organizations with several real-time benefits:
- Expense Control: Asset requisition helps control expenses by validating the necessity of each purchase and checking it against available stock, preventing unnecessary spending.
- Efficient Procurement: It streamlines the procurement process, reducing errors and miscommunication, ultimately saving the organization time and money.
- Compliance Management: Asset requisitions create an audit trail for all purchases, ensuring that the organization complies with regulatory requirements and standards.
- Streamlined Reporting: Asset requisition software provides complete visibility of purchase requisitions, vendor details, and purchase order status, simplifying reporting and record-keeping.
