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A requisition in finance refers to a formal request or demand for something, typically made in writing, often for the procurement of goods or services. It is used to provide clarity and documentation for the purchasing department, allowing control over spending. In a more general sense, it can also refer to the act of officially taking or asserting control over assets or resources.


The phonetic spelling of the word “Requisition” is /ˌrɛkwɪˈzɪʃ(ə)n/.

Key Takeaways

Main Takeaways About Requisition:

  1. Definition: Requisition is commonly understood as an official order laying claim to the use of certain items, properties, or services. In business terms, it’s a document that an employee submits to request purchased goods or services.
  2. Process: The requisition process is crucial in financial controls as it helps in the delineation of duties so that employees follow established protocols. Upon approval, the requisition becomes a purchase order sent to vendors.
  3. Importance: Requisition ensures proper tracking of expenditures, enables effective budgeting, ensures the right items are purchased at the right price, prevents unauthorized expenditures, and encourages accountability and transparency within an organization.


A requisition, in the context of business and finance, refers to a formal request or demand for something, usually used when referring to goods or services. This term is crucial in the management of a company’s internal operations and financial transactions as it helps control expenditures and maintain an effective purchasing system. It is essentially a control mechanism employed by businesses to ensure that purchases are necessary and within the company’s budgetary constraints. Furthermore, requisition also serves as an auditing tool that provides documentation and transparency in all purchasing activities, showing when, why, and by whom a purchase was requested, thereby supporting accountability and efficiency.


The primary purpose of a requisition in the finance/business world revolves around streamlining processes of purchasing, billing, and budgeting. It’s an essential mechanism for maintaining order, permitting a structured approach towards acquiring goods or services necessary for the operations of an organization. By using requisition forms or systems, companies can prevent unregulated buying, control expenses, and track purchases. This system involves sending a formal request for something needed for business operations. These needs might include equipment, supplies, or services.Moreover, requisitions play a crucial role in maintaining transparency and accountability within an organization. They document who has requested specific goods or services, for what purpose, and when, facilitating internal auditing and control. Additionally, by forecasting and outlining specific needs, requisitions aid in budget planning and prevent overspending. In other departments of an organization, like human resources, requisition usage aids in the hiring process by highlighting an explicit need for new employees in certain roles, thereby justifying recruitment activities.


1. Purchase Requisition in a Company: Let’s say for instance, an advertising agency needs to acquire new software for their graphic design team. The team leader would fill out a purchase requisition form which includes details about the product they want to acquire, the quantity, and the vendor, and then submit it to the procurement department. The procurement department approves the order if they have the necessary funds, resulting in a purchase order being sent to the software seller.2. Hiring Requisitions: When a business discovers the need for more personnel, it might complete a hiring requisition. For example, suppose a rapidly-growing healthcare startup realizes that they need more customer service representatives to meet the increasing customer inquiries. The manager will fill out a job requisition form detailing the job role, responsibilities and qualifications required, which will be sent to the human resources department to kick off the hiring process.3. Requisition in Real Estate: Suppose a city government is planning a large infrastructure project like a new subway line. The project would require the acquisition of certain parcels of private land along the intended route. The government might initiate a process of requisition, where it formally requests the transfer of this private property for public use, sometimes referred to as ‘eminent domain’. The owners of the properties are usually compensated in such cases.

Frequently Asked Questions(FAQ)

What is a requisition in the finance and business domain?

A requisition is a formal request or demand for something to be obtained or actioned within an organization. In finance, this often refers to a request for purchase of goods or services.

Who usually creates requisitions in a business?

Requisitions are usually created by department managers or personnel who need certain goods or services. However, the final approval usually comes from upper management or the finance department.

What is the purpose of the requisition process?

The main purpose of a requisition is to control expenditures and ensure that all purchases are necessary. It also helps in maintaining transparency and proper documentation that could be beneficial for future reference.

What should a requisition typically include?

A requisition typically includes information like a detailed description of the goods or services, quantity needed, estimated cost, the department requesting, date of request, and the signature or approval of the relevant authority.

Is a purchase order the same as a requisition?

No, a purchase order and a requisition are not the same. A requisition is a request for approval to proceed with a purchase while a purchase order is a legal document sent to the vendor to confirm the purchase.

How does a requisition help in budget control?

A requisition helps control the budget by ensuring that there’s proof of need before purchases are made. It also ensures only approved and necessary items are bought.

What happens if a requisition isn’t approved?

If a requisition isn’t approved, the materials or services requested cannot be purchased. The reasons for disapproval must be communicated back to the originating department.

Are electronic requisitions different than paper requisitions?

The process is the same, but the method of submission differs. Electronic requisitions often streamline the process and allow for easier tracking and faster approval.

Related Finance Terms

  • Purchase Order
  • Invoice
  • Budget Approval
  • Vendor Management
  • Inventory Control

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