7 purchase requisition best practices to optimize the P2P cycle

Accounts payable (AP) teams are facing pressure from every direction, causing procurement workflows to break down.

• Department leaders want their purchase requisitions approved yesterday. 
• Finance heads want AP managers to work more efficiently.
• Legal teams want AP teams to pay more attention to compliance.

The pressure shows no signs of slowing. In fact, 63% of finance leaders expect AP teams to take on more responsibilities in the near future.

As they strive to do more with less, AP teams must find ways to work smarter. For smart teams, this starts with the first activity in the procurement process: purchase requisitions.

In this article, we’ll explore purchase requisition best practices to help AP teams maintain spending control, improve transparency, and run processes efficiently — even as expectations continue to rise.

By the end of this article, you’ll have a firm grasp on key challenges with the purchase requisition process and get actionable tips to develop a workflow that’s more efficient, accurate, and transparent.

How does the purchase requisition process work?

The purchase requisition process is the first phase in a procure-to-pay (P2P) workflow. It typically includes three steps: request, approval, and procurement.

Step 1. Request phase

First, an employee or department identifies a business need for a product or service.

Suppose Sam, an account executive for a large B2B business, recognizes that her team needs a new sales automation tool to reach prospects more efficiently.

After identifying the need, the employee or department gathers information about the purchase. This can include researching solutions, talking with potential service providers, or demoing software options.

During this phase, Sam might talk with colleagues to pinpoint the specific features and capabilities they need in a sales automation tool. Then, she would identify the software platform that has the AI-powered features and functionality her team needs. She’d also confirm the number of seats her team requires.

Next, the employee or department fills out a purchase requisition form via enterprise resource planning (ERP) or procurement software, asking the organization to procure the product or service.

Step 2. Approval phase

The employee or department then submits the purchase requisition to the appropriate manager or supervisor. The approver reviews the request while considering the department’s needs and budget.

For example, Sam might send the purchase requisition to her sales manager or director of sales.

Many organizations have a multi-step approval process. So, once the initial approver signs off on the request, they forward it to the next person in the approval workflow — often in the purchasing department.

In most cases, finance reviews purchase requisitions and confirms that they align with the organization’s budget. When purchases exceed a certain amount, additional approvers are often necessary.

Some organizations also involve legal teams in the purchasing process. This step is important for maintaining compliance and avoiding legal issues.

For example, Sam’s sales manager might forward the requisition to finance. And since the request exceeds $50,000, finance might require an additional signature before proceeding.

Step 3. Procurement phase

Once the purchase requisition is approved, the process is in the procurement team’s hands. This team takes responsibility for reviewing potential suppliers and vendors that can fulfill the requisition request.

Procurement typically contacts vendors and suppliers for quotes. If necessary, the team also negotiates to get the best possible rate.

Although Sam’s requisition may specify a certain software platform, her organization’s procurement team might solicit quotes from other comparable vendors.

After securing a quote that fits the request and aligns with the organization’s budget and legal terms, the procurement department then completes the requisition process and creates a purchase order.

Key challenges in the purchase requisition flow

An efficient purchase requisition workflow is crucial for tracking spending throughout the organization, maintaining records of purchases, and incorporating approvals from multiple stakeholders.

But broken purchase requisition systems often slow down P2P and make procurement more difficult than it needs to be. Let’s look at some of the biggest issues.

Time-consuming data entry

A typical purchase requisition form requires a long list of essential information. Filling out these forms from scratch can require a substantial time investment. Employees and departments that create a high volume of requisition orders can lose significant time to completing paperwork.

Lengthy approval processes

Many requisition forms include information about the urgency level of the purchase. But no matter how quickly the department needs to make the purchase, the approval process can take days, weeks, or months longer than expected. This can cause the department to push back timelines and delay important work.

Multiple communication channels

As approval processes become multilayered, communication tends to become more complicated. Requesters and approvers may maintain multiple conversation threads across email, messaging platforms, and procurement tools. Monitoring and responding to threads across platforms can become nearly impossible.

Unclear compliance standards

When employees submit purchase requests, they often intend to procure goods and services from specific suppliers and vendors. But when the organization’s compliance standards or vendor preferences aren’t clear, their requests may not be approved as submitted. This can lead to frustration and delays.

Lack of integration with AP processes

From processing the initial request to paying the final invoice, finance and procurement teams tend to rely on ERP tools. However, many ERP tools consider AP as an afterthought. This can cause a disconnect between purchase requisitions and AP, creating more work for AP managers.

7 purchase requisition best practices to increase efficiency and transparency

When your purchase requisition system slows down the procurement process, it can drive up internal costs, delay project timelines, and compromise relationships with department leads. Use these best practices to improve your purchase requisition workflow and benefit stakeholders across the organization.

1. Use a standard form across the organization

Without a standard purchase requisition form, procurement teams often end up wasting time on collecting missing information or sending the request back to the first phase. To make the requisition process more efficient from the very beginning, create a standard form to use across the organization.

A typical requisition form includes details like:

• Description of the goods or services
• Quantity of goods or services needed
• Estimated cost of the goods or services
• Date the products or services were requested
• Date the products or services are required
• Explanation of the business need
• Level of urgency
• Billing or budget code for the purchase
• Employee or department making the request
• Name, title, and signature from the authorized approver(s)

Use these suggestions as a guide, but tailor the form to meet the organization’s needs and workflow. Aim to strike a balance between collecting comprehensive information and maximizing the form’s usability. Keep in mind that creating an overly complex form may cause requesters to subvert the process.

2. Develop templates for vendors and purchases

As organizations scale and procurement needs ramp up, manually filling out purchase requisition forms quickly compromises efficiency and accuracy. Rather than requiring departments to complete blank forms, cut down on manual work and create templates to simplify the process.

Here are two common use cases for purchase requisition templates:

• Pre-approved vendors: Develop a list of vendors that meet the organization’s business needs and compliance requirements. Make the list accessible to employees and department leads involved in the procurement process. Then, prefill purchase requisitions with vendor details.
• Recurring purchases: Create a list of recurring purchases of supplies, equipment, software, and services. Use data from past requests to build this list. Then, prefill purchase requisitions with purchase details — including the item description, quantity, cost, explanation, and billing code.

Store prefilled forms where requesters can easily access them, creating a sort of self-service process. In addition to eliminating manual tasks and saving time, developing templates also improves accuracy and speeds up the approval process. More prefilled data often means less back-and-forth and fewer corrections.

Stampli’s Vendor Management makes this process simpler. With this add-on, AP teams gain a centralized system to keep track of approved vendors, compliance documents, and relevant communications.

3. Create a transparent approval process

Unclear and inconsistent procurement workflows make the process more difficult for everyone. Requesters are left wondering if their purchases will ever be approved. And AP managers are stuck piecing together data from ERP systems, spreadsheets, and emails.

Instead, outline a clear approval and routing process:

• Identify department leaders responsible for the initial review and approval.
• Designate finance leaders responsible for next-level (and often final) approvals.
• Assign stakeholders responsible for high-value approvals.

Avoid designating a single person for each step in the approval process. Instead, identify a primary approver as well as at least one substitute. This way, neither procurement backlogs nor paid time off (PTO) have to create additional delays.

Establish timelines for each requisition, including deadlines for approvals. This added step sets expectations for requesters and helps approvers prioritize their reviews.

Aim to manage the process in a single system instead of across multiple platforms. This way, AP managers can maintain real-time visibility into approval progress and address bottlenecks as necessary.

4. Implement automated spending controls

While some purchases may only need approval from a department lead and a procurement specialist, other purchases may be more involved. Purchases above a certain amount or from specific vendors often require executive approval.

Instead of letting these additional approvals create bottlenecks, automate the process.

• Clarify the conditions when additional approvals are required: For example, the organization might require executive approval for purchases totaling $50,000 or above or when sourcing from new vendors.
• Designate the person(s) responsible for signing off on these additional approvals: For example, the CFO might sign off on new vendors, but the CEO might approve purchases above a certain threshold.

Make sure everyone involved in the purchasing process understands these additional steps. The more requesters know about the approval workflow, the better they can manage relationships with vendors and timelines for projects.

5. Communicate clear compliance policies

Noncompliant purchase requisitions are a surefire way to make the procurement process take longer. AP managers end up spending time processing requests they can’t approve. And requesters waste time having to redo their purchase requisitions.

To reduce rework and speed up the requisition process, publicize your compliance policies:

• Share lists of approved vendors: Spell out the process for approving new vendors.
• Connect requisitions to departmental budgets: Require budget or billing codes.
• Clarify security and legal requirements for goods and service: Create a straightforward list that requesters can easily cross-check with vendors.

The clearer these policies are, the easier employees can submit accurate requests the first time. And the more transparent these policies are, the better the procurement team can enforce them, ensuring that everyone complies with organizational requirements.

Stampli’s Vendor Management makes compliance easier. It automates document collection and compliance updates, reducing risk and providing additional control.

6. Manage P2P with a centralized system

Using multiple disconnected systems to manage different parts of the procurement and AP process leads to more work and more opportunities for steps to fall through the cracks. Instead, use a centralized tool to manage everything from procurement to payment.

Stampli is designed to streamline, automate, and integrate the entire P2P process. As a result, it helps AP teams maintain best practices while enforcing consistent processes and providing transparent communication.

Because Stampli has native integrations with 70+ ERP tools, it simplifies (rather than complicates) P2P. And since it offers multi-subsidiary support, it’s ideal for managing P2P processes across companies and locations.

7. Monitor key performance indicators (KPIs)

Establishing a reliable purchase requisition workflow is an essential first step. But continuing to follow the same process without a routine audit can lead to inefficiencies.

Regularly review purchase requisition and purchase order metrics like:

• Approval timeline
• Request error rate
• Compliance rate
• Spend under management
• Cost reduction

Set specific KPIs and monitor progress monthly or quarterly. During each review, identify inefficiencies and areas that need improvement. Then adjust the process to track toward faster approvals, fewer errors, and lower costs.

Share insights with stakeholders, including department leaders and procurement specialists. Help them understand their impact on the purchase requisition process and get buy-in as the organization aims to continuously improve the process.

Next steps to improve your purchase requisition process

Take action to improve your requisition workflow and optimize your entire purchase to pay process. Focus on standardization, communication, and centralization.

Standardize the workflow

Create a standardized form to increase accuracy. Build out a series of prefilled templates for frequent purchases and repeat vendors to improve efficiency.

Communicate key steps

Establish a clear approval process to reduce bottlenecks and offer transparency. Communicate compliance policies to speed up the process for everyone. 

Centralize the P2P process

Adopt a centralized system that connects every dot from requisition to payment. Stampli centers on AP and connects with dozens of popular ERP tools, creating a complete and end-to-end P2P system.

Optimize your purchase requisition workflow with Stampli

Purchase requisitions are just the beginning. Stampli manages everything from request to reconciliation, transforming disjointed procurement and accounts payable processes into one fluid experience—where every step, approval, and conversation happens in one place.

With Stampli’s Cognitive AI, led by Billy the Bot™, you can manage purchase order automation, eliminate manual PO-to-invoice matching, and streamline procurement workflows—all while improving accuracy and efficiency.

Stampli is recognized as a top AP automation solution by G2 customer reviews and empowers organizations to:

• Accelerate procure-to-pay (P2P) processes by automating tasks and minimizing errors
• Adopt an AP-first platform with native ERP integrations like Sage, Microsoft, Oracle, SAP, QuickBooks, Acumatica, and Dealertrack
• Gain full visibility into procurement workflows with real-time tracking from request to payment
• Maintain compliance by enforcing policies consistently and capturing a complete audit trail
• Implement in weeks, not months, with an intuitive interface that requires no extensive training

Take the first step toward a seamless procure-to-pay experience. Contact us today for a free demo of Stampli.