Purchase Requisition vs Purchase Order: Key Differences for E-commerce

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The Indian D2C e-commerce brands do a significant number of transactions daily.

These include purchases, sales, recruitment, and much more. To keep things managed, in proper budget and procurement, a record of every transaction or movement is necessary.

In the field of purchasing, the two important documents that come in are the Purchase Requisition (PR) and the Purchase Order (PO).

These two terms seem similar, but PRs and POs have very different roles in the buying process. One helps request and approve purchases internally, while the other confirms and places the order with suppliers.

In this blog, we will examine "Purchase Requisition vs Purchase Order: Key Differences for E-commerce " in detail.

So, let's begin with Purchase Requisition.

What Is a Purchase Requisition (PR)?

Whenever an employee or someone in the organisation wants to buy something, they have to take permission from the finance department or other important authorities. The document of request, which was created at that moment, is called a PR- Purchase Requisition.

In simple words, we can say that it's a request or a formal way to buy something inside the organisation.

The Purpose of Purchase Requisitions

The main purpose of a PR is to:

• Get internal approval before spending the company’s money
• Create a paper trail for budget tracking
• Ensure purchases align with business needs
• Prevent unauthorised spending

When is a Purchase Requisition Created?

PRs are created before engaging with any suppliers. This happens when:

• Inventory levels are running low
• New equipment is needed
• Marketing campaigns require additional resources
• Seasonal stock needs to be ordered

Key Components of Purchase Requisitions

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• Requestor details (name, department, date)
• Item description and specifications
• Quantity needed
• Estimated cost
• Business justification
• Required delivery date
• Budget code or department allocation

Why Does an Organisation Need a PR - The Importance of A Purchase Requisition

As we have discussed, a PR is a formal document or request that keeps a record of your purchases with the finance department or other main authorities.

So, if a business wants to have everything in a written, clear manner without any occurrences of fraud, then a PR is a must.

Not only will it prevent fraud, but it will also help you track your expenses. It will help to keep your purchases in check.

What Is a Purchase Order (PO)?

On the other hand, a purchase order is a formal document that is sent to a vendor to purchase the list of items that an organisation wants at a specific price. It consists of all the details of products or services you wish to take from the supplier.

The Main Purpose of a Purchase Order

POs serve to:

• Create a legally binding contract with suppliers
• Specify exact terms and conditions
• Provide clear delivery and payment instructions
• Enable proper invoice matching and payment processing

When a Purchase Order is Created?

Once the purchase department gets the approval from the finance department or others, the PO is created. Basically, it is made when:

• All the internal approvals are complete
• The budget availability is confirmed
• The supplier selection is finalised

Key Components of Purchase Order

As the PO is to be sent outside the organisation to the supplier, it must have the following things:

• Supplier name and contact details
• List of products or services
• Agreed quantity and price
• Delivery date and location
• Payment terms
• Purchase order number
• Contact details of the organisation

Why Does an Organisation Need a PO - The Importance of A Purchase Requisition

As the organisation has to buy various products, it is essential that they have a record of them. As the POs are required at the time of the company audit.

On the other hand, it also acts as proof between them and the supplier. It may occur many times that the supplier increases the price of the products you are willing to buy. But, if you have a PO already shared with them, you can show that to your supplier and get things at the same price agreed before.

Also, a PO acts as a medium to convey your demands in a written form so that there will be no confusion afterwards related to delivery, products, or prices.

Let us now move to the purchase order vs requisition!

Purchase Requisition Vs Purchase Order 

We have mostly come across the question, “What is a purchase requisition vs a purchase order?” 

Let us understand with the help of a table:

Procurement Workflow in E-commerce- The 5 Simple Steps of E-commerce Procurement

Step 1: "We Need Something" → Create Purchase Requisition (PR)

The very first step of the procurement process starts whenever somebody in the organisation realises that they need to get some stuff.

Who may they be?

• They can be the inventory manager who sees, "We only have 50 phone cases left, but we sell 20 per day!"
• They can be the marketing team, who find "We need 1000 branded t-shirts for our upcoming campaign"
• Or it may be someone from another department of the organisation.

How They Ask for Permission: Instead of just buying things, they fill out a form (Purchase Requisition) that outlines the requirements.

Step 2: "Can We Afford This?" → Internal Approval

The company checks if they should really buy this stuff. In this step, they check:

• Do we have money for this?
• Do we really need it?
• Is the price reasonable?
• Does it fit our business plans?

How Long It Takes: 2-3 days of running around with papers.

Step 3: "Let's Make This Official" → Create Purchase Order (PO)

Once everyone says "yes," the company creates an official order to send to suppliers. But before sending it to the suppliers, the company looks for:

• Look for 3-4 companies that sell what they need.
• They ask for the prices.
• Then, compare the different options to determine which gives the best price, quality, and delivery.
• They may negotiate, if required
• At last, pick the best supplier and send them the PO.

Have a look at how a POs look:

Step 4: "The Supplier Does Their Job"

When the supplier receives your PO and confirms the same, they do the following process:

• Check Stock: Do they have the items ready, or need to make them?
• Production: If needed, they manufacture the products
• Quality Check: Make sure everything is perfect
• Pack & Ship: Carefully package and send to you

Step 5: "Check Everything & Pay" → Receive Goods and Pay Bills.

When your order arrives, you check if everything is correct, then pay the supplier.

What should be checked here?

• Did we get what we ordered?
• Are they the right type, no damage?
• Does this match what we ordered in the PO?
• Add new stock to the inventory system
• Make a record that we received everything

Basically,

The Payment Process

Before paying, they do a "Three-Way Check":

• Purchase Order: What we ordered
• Delivery Receipt: What we actually got
• Supplier's Bill: What they're charging us

All three must match perfectly! After that, the payment will be processed.

Why Indian E-commerce Brands Should Use PR + PO?

Here are some reasons why, as a D2C ecommerce brand, you should use PO and PRs.

Prevent Budget Overruns During High-Volume Campaigns

According to industry data, during peak seasons like festivals or big billion sales, Indian e-commerce sales can increase by 30-40%. If a brand maintains proper PR and POs, then it can avoid unnecessary costs on unwanted inventory.

With Pragma’s automation and workflow services, your purchase approvals go through smart checks. It helps you stay within your budget during the peak seasons.

It Will Help You Get Transparency Over Spending

With GST compliance requirements in India, maintaining proper documentation is crucial. Companies using structured PR-PO processes report 40% fewer audit issues and faster GST return filing.

With Pragma, you can get customised dashboards, which give you a record of every rupee spent.

Reduce Fraud by Approving Before Purchase

Pragma’s systems ensure pre-purchase approvals are mandatory. This means no one can place an order without proper permissions, reducing the chances of fraud or unauthorised buying.

Ensure Supplier Clarity and Prevent Invoicing Errors

Clear POs reduce invoice disputes by 45% and improve supplier relationships. Pragma supports enhanced document processing and standardised workflows that ensure accurate specification of product details, prices, and terms.

What Can Be the Common Pitfalls in PO and PR & How to Avoid Them?

• PR Created Too Late or Skipped

It may sometimes happen that the employees directly contact suppliers without PR approval. This situation can result in fraud, discrepancies, and confusion.

To avoid such a situation, brands can implement mandatory PR workflows for purchases above a specific amount, say, ₹10,000.

• Discrepancies Between PR and PO

When handling everything manually, it may happen that the PR and PO details don't match.

To avoid these kinds of discrepancies, they should use automated systems that transfer PR data directly to PO templates.

• Lack of Proper Approvals

Sometimes, PRs can be approved by unauthorised personnel, which leads to invoice disputes. To prevent this, one should set up role-based approval hierarchies with clear spending limits.

Also, the centralised procurement systems that automatically route PRs can be used.

Best Tools & Automation for PR and PO in E-commerce

ERP Modules

1. Zoho Inventory

• It offers integrated PR-PO workflows.
• It is good for small-sized businesses.

2. Tally Prime

• One of the popular platforms among Indian SMEs includes basic procurement features.

3. Pragma

• 100 % Automated System with data from 1000+ D2C Brands.

Procurement Platforms

1. Tradogram

• Cloud-based procurement with automated workflows

2. Stampli

• AI-powered invoice matching with PO integration

Benefits of Using Automation

• Ready-made PR Templates with Set Limits: You don’t have to start from scratch every time. Use simple forms with spending limits already set.
• POs Created Automatically: Once a request is approved, the system can create a purchase order (PO) for you no need to do it manually.
• Smooth Approval Workflows: The right people get notified to approve requests. This saves time and avoids delays.

Best Practices & Tips for Purchase Order Management

Make Use of Standardised PR Templates

Keep your purchase requisition (PR) format the same across teams to avoid confusion and save time. Create department-specific templates with pre-filled budget codes and common items.

Set Approval Rules Based on Order Value

Big purchases should go through more checks. Set rules so higher-value orders need manager or finance approval.

Properly Include Delivery Terms and Expected Timelines

Specify exact delivery addresses, contact persons, and required delivery dates. This will help you to prevent 60% of issues related to deliveries.

Always Keep the Purchase Order Updated

If you or the team have changed anything, that should be immediately changed in the purchase order; also, keep a clear record of all edits.

Archive Matched Invoices with POs

Save invoices that match your POs. This helps during audits and keeps your legal records clean.

Conclusion

So, PR and POs are an essential part of the business. To be clear and prevent any confusion or discrepancies, it is essential that proper PR and PO are generated. PR helps in internal communication, and PO helps in external ones.

According to a report, companies that adopt structured procurement processes typically see 20-30% better budget control and 40% fewer operational issues.

You can also achieve this by standardising your PR templates, setting up approval workflows, and gradually introducing automation tools. 

FAQs – (Frequently Asked Questions on Purchase Requisition vs Purchase Order: Key Differences for E-commerce)

1. What is a Purchase Requisition (PR), and how does it differ from a Purchase Order (PO)?

A Purchase Requisition is an internal document used by employees to request approval for purchasing goods or services within the company. A Purchase Order, on the other hand, is an external, legally binding document sent to vendors once approval is granted.

2. Who initiates a PR, and who issues the PO?

A PR is created by the employee or department in need. Once approved, the Purchasing or Procurement Department generates the PO and sends it to the vendor.

3. Are these documents legally binding?

No—PRs are merely internal approval requests and have no legal force. In contrast, POs become legally binding contracts once accepted by the supplier.

4. What is the procurement workflow involving PR and PO?

1. An employee identifies a need and raises a Purchase Requisition.
2. This PR undergoes internal approvals.
3. Upon approval, a Purchase Order is issued to the vendor—initiating the formal purchasing process.

5. What’s typically included in each document?

• PR: Details of the need—item description, quantity, estimated cost, justification, requesting department.
• PO: Official order with specifics like buyer/vendor details, itemised list, quantities, prices, delivery dates, payment terms, and PO number.

6. Do vendors see the PR?

No—Purchase Requisitions remain internal. Vendors only receive the Purchase Order.

7. Why use both PR and PO?

Using both creates internal controls and audit trails. PRs ensure budget and approvals are properly managed before committing to purchase, while POs formalise that commitment in writing.

8. When do eCommerce brands skip PRs and directly use POs?

Start-ups and small D2C brands often bypass PRs to speed operations. However, with scaling, adopting PRs becomes critical to prevent unauthorised expenses and manage multiple team workflows.

9. What real-life examples or discussions reflect this?

On Reddit, a user explained:

“Purchase Orders are legal documents. Once created and approved, it commits you to paying the supplier. Purchase Requisitions are internal documents to show an intent to buy.”

Another user broke down the typical business flow:

“PO is a written order for goods or services… it protects you… and the invoice protects the seller.”