A Step-by-Step Guide to Creating Perfect Procurement Approval Form

If you’re a procurement manager, you know the importance of creating a seamless and efficient procurement process. Without the proper procurement process, you may encounter challenges that can waste hours of your productive time and effort. In today’s competitive business landscape, procurement approval forms serve as the backbone of this process. According to Verified Market Research, the procurement market will grow about 7.6% per year and reach a value of $9.5 billion in 2028.

Whether managing daily supplies or large-scale procurements, a robust procurement approval process is essential. This streamlines communication ensures error reduction, and speeds up approvals. Without the proper procurement form, you may face issues such as: 

• Data errors
• Delays
• Miscommunication 
• Financial losses
• Unauthorized spending 

A well-designed procurement form ensures consistency, transparency, and compliance. This helps you optimize procurement operations and maintain control over your expenses.  In this blog, we will help you understand how to create the perfect procurement approval form step by step. 

Understanding Procurement Approval Form

A procurement approval form is a formal document used to request, review, and approve the purchase of goods or services within an organization. It ensures that all procurement activities align with company policies, budgets, and operational needs. This form includes details such as:  

• Item or service description
• Justification for the purchase
• Estimated costs
• Approval signatures from relevant stakeholders. 

For a standardized approval process, these forms set up transparency, accountability, and efficiency. They also help prevent unauthorized spending. These forms become an important tool for maintaining financial control and compliance with organizational procurement policies. 

You may also like: Best Practices for Business Travel Procurement

Types of Procurement Approval Forms 

Most organizations use various types of procurement approval forms for a seamless procurement approval process. Some of them are: 

1. Standard Procurement Approval Form

This procurement form is used for daily purchase of goods and services. It ensures that all purchases align with company policies and budgets. They include item descriptions, quantities, cost estimates, and other necessary approvals. It is suitable for day-to-day procurement needs that do not require specialized handling.

2. Capital Expenditure (CapEx) Approval Form

This form is designed for one-time, high-value purchases or investments in long-term assets. It is used for large machinery, buildings, and technology investments. It includes detailed justifications and estimated ROI calculations and often requires approval from higher management due to the huge money involved. 

3. Emergency Procurement Request Form 

This is a procurement approval form used during emergencies and during any untoward incidents. It is used for expedited processing and does not mostly require any kind of approval due to the serious situation. For example, it is used for repairs for critical equipments or unforeseen supply needs. 

4. Single-Source Procurement Approval Form

These procurement approval forms are used when only one vendor fulfills the procurement needs due to specific requirements or constraints. It includes details about the justification for not seeking multiple vendors, vendor credentials, and approval signatures. This simplifies the procurement approval process for specialized needs. 

5. Service-Based Procurement Approval Form

The need for services rather than goods is the cardinal feature of this document. It contains information on the service provider, the scope of work, duration, and payment terms. This form is indispensable for consulting, maintenance, and other professional services. 

6. Contractual Procurement Approval Form

This form is designed for purchases that include long-term contracts or agreements. It addresses contract terms, vendor compliance, and payment schedules. For instance, it includes information about multi-year maintenance contracts or bulk supply agreements. 

5 Steps to Create the Perfect Procurement Approval Form

The effective procurement approval forms should be thoroughly evaluated about design, content, and functionality. Here is a list of suggested best practices to ensure that the form aligns with organizational needs.

Step 1: Understand the Purpose of Procurement Request Form

While creating a form, it is necessary to know the purpose of the form before starting the actual design. A procurement request form is not merely a document. It is a way of doing business to ensure that there is transparency, accountability, and efficiency in your purchasing processes. It acts as a standardized way to present, evaluate, and approve purchase requests across departments.

Key Purposes of Procurement Request Forms

• Standardizing the Process: This form creates an easy way for employees to submit purchase requests. It reduces confusion and ensures consistency across departments.
• Improving Communication: With detailed information about budgets and justifications upfront, the form eliminates miscommunication with all the members involved.
• Ensuring Compliance: The form ensures all purchases follow organizational policies, budget limitations, and approval workflows. This eliminates the risk of financial irregularities.
• Centralizing Records: Procurement forms act as a documented trail of all purchasing activities. This is essential for audits and future reference.

Step 2:  Identify Key Stakeholders

For good implementation of procurement approval forms, you must identify and involve the right stakeholders. Involve representatives from various departments to ensure everything in the form is valid, justified, and in alignment with your company’s goals and objectives. This ensures accountability and speeds up your approval process. 

Primary Stakeholders to Include are: 

• The Requestor: The requestor is the member responsible for initiating the request for goods or services. They mainly provide information regarding their specifications, quantities, budget and any justifications. 
• Department Heads: The department heads are responsible to review the information and verify if it aligns with your organizational goals and budget. Once they have been approved, it confirms that the purchase is good to go and is within the company’s guidelines. 
• The Finance Team: The finance leaders cross-verify all the budgets mentioned in the form. They look into every specific requirement to ensure that the purchase is within the scope of the company. 
• Procurement Team: This team handles vendor selection, price negotiation, and ensuring compliance with procurement policies. Their role is critical to validate whether these requests meet the company’s objectives. 

Step 3: Outline the Essential Sections of the Form

To minimize the risk of mistakes, delays, and wasteful follow-ups, a well-designed request form must elicit important details. Each section must be tailored to capture the specific information required to get approval so that approval is smooth.

Key Sections to Include:  

• Requestor Details: Begin with some simple yet necessary details: name of the applicant, department, and contact details. This section establishes accountability and acts as a precursor to any follow-ups that might be required later. 
• Description of the Item or Service: This segment is very vital in terms of clarity-it should furnish sufficient information concerning the products or services requested. It must include the number of items requested, specifications of the goods required, and vendor quotes or brochures. 
• Reason for the Request: The procurement approval forms should have a section justifying the reason for the necessity of the request. This section ensures that all the requests are within the company’s policies and guidelines. 
• Estimated Cost and Budget: Financial transparency is key to a smooth procurement approval process. This section should include details regarding the estimated cost of the purchase and whether it falls under the company’s budget. 
• Approval Workflow: This section highlights the hierarchy of the approval process and its status. For example, it should go through the manager, finance department, procurement department, and then to the senior management. 

Step 4: Choose the Right Format 

The procurement approval forms may be on paper, electronic, or integrated into procurement management software. The choice depends on the individual needs of an organization, its size, and its technological capabilities. 

Options for Procurement Request Forms

• Paper Based Forms: While traditional paper forms can be difficult to manage and prone to errors, they may be a good method for smaller organizations. 
• Excel or Word Templates: Using customizable templates is an affordable way to use forms digitally. However, they lack advanced features such as automated workflows. 
• Procurement Software: By using procurement software, it is possible to integrate them into digital tools. They streamline the process and enhance collaboration. 

Step 5: Test and Refine the Form

Once the form is finalized, test it with everyone. Take feedback from users, approvers, and the procurement team. This helps in identifying any gaps or areas of improvement. 

Key Testing Metrics:

• Ease of Use: Is the form user-friendly and intuitive?
• Completeness: Does it capture all the required information?
• Efficiency: Does it speed up the procurement approval process?

Create the Best Procurement Approval Forms for Your Organization 

Well-structured procurement approval forms are one of the prominent components of your organization’s operational procurement strategy. It streamlines the process, improves communication, and ensures compliance at every stage. Using this guide, you can create a form that meets operational needs to facilitate its use and the overall approval process for procurement. 

One way to do this is with the assistance of renowned and modern TMCs such as itilite. It is a corporate travel management solution that can help you implement such practices. We also help businesses with seamless automation for travel and expense management process.

To know how to implement the procurement process, book a free demo with itilite.