Unplanned spending often manifests as a series of small, unmonitored costs that gradually erode a company’s monthly net margin.
For many African SME founders, this leakage happens when employees make autonomous purchases or when urgent requests are approved without checking the remaining budget.
The result is a cash flow gap that can delay payroll or stall planned growth investments.
The difference between a request and an order
A purchase requisition is an internal document. It is a formal request by an employee to the management to purchase a specific item or service.
This differs from a purchase order, which is the external document sent to a vendor to finalize the buy.
When a business skips the requisition stage, it moves straight from a perceived need to a financial commitment.
A requisition process introduces a critical pause. It forces the requester to justify the spend before the company is legally obligated to pay a supplier.
Implementing a requisition workflow
To create purchase requisitions that stop unplanned spending, SMEs should establish a clear threshold for when a formal request is required.
For example, a Lagos-based logistics firm might decide that any expense above 50,000 NGN requires a written requisition.
The requisition form must capture four essential data points to be useful for financial control.
- The specific item or service required and its quantity.
- The commercial justification for the purchase.
- The estimated cost based on a preliminary quote.
- The budget line or project the expense will be charged against.
Once submitted, the request should follow a strict approval chain. Typically, this moves from a department head to the finance manager or the founder.
Approval should only be granted if the item is necessary for operations and the funds are available in the current month’s budget.
Common failures in spending controls
Many SMEs implement these forms but fail to enforce them. The most common error is allowing the emergency bypass.
When “urgent” requests consistently skip the requisition process, the system collapses and unplanned spending returns.
Another mistake is approving requests based on the identity of the requester rather than the commercial utility of the item.
This leads to bloated operational costs and a lack of accountability among staff.
Poorly managed requisitions can also lead to duplicate buying, where two different team members order the same software license or office equipment because there is no central log of pending requests.
Impact on resilience and margins
Consistent use of purchase requisitions improves cash flow predictability. Management can see what spending is coming before the invoices arrive.
This visibility allows founders to negotiate better terms with suppliers by consolidating multiple small requests into one larger, discounted order.
Furthermore, it creates an audit trail. This is essential for compliance and makes the business more attractive to investors who require disciplined financial reporting.
SME owners should start by creating a simple digital requisition template in a shared spreadsheet or a basic procurement tool.
