Encumbrances

An encumbrance is an estimate of how much money is left in a budget after actual expenses are taken out. For example, if $1 million is budgeted for employee expenses and you spend $600.000 for salaries, you still have $400,000 left for other party expenses. Four hundred thousand is the encumbered amount.

Encumbrances (also called commitments) help you manage budgeted money by ensuring expenditures do not exceed the budget.

Encumbered salaries reduce the amount of available budget, which makes automatic budget edits more accurate. When you process payroll, the salary encumbrance is reduced and the actual salary cost for the pay period is incurred. This allows you to accurately track encumbered salaries, actual salaries, and available budget at any point.