Commitments, encumbrances, and budget edits

A commitment is a reservation of funds for requested products and services. You can have commitments for activities and for your general ledger. A commitment record is created when a requisition for products or services has been entered and released, but not yet ordered from the vendor.

An encumbrance is an obligation of amounts to pay for products and services that were contracted for but not yet received.

Commitments and encumbrances create records during normal operating processes which can be used to perform budget edits. Budget editing tracks the posted transactions, commitments, and encumbrances, and deducts them from your budgeted funds. This results in an accurate remaining balance of your budgeted funds and helps prevent going over the budgeted amounts.

If you have general ledger commitments and budget edits set up, these affect a purchase order at the time it is created or released. If you have activities commitments set up, it also affects a purchase order when it is created or released. For information about general ledger commitments and encumbrances, see the General Ledger User Guide. For information on activities and commitments, see the Project Accounting User Guide. For information on budget edits, see the General Ledger Budgeting User Guide.