Purchase Order Encumbrances

An encumbrance is the recording of a claim or commitment against University funds. On your financial reports, an encumbrance reminds you of this outstanding commitment by reducing the available balance of your SpeedType until the actual expense is payable and recorded.

Encumbrance entries will show under the Encumb column, with a BAE (Budget, Actual, Encumbrance) Code beginning with EN. Your actual expense entries will show under the Actual column, with a BAE Code of ACTUALS.

A common example is when a Purchase Order (PO) is created:

When your PO is created, the funds are encumbered. This decreases your SpeedType’s available balance, but does not decrease its actual balance.

When an invoice is received, depending on the invoice amount, part of the PO’s encumbrance is converted into an actual expense. Your SpeedType’s encumbered and actual balances are both decreased by the amount of the invoice. Your available balance is not decreased because your available balance already understood there was a claim against the funds. Balances will continue to decrease until the purchase is completely paid.

The encumbrance will continue to show on your report unless the entire PO amount is invoiced.

If payment is complete and there will be no more invoices, and there is still an encumbrance showing on reports, the PO needs to be closed.

Want to see a financial report that focuses only on encumbrances? You can run the m-Fin Outstanding Encumbrances report to see a list of encumbered POs and their current encumbrance amounts for a specific SpeedType.​