Include committed expenses

Organizations often have budgeted funds that are committed for a purpose but not yet spent. For example, nonprofits put money aside for fundraisers, and commercial organizations often plan for trade shows that can be years away. You can include these planned expenses in your Spend Management budget calculations.

Why include committed expenses?

Spend Management can include committed expenses in the available budget calculation so that you're able to adhere more closely to the budget plan. The committed expense amounts are recorded in user-defined books that you create to track and release these committed funds.

When you include committed expenses and specify the user-defined books that track them, these expenditures are included when Spend Management checks a transaction for the available budget.

For example, if you’ve contracted for R25,000 with a supplier for a conference venue, record that anticipated expenditure entry into a user-defined book. This entry can be made either:

• Directly as a journal entry into the user-defined book
• If you use Purchasing, automatically record the transaction from the associated purchase document with some configuration.

When you receive the AR sales invoice and are ready, release the reserve and convert the transaction to an actual expense.

Visibility into these budgetary reserves ensures they’re factored into the equation when Spend Management determines budget availability, providing better insight and reducing your chance of overspending.

Set up for committed expenses

Before you can include committed expenses in your Spend Management calculations, you need to set up how you're going to track your commitments.

1. Create or verify the user-defined book in which you want to track your commitments. User-defined books are a common way to track other types of entries, entries like commitments of budgetary reserves.
2. Consider how you want to track your commitments:
   • General Ledger journal entries: You can create a user-defined journal to which you can post journal entries that post to the specified user-defined book. This creates a reserve in your budget against that transaction without it actually impacting your books. If you need to post the transaction to your actual books, you reverse the user-defined transaction and recreate it in your actual books to release the transaction.

   • Purchasing transaction definitions: You can configure your Purchasing transaction definitions to automate commitment tracking.

     For more information, see Set up purchase transaction definitions to track commitments for Spend Management.

   If you're recording committed expenses in Purchasing, set up a separate transaction definition to reverse the committed expense in the user-defined books. If you back out the commitment amount based on the invoice, you may need to create an additional transaction if the invoice is different from the purchasing transaction.

Specify user-defined books

After you've set up your committed expenses, go to the Configure Spend Management page. Include 1 or more user-defined books that track these commitments in your Spend Management budget calculation when it validates a transaction.

1. Go to Budgets > All > Spend Management, then select Configure.
2. If you have not done so already, configure the basics for Spend Management.
3. Select the Include committed expenses checkbox.
4. In the User-defined books field, include 1 or more user-defined books that you're using to track committed expenses.
5. Select Save.