Understanding PO Encumbrance Liquidation Options
Purpose
To explain the liquidation options for a Purchase Order (PO) encumbrance, when it is appropriate to use each option, and how to use each option.
Overview
An encumbrance reserves funds for a planned
expenditure. This reduces the available
budget in Commitment Control, making the funds unavailable for other
purposes. Liquidating the PO encumbrance
is part of standard procure-to-pay processing, specifically vouchering. When a PO voucher is budget checked, the PO
encumbrance is reversed.
The typical PO lifecycle includes
the creation of the PO, followed by the receipt, voucher and eventual close out
of the PO. In some cases, a PO will not
be fully vouchered. Depending on the
activity against the PO, the PO encumbrance needs to be liquidated using
another mechanism. Options include
canceling, completing a reductive change order, PO Close Short or finalizing
related voucher(s).
This article was previously named PO- Understanding Close,Cancel,Change Purchase Orders.