How to use Encumbrance and Approvals together successfully

Have you ever wanted to utilize the Encumbrance Management module but would like to put in more complex controls for individuals to approve the purchase order before applying it against a budget?  Well then this set up is for you!  Below I have outlined things to consider and the basic setup to utilize the Encumbrance Management module with the Purchase Order Enhancements Approvals to have more control over your budgets.

Steps to utilize Encumbrance module and PO Approvals

*This will allow users to have values against budgets in Encumbrance but control the POs thru Approvals. 

 You will first need to determine how you want the Approver to see or handle the Encumbrance piece.  If you navigate to Purchasing >> Setup >> Encumbrance Management, you will have some options when Approvals are on:

When Document is Approved

You can select what actions occur when a purchase order or general entry is approved. These options are available if you have activated Workflow or purchase order approvals in Purchase Order Enhancements.

Ask when over budget - Encumbers any purchase order lines that are under budget. Displays a message for lines that are over budget; the person who is responsible for approving the purchase order has the option to encumber those lines or leave them pre-encumbered.

Always pre-encumber - Pre-encumbers all purchase order lines, regardless of their budget status. With this option, one person does not need to approve purchase orders and manage encumbrances. After a purchase order has been approved, the person who performs the encumbrance tasks must review all pre-encumbered purchase order lines.

Pre-encumber when over budget - Encumbers any purchase order lines that are under budget and pre-encumbers lines that are over budget. With this option, one person does not need to approve purchase orders and manage encumbrances. After a purchase order has been approved, the person who performs the encumbrance tasks must review only those line items that are over budget. Under-budget lines are encumbered automatically.

Once this is set, this is what I recommend for processing:

Step 1: Enter the PO as you would like.

*Note, you should not Approve and Encumber from this step.  

At this point, once you hit save, the PO is not Approved or Encumbered so the line is sitting in a “Pre Budget” state.  You will not be able to print the PO as the PO needs to be approved first.  This is normal:

There are 4 Encumbrance status’ that exist:

1 = Encumbered – counted toward budget totals

2 = Pre Encumbered – has not been counted toward budget but one step forward to Encumbered status (typically means some kind of support action is needed)

3 = Invalid – Data entered is incomplete

4 = Pre Budget – has not been counted toward budget. (Typically means some kind of support action is needed)

*Pre Budget is used for approvals because the user needs to approve the PO to push it down the chain.  This status is considered a stepping stone and nothing more.

Step 2: The PO needs to be approved.  Navigate to Purchasing >> Transactions >> Purchase Order Enhancements Entry. From here, you can approve the PO and how we Encumber will be based on the settings under Purchasing >> Setup >> Encumbrance Management.  For my example, I would like to only see when I am over budget so this is what I see from the window once I approve:

 Once I select Yes to encumber, the report that comes out looks like this:

It even produces a report showing the PO coming out of Pre Budget and into Encumbered (some users like to be aware of this):

 Step 3: Now the PO is Approved and Encumbered so the PO can now be printed from the Purchase Order Entry window with no issues. 

 If you have any questions regarding this process, please contact Support and we would be glad to assist you further if needed.

Have a great day!