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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / Budget control re-trig...
Finance | Project Operations, Human Resources, ...
Suggested answer

Budget control re-triggered at PO creation from PR, despite prior budget approval and allocation

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Posted on by Maryem Ayouni 14
Hello community !

Description:

We are facing a scenario where budget control is enabled across the full procurement process — from Purchase Requisition (PR) to Vendor Invoice.

 

In one particular case, a PR exceeded the available budget. A budget approval request was submitted and subsequently approved. Then, additional budget was allocated, and the PR was successfully approved.

 

However, after a significant delay, when converting this PR into a Purchase Order (PO), we encountered a new budget control blockage.

 

Question:

How can we allocate and reserve budget at the PR level and have that same budget commitment carried forward to the related PO, in order to avoid repeated budget blockages for the same transaction?

 

Any best practices or setup recommendations to maintain the initial budget commitment from PR to PO would be appreciated.

Categories:
Dynamics 365 Finance
  • Suggested answer
    Saif Ali Sabri Profile Picture
    Saif Ali Sabri 2,107 Super User 2025 Season 1 on at
    Budget control re-triggered at PO creation from PR, despite prior budget approval and allocation
    Certainly — here’s a solution to your scenario regarding budget control re-triggering at PO creation from PR in Dynamics 365 Finance:
    Issue Summary:
    • Budget control is triggered again at PO creation, even though the PR already had budget approved and reserved.
    • The system treats the PO as a new financial event and checks budget again, rather than carrying the PR's reservation forward.
    Root Cause:
    In standard Dynamics 365 Finance, budget reservation at PR level does not automatically reduce the budget available when the PR is approved. It only "soft reserves" or "encumbers" the budget. When a PO is created, a new budget check occurs because the system treats the PO as a commitment that can impact financials more heavily.
    Key Point: PRs reserve budget but don't consume it. POs consume (encumber) budget and trigger stricter validation.
    Solution:
    To carry budget commitment from PR to PO without retriggering new budget blockage, follow these steps:
    1. Enable "Carry forward budget reservations":
      • Go to Budgeting > Setup > Budget control > Budget control parameters.
      • In the Budget reservation for draft documents section, ensure the option “Carry forward budget reservations” is enabled.
      • This setting allows budget reservations made at PR to transfer into the PO automatically.
    2. Use "Commitment accounting" properly:
      • Confirm that budget commitments are being tracked correctly through Purchase Requisitions, Purchase Orders, and Vendor Invoices.
      • Check Budgeting > Setup > Basic budgeting > Budget models — make sure the commitment type for the active model includes PRs and POs.
    3. PR-PO Linking:
      • Ensure POs are directly generated from the approved PR (i.e., using “Create Purchase Order” action from the PR).
      • If the PO is manually created, the link between PR and PO may break, causing new budget checks.
    4. Budget Control Configuration:
      • Set Pre-encumbrances at PR stage.
      • Set Encumbrances at PO stage.
      • Pre-encumbrances (PR) should automatically relieve when the related PO encumbrance is created.
    Navigation:
    Budgeting > Setup > Budget control > Budget control rules
    Define rules to manage how pre-encumbrances are relieved when moving from PR to PO.
    1. Batch Job for Budget Reservation Updates:
      • If your process has long delays between PR approval and PO creation (as mentioned), it’s good to schedule a periodic batch job to refresh or reconcile budget reservations:
        • Budgeting > Periodic tasks > Process budget reservations
    2. Security and Workflow Checks:
      • Review whether your workflows for PR and PO separately trigger budget validations.
      • Sometimes a workflow step on PO creation may force a new budget check, regardless of PR status — ensure it's aligned.
    Best Practices Recommendation:
    • Always generate PO from approved PR, not manually.
    • Minimize the time delay between PR approval and PO creation where possible.
    • Use periodic budget reconciliation to keep reservations current.
    • Educate users on the difference between reservation and encumbrance in budgeting.
    Short Final Answer:
    ➡️ Enable “Carry forward budget reservations”, use proper commitment accounting setup, ensure POs are created directly from approved PRs, and configure budget control rules for pre-encumbrances and encumbrances properly.
  • Suggested answer
    Abhilash Warrier Profile Picture
    Abhilash Warrier 968 on at
    Budget control re-triggered at PO creation from PR, despite prior budget approval and allocation
    Hi Maryem,

    Have you tried the below options?

    If this helped, please mark it as "Verified" for others facing the same issue.
    Keep in mind that it is possible to mark more than one answer as verified.

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