What is 'commitment' in SAP PSM-FM - Funds Management?

commitment - Overview

• Component: PSM-FM

• Component Name: Funds Management

• Description: Encumbrances made for the purchase of goods or services using existing budgeted funds. They are usually realized within the budget year or shortly thereafter. However, some governments have commitments that span more than one fiscal year. Example: multi-year construction contracts. Commitments are usually treated in a manner similar to expenditures for budgetary accounting purposes. In some cases, they reduce the budgetary fund balance; any differences in the following year are shown as recovery of unspent funds.

commitment - Details

• 
  Key Concepts: 
  Commitment in SAP Funds Management (PSM-FM) is a legally binding agreement to spend a certain amount of money on a specific purpose. It is used to reserve funds for future use and to ensure that the funds are available when needed. Commitments are created in the system and can be tracked and monitored throughout the life cycle of the project. 
  
  How to use it: 
  In SAP Funds Management, commitments are created by entering the necessary information into the system. This includes the amount of money to be committed, the purpose of the commitment, and any other relevant details. Once created, commitments can be tracked and monitored throughout the life cycle of the project. 
  
  Tips & Tricks: 
  When creating a commitment in SAP Funds Management, it is important to ensure that all relevant information is entered accurately. This will help ensure that the commitment is tracked and monitored correctly throughout its life cycle. Additionally, it is important to keep track of any changes that are made to commitments over time, as this can affect how they are tracked and monitored. 
  
  Related Information: 
  For more information on commitments in SAP Funds Management, please refer to the official SAP documentation. Additionally, there are many online resources available that provide detailed information on how to use commitments in SAP Funds Management.