What is encumbrance in SAP SRD-FIN-COR - FIN-Cost and Revenue?

SAP Term: encumbrance

• Component: SRD-FIN-COR

• Component Name: FIN-Cost and Revenue

• Description: An expenditure that is anticipated based on a purchase order or that is entered manually.

Smart SAP Assistant

• Key Concepts: 
  Encumbrance is a term used in SAP to refer to a financial commitment that has been made but not yet settled. It is a way of tracking the amount of money that has been committed to a particular purpose, such as purchasing goods or services. Encumbrance is typically used in the context of budgeting and financial planning, as it allows organizations to track their spending commitments and ensure that they are not overspending. 
  
  How to use it: 
  In SAP, encumbrance is tracked using the SRD-FIN-COR FIN-Cost and Revenue Accounting component. This component allows users to create encumbrance documents, which are used to track the amount of money that has been committed to a particular purpose. These documents can then be used to monitor spending commitments and ensure that they are not exceeded. 
  
  Tips & Tricks: 
  When creating encumbrance documents in SAP, it is important to ensure that all relevant information is included. This includes the amount of money being committed, the purpose for which it is being committed, and any other relevant details. Additionally, it is important to regularly review encumbrance documents to ensure that spending commitments are not exceeded. 
  
  Related Information: 
  Encumbrance is closely related to budgeting and financial planning. It is important for organizations to have an accurate understanding of their spending commitments in order to ensure that they are not overspending. Additionally, encumbrance can be used in conjunction with other financial tools, such as cost accounting and revenue recognition, in order to gain a more comprehensive understanding of an organization's financial position.