Overview: Purchasing Commitments

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Purchasing Commitments Defined

A purchasing commitment represents an obligation to pay a vendor for future delivery of goods or services as recorded on an approved requisition or purchase order. The commitment amount is equal to the dollar ($) amount for each distribution line (PTAE). Purchasing commitments will appear on certain Oracle Financials expenditure reports.

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How to View Purchasing Commitments

Purchasing commitments can be viewed using the Requisition and Purchase Orders Inquiry tool (a.k.a. Web Inquiry). Commitments are updated immediately in this tool. Reference How To: View or Suppress Commitments on an approved Purchase Order.

Commitments can also be seen by Oracle Financials report users on certain expenditure reports, notably the Monthly Expenditure Statement (FIN_EXP_285_Mo_Detail_Statement) available in ReportMart3. Transaction source codes for all types of commitments listed on Oracle Financials reports begin with "E". Purchasing commitments can be identified with source codes "E_Req", "E_PO", and "E_AP". Purchasing commitments on reports are updated overnight.

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How Purchasing Commitments Are Determined

This section explains how purchasing commitments are determined throughout the purchasing process from initial requisition through actual expenditure as shown in the diagram below.

Purchasing Commitment Process

Purchase Commitment Process Diagram


An approved purchase requisition creates a commitment by distribution line (plus tax). Requisition commitments are referenced by transaction source code "E_REQ" on the Monthly Expenditure Statement (FIN_EXP_285_Mo_Detail_Statement).

When a requisition becomes an approved Purchase Order, the requisition commitment becomes a Purchase Order commitment and the transaction source code changes to "E_PO". The Purchase Order commitment is calculated by line plus sales tax. The commitment only includes valid lines where no invoice has been processed. A valid line is one that is approved and not cancelled, unreserved, or finally closed.

When an invoice is processed, an "Accounts Payable" commitment will be reflected with transaction source code "E_AP". When the invoice is fully posted it becomes an actual expenditure. A Purchase Order that is partially invoiced will be reflected as both a remaining PO commitment and either an E_AP commitment or an actual expenditure.

Note:  Remaining balances for purchasing commitments will appear on a report regardless of whether it is for a Project-to-Date (PTD) or Fiscal-to-Date (FTD) type of account. The system does not know when future invoices might be received. Therefore the entire remaining balance is displayed, even if the actual costs will not be recorded until the next fiscal year.

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How Purchasing Commitments Are Relieved

Purchasing commitments are relieved by line item under the following circumstances:

  • An invoice is matched to the line item for payment. A fully matched invoice relieves the commitment completely. A partial invoice will create a remaining partial commitment.
  • A line item is canceled.
  • A line item or PO has a status of "Requires Reapproval" or "Unreserved".
  • A line item is manually suppressed using the Requisition and Purchase Orders Inquiry tool (a.k.a. Web Inquiry). This may be needed when a Purchase Order was created for a higher amount than was actually needed, or if circumstances have changed. Note: Suppressing a Purchase Order merely removes it from appearing as a commitment on reports. If an invoice related to the Purchase Order is received, it will be processed and paid. Reference How To: View or Suppress Commitments on an approved Purchase Order.
  • A periodic process is run to automatically suppress old, small dollar purchase order line items. For more information, see Mass Suppress / Clean-up Process.

Note:  A purchasing commitment may be relieved for purchase orders based on quantity or dollar ($) amount:

  • An amount-based order, such as a blanket purchase order, is relieved when an invoice is matched to the line by dollar ($) amount.
  • A quantity-based order, such as for goods, is relieved when an invoice is matched to the line by quantity, regardless of the price.
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Mass Suppress / Clean-up Process

Effective September 2007, purchasing commitments were included on Oracle Financials expenditure reports. A mass clean-up process was run to automatically suppress old commitment data that was determined to be inaccurate or no longer relevant. For requisitions and purchase orders that met the clean up criteria, commitments will not show in the Requisition and Purchase Orders Inquiry tool (a.k.a. Web Inquiry) or on Oracle Financials expenditure reports. Beginning in February 2008, a similar automatic suppression program will be run weekly.

Initial Clean-up Criteria

Approved requisition meets one of the following criteria:

  • No activity for the past 18 months or longer
  • Total requisition value < or = to $100

Approved purchase order meets one of the following criteria:

  • No activity for the past 18 months or longer
  • Total order value < or = to $100
  • Category REIMB (reimbursements which were created in Oracle iProcurement prior to the implementation of the iOU reimbursement system)
  • Line that is < or = to $1.00
  • Invoice total greater than the value of the Purchase Order

Ongoing Weekly Clean-Up Criteria

Approved purchase order meets one of the following criteria:

  • Line that is < or = to $1.00
  • Invoice total greater than the value of the Purchase Order
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