Commitment Management: Concepts

Approving Commitments

You can configure an approval process for commitments. The approval process begins when you save and submit the commitment. The commitment cost is applied to the associated activities when the commitment is pending approval or approved. After a commitment cost is approved, the amount cannot be changed without re-approval.

You can associate invoices with commitments. You can track and report on the commitment totals by fiscal period based on the invoices and journal vouchers associated with the commitment.

Configuring an Approval Process for Commitments

Your organization can configure an approval process for commitments. This allows users to review and approve a financial commitment before the commitment is applied to the associated activities and funding accounts.

The Commitments Approval system parameter setting determines which kind of approval process is used. This table describes the options available for this system parameter.

Review Type	Description	When to use
No	Choose no if your organization does not require an approval process.
Yes - By Controlling Account Funding Account Contact	Multiple activities and multiple funding accounts might be associated with a commitment. However, each funding account has a single controlling account.	The owner for each associated controlling funding account must approve every commitment.
Yes - By Commitments Approval, Access Security Right (Pooled)	Commitments must be reviewed by a user who has the Commitments Approvals, Access right.	Your organization has a pool of financial administrators with the Commitments Approvals, Access right who are responsible for approving commitments. The users can perform approvals for commitments associated with their finance group.
Yes - By Commitments Approval, Authorization Rules	Commitments must be reviewed by one or more users. The approvers are determined by the Authorization Trees module and Authorization Rules module configuration. An authorization tree lists the users involved in the approval process, and defines the amount that each user is authorized to approve. An authorization rule contains criteria that determine which commitments are reviewed by the users in a specific authorization tree.	The total commitment amount determines which users in an authorization tree must review the commitment. More than one user might review a commitment, depending on the total commitment amount.
Yes - By Commitments Approval, Authorization Rules and Pooled	Similar to Yes - By Commitments Approval, Authorization Rules, but also determines whether the user can select No in the Final Approval Pooled field in an authorization rule.	The Final Approval Pooled field defaults to Yes, and does not allow you to change the field.

The approval process begins when you submit the commitment. Reviewers can access it using one of these methods:

Click the link in the email message notification that is sent regarding the commitment
Open the commitment in the Commitment Approvals module
Open the commitment in the Commitment Approvals module in My Reviews

Key Fields

When you create a commitment, the Commitment Lookup and Commitment Select tabs allow you to select an associated supplier and activity before you reach the details for the commitment.

Commitment Lookup
Commitment Select
Details
Additional Fields, Sections, and Tabs
Approvals

Commitment Lookup

You associate each commitment with a supplier and an activity. The Commitment Lookup tab and the Commitment Select tab allow you to search for and select the appropriate supplier and activity.

Note:
If you create the commitment in an activity, the activity defaults to the activity from which you create the commitment.

The supplier list is limited to those suppliers that are associated with the finance group for the activity.

Each field on the Commitment Lookup tab is optional. You can choose a supplier by entering information in any of these fields, but you do not have to enter any information. You can continue to the Commitment Select tab for a list of suppliers from which to choose a supplier.

Supplier

For each field, enter as much information as you know. The fields you complete narrow the list of suppliers you can associate with the commitment. The available fields depend on the Supplier Lookup Fields system parameter settings.

Activity

For each field, enter as much information as you know. The fields you complete narrow the list of activities you can associate with the commitment. The available fields depend on the Activity Lookup Fields system parameter settings.

Click Continue when you finish your selections. You continue to the Commitment Select tab, even if you do not complete any supplier or activity information.

Commitment Select

You Associate each commitment with a supplier and an activity. The Commitment Lookup tab and the Commitment Select tab allow you to search for and select the appropriate supplier and activity. The options you see on the Commitment Select tab depend on the fields that you completed on the Commitment Lookup tab.

Click the button next to the appropriate supplier and activity to select them. If you narrowed your selections on the Commitment Lookup tab, the supplier and activity might already be selected. Available activities meet these conditions:

The activity has a status of Open.
The activity has a financial status of Open.
The activity contains a controlling funding account.

Note:
If you create the commitment in an activity, the activity defaults to the activity from which you create the commitment.

The supplier list is limited to those suppliers that are associated with the finance group for the activity.

Click Select to apply the selections to your commitment. If you do not make a selection, you can choose the supplier on the Details tab for the commitment.

Details

The Details tab contains several sections. You always see the first 3 sections. The Closed Period Commitment Items section is displayed when commitments have been closed during the formal closeout process. The Funding Account Summary section is displayed when you view a commitment from the Commitment Management list page, and only if the commitment has a status of Approved or Closed.

Details
Commitment Summary
Commitment Items
Closed Period Commitment Items
Funding Account Summary

Details

Field	Description
Supplier	Choose the active supplier to associate with the commitment. If the supplier for the commitment has not been added to the master list, you can create a new supplier. If you cannot locate the supplier you want to associate with the commitment, the supplier might exist but be inactive. In this situation, edit the supplier record in the master suppliers list, and change the status to Active. It is also possible the supplier is not available for the finance group associated with the activities for the commitment.
Contact	Choose the supplier contact.
Type	You use commitment types to categorize commitments. This field identifies the category assignment for the commitment. The type that you select might affect the additional fields, sections, and tabs that appear. You configure commitment types in the System Types module in System Tools.
PO Number	Choose the commitment number. If the PO Number is enabled in the Commitment Lookup Fields in System Tools, you can use the PO Number to look up a commitment to associate with an invoice.
Currency Code	Choose the currency in which the commitment is calculated when you create the commitment. The currency for a commitment can be different from the currency for the activities with which the commitment is associated.
Closed	Choose whether you can spend money against the balance for a commitment. You can change a non-Draft commitment to the Closed status at any time, either individually, or, if you have the appropriate rights, using the mass close feature. If this field is set to No, the sum of the associated invoices is subtracted from the outstanding commitment balance. If this field is set to Yes, the outstanding commitment balance is zero.
Creator	Choose the user who creates the commitment.
Owner	Choose the user who is responsible for the commitment.
Status	This field indicates the state of the commitment.

Commitment Summary

This section summarizes current values that pertain to the commitment items. When a commitment is pending re-approval, the commitment summary shows the current values.

Note:
This section appears only on the View Commitment - Details page.

Field	Description
Amount	This field indicates the sum of the commitment items.
Pending Invoices	This field indicates the sum of the unpaid invoices and unreconciled journal vouchers.
Paid Invoices	This field indicates the sum of the paid invoices and reconciled journal vouchers. The calculation uses the exchange rate from the day each invoice was paid rather than the current exchange rate.
Outstanding	This field indicates the outstanding commitment balance. The total reflects each commitment item minus the amount of any pending or paid invoice items, or pending or reconciled journal voucher items, that are directly tied to the commitment item. You may have a negative outstanding balance. For example, if you have a credit for a commitment, you can enter a negative amount for a commitment line item, possibly causing the outstanding total to be negative. When a commitment item is closed, the outstanding value is zero, even if the entire value was not used. If the Closed field is set to Yes, the outstanding balance is not calculated.

Commitment Items

Use the Commitment Items section to itemize the goods or services that will be purchased from the supplier.

If a commitment that has been approved is changed, you see two Commitment Item sections:

Proposed Commitment Items
Current Commitment Items

Field	Description
Closed	Choose whether the individual item is closed. If the item is closed, you cannot spend against it.
Fiscal Year	Choose the year with which the commitment item is associated. The fiscal year you select determines which expense categories are available to select.
Period	Choose the period in the fiscal year with which the commitment item is associated.
Activity	Choose the activity with which the commitment item is associated. The total for the commitment item is applied to the commitment costs of the selected activity.
Expense Category	If your company uses expense categories, associate each commitment item with an expense category.
Quantity	Type the number of items for the commitment.
Price	Type the cost per item for the commitment. When you enter the price, do not type commas or other whole number separators. To view the monetary values with comma separators, position your cursor over the field. The ScreenTip displays the amount with commas included.
Total	This field indicates the commitment item cost based on the quantity and price.

Closed Period Commitment Items

This section shows items that belong to periods that were closed due to a period closeout or an annual closeout.

Funding Account Summary

This section displays the accounts that fund the commitment based on the associated activity or activities. The section is displayed for approved or closed commitments. The calculations use the exchange rate from the day each item was paid rather than the current exchange rate. You do not see this section if you access a commitment from within an activity.

Commitment Statuses

Commitment Status	Description
Draft	Each commitment begins with the Draft status, during which time it can be deleted. To proceed to another status, submit the commitment for approval.
Pending Approval	After you submit a commitment for approval but prior to the approval, it has the Pending Approval status. While a commitment is pending approval, you can retrieve, cancel, or delete the commitment. The type of approval process your company has configured determines the wording on this field. The commitment can be modified during this time from within the review by a user with the Commitment Approval, Edit right unless the approval is based on authorization rules.
Approved	After the commitment is approved, changes that impact the commitment amount or the funding account allocation require the commitment to go through a re-approval. The activity, fiscal year, and period cannot be changed once a commitment is approved. You cannot change the amount for a commitment item to a number that is below the total amount of paid invoices and journal vouchers from that item. You cannot delete the commitment if any associated fiscal periods have a status that is not Open. If invoices are associated with the commitment that do not have a status of Draft or Rejected: The commitment cannot be deleted The supplier cannot be changed The supplier contact cannot be changed
Rejected	The type of approval process your company uses determines the wording on this field. If a commitment is rejected, you can choose to edit the commitment and resubmit it for approval. You might also choose to cancel or delete the commitment.
Pending Re-Approval	If you want to request an increase or decrease to an approved commitment, you can submit the new commitment amount for re-approval. If accepted, the new amount is reflected for the commitment. If rejected, the commitment remains approved for the original amount.
Canceled	A canceled commitment cannot be modified. You can delete a canceled commitment.
Closed	To close a commitment, change the Closed field to Yes. After you close it, a user with edit rights can change the commitment back to a status of Approved by changing the Closed field to No. You can re-open a commitment by creating new commitment items for an open fiscal year.

Additional Fields, Sections, and Tabs

Your system administrator can create additional fields for some objects and make them available for certain system types. Additional fields appear on the Details tab in the Additional Details section or in other sections or on other tabs that the system administrator creates.

For more information about an additional field, section, or tab, contact your system administrator. For more information about additional fields in general, see Additional Fields.

Approvals

The Approvals tab appears if your organization has configured an approval process for commitments that is not pooled. It lists the users involved in the approval process. The functionality on this tab depends on the type of approval process that your organization has configured.

The e Commitments Approval system parameter setting determines which kind of approval process is used.

If your company uses an approval process either by controlling funding account contact or by authorization rules that are not pooled, you can delegate the reviewers. If a commitment is pending approval, you might be able to edit the approver list. On the Edit Approvers tab, select the reviewers to add or remove from the list. You cannot remove or add a reviewer who has already voted. If a reviewer has already voted, their vote is displayed in the Approval Decisions section.

Notifications

In a default environment, no notifications will be sent to invite a reviewer, or to inform the creator that a commitment has been reviewed.

If you need to have a commitment approval process with automatically sent notifications, you need to set the following system parameters to Yes:

Commitments Approval - Choose one of the options that start with Yes to allow notifications being sent to reviewers. Please see below for an explanation of the options.
Commitments – Send Email Notification if Approved or Rejected - If this system parameter is set to Yes, the commitment creator and to the owner are notified when a commitment is approved or rejected.

Notifications to creators and owners

As mentioned above, the commitment creator and the owner are both notified when a commitment is approved or rejected, if the parameter Commitments – Send Email Notification if Approved or Rejected is set to Yes.

The notification contains the ID, supplier, activity, purchase order number, and amount of the commitment.

Options for notifications to reviewers

The system parameter Commitments Approval determines which user receives notifications:

Scenario	Notification Content and Recipients
A commitment is created, and the approval process is based on the controlling funding account contact.	The notification contains the ID, supplier, activity, purchase order number, and amount of the commitment. It is sent to the controlling funding accounts contacts for the activities associated with the commitment.
A commitment is created, and the approval process is based on the Commitments Approval, Access right.	The notification contains the ID, supplier, activity, purchase order number, and amount of the commitment. It is sent to the users who are in the associated finance group and who have the Commitments Approval, Access right, except for the user who created the commitment.
A commitment is created, and the approval process is based on authorization rules.	The notification contains the ID, supplier, activity, purchase order number, and amount of the commitment. If the approval method is single, the notification is sent to the selected commitment approver, provided that in the corresponding authorization tree the Notification field is set to Yes for this approver. If the approval method is sequential, the notification is sent to the first commitment approver, provided that in the corresponding authorization tree the Notification field is set to Yes for this approver. If the commitment is approved, the next approver is sent a notification. This continues until the approval process for the commitment is complete. For more information about authorization rules or trees, see Budget Allocation.
An approver is removed from the list of approvers or a review is delegated to a different approver.	The notification contains the commitment details, with a message indicating that the approver no longer needs to review the commitment. It is sent to the affected approver, provided that in the corresponding authorization tree the Notification field is set to Yes for this approver.
An approver is added to the list of approvers or is selected as a replacement reviewer.	The notification contains the ID, supplier, activity, purchase order number, and amount of the commitment. It is sent to the selected approver, provided that in the corresponding authorization tree the Notification field is set to Yes for this approver. If the approval method is sequential, the notification is sent when it is the approver's turn to review the commitment.