Encumbrances

An encumbrance is a reserve of funds set aside for a particular purchase. Encumbrances are used to earmark funds so the funds are not used for other expenses. Encumbrances are created in the accounting system at the account, support account, and object code levels at the time a requisition is approved by the final department approver. When an invoice is processed against the PO, the encumbrance is released at the time of the invoice posting in the accounting system. It is possible that the invoice posting may not release the entire encumbrance due to the vendor billing less than the encumbered amount. Or, only part of the order could be fulfilled and an alternate vendor was used. It is also possible a PO may not be able to be fulfilled by the vendor or the department decided to cancel the order. Unspent encumbrances will roll over to each fiscal year until they are spent or removed. If an encumbrance needs to be removed, please send an email to aggiebuy@tamu.edu with the encumbrance amount, document number and justification to remove the encumbrance.