Encumbrance & Pre- Encumbrance in AX2012

When we activate the encumbrance process at GL Parameter, when we post the purchase order than all the transaction are gets recorded at Encumbrance table

Encumbered Value on a purchase order are released when a vendor invoice is posted to spend all or part of the encumbered amount. Released amounts are subtracted from the value of the purchase order encumbrance.

Pre- Encumbrance

A pre-encumbrance is a process of request to reserve funds for planned expenditures i.e., purchase requisition. The funds have been requested, but have not yet been approved for a purchase order. If the pre-encumbrance process is activated, you can create purchase requisitions with a pre-encumbered amount for the planned Expenses.

The pre-encumbrance amount will be released and transferred to PO once the PR is approved and converted to purchase order

Step to follow :

Step 1: General ledger РSetup-  Ledger Parameter

check the Posting Definition ( if user want to post the Pre-encumbrances and Encumbrances in ledger Account)

Check Pre-encumbrances and Encumbrances Check box.

Step 2:

Define the Posting Define at  General ledger РSetup- posting- posting Definition

One for Pre-encumbrances and encumbrances




Once the Posting definition is define than we have to map the posting define to Posting Definition Transaction.

Where we mention the which posting definition will be used for particular transaction.

posting definationtransaction

The same way we have to define for account payable – for vendor posting

Transaction :

Step 1 : Purchase Requisition. (Pre-encumbrances Posting)


Step : 2 – Converting to Purchase Order


Step 3: when a purchase order get converted to Purchase invoice

the Encumbrances amount becomes ZERO and reduces the actual Budget amount.





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