Setup Considerations: Commitment Accounting in Procurement
You can use this topic to help make decisions when planning your configuration and use of commitment accounting to track procurement spend. It explains:
- Why to set it up.
- How it fits into the rest of Workday.
- Downstream impacts and cross-product interactions.
- Security requirements and business process configurations.
- Questions and limitations to consider before implementation.
What It Is
Commitment accounting is the practice of identifying and reserving funds for future payment obligations. This accounting is linked to procurement documents such as requisitions and purchase orders.
Business Benefits
You can:
- Enable the accounts payable (AP) department to control and plan for spend before you authorize it.
- Easily track a single recurring purchase order so it doesn't fall under oversight.
- Enable users to verify budget constraints while reviewing and approving procurement transactions.
Use Cases
- Roll remaining commitments and obligations forward to the next ledger period for requisitions, purchase orders, and supplier contracts.
- Track journal entries for requisitions by enabling commitment ledgers.
- Track journal entries for purchase orders by enabling obligation ledgers.
- Create an actuals ledger to track journal entries for supplier invoices.
- Plan for cash flow by tracking obligations and commitments.
- Review procurement transactions against a specific budget.
Questions to Consider
Questions | Considerations |
|---|---|
How do you structure your company budget? | Budget structures are the foundation for budgets in Workday. The structure determines:
The structure also impacts how often you roll forward procurement documents. |
How do you track accounting for requisitions? | Workday recommends that you enable commitment ledgers to track journal entries. |
How does your organization use worktags? | When you use worktags such as funds or grants, balancing worktags enable better tracking of commitments and obligations. |
Recommendations
To ensure that transaction documents continue to meet budget constraints, add the
Check Budget
subprocess and action step after review or approval steps on business processes.When you're rolling forward multiple times for the same time period, use the
Fiscal Year
filter to filter out documents you already rolled forward.To ensure consistent data, complete these year-end tasks in this order:
- Roll forward any remaining commitments and obligations.
- Mass close procurement documents.
- Close the ledger period.
To confirm your accounting setup, verify worktag balancing for a company on the
View Worktag Balancing Configuration
report.Requirements
Set up:
- Account sets.
- Accounting posting rules.
- Journal sources.
- Ledger account types.
- Ledger periods.
Define configurations for:
- Ledger years and periods.
- Ledger account types.
- Account sets.
- Account posting rules.
Use the
Maintain Procurement Roll Forward Book Codes
task to enter a book code for the company for which you want to roll forward.Limitations
No impact.
Tenant Setup
No impact.
Security
Domains | Considerations |
|---|---|
Set Up: Ledger and Book in the Common Financial Management functional area | Enables you to configure book codes for rolling procurement commitment accounting forward. |
Process: Year End in the Common Financial Management functional area | Enables you to assign procurement roll forward book codes to companies. |
Set Up: Journal Source in the Common Financial Management functional area | Enables you to map commitment and obligation journal sources to operational transactions. |
Set Up: Supplier Contracts
| Enables you to configure supplier contract types to create obligations. |
Business Processes
Modify the
Procurement Roll Forward
business process to define the workflow for rolling procurement documents forward to the next fiscal year.Reporting
No impact.
Integrations
No impact.
Connections and Touchpoints
Features | Considerations |
|---|---|
Budget Check | Enable budget checks to track commitments and obligations for procurement transactions against a specified budget. |
Procurement Roll Forward | You can use the Roll Forward Procurement Documents task to roll forward:
|