How does working with commitments in Spend Cloud work?

How does working with commitments in Spend Cloud work?

A commitment is a financial obligation that arises from a purchased product and/or service. Such a commitment can be based on an offer, a contract, or an order. You enter into this commitment with a supplier who will provide the service and/or product. You can register these commitments in Spend Cloud to gain control over incurred and anticipated costs.

Registering Commitments

For example, let's say you initiate a construction project and request a quote from Supplier X for a new floor. You can register this future expenditure as a commitment. By registering all commitments with the involved suppliers in the construction project, you can maintain control over all future expenses. Now, when an invoice arrives from Supplier X, the commitment related to the floor can be selected during invoice coding. The invoice amount will then be deducted from the total commitment amount. Spend Cloud will calculate the remaining commitment amount as well as the total incurred costs. You can find this information in the commitment overview.

Relevant Actions:
  1. Add a new commitment
  2. Write off a commitment

Budgeting

In addition to commitments, you can also register budgets in Spend Cloud. While commitments are added at the supplier level, budgets allow you to specify expected costs. If you have initiated a construction project, multiple tasks may arise for various suppliers. You can set a separate budget for each of these tasks. For example, you might have a budget for lighting in the renovation. Now, when an invoice arrives for the lighting, you can select this budget during invoice coding. Just like with commitments , Spend Cloud will calculate both the remaining budget amount and the total incurred costs. You can access this data in the budgets overview and under the Reporting menu.

Relevant Actions:
  1. Add a new budget
  2. Budget overview
  3. View reports

Combination with Other Functionalities

Ninety-five percent of our customers combine the Commitments module with Invoice Processing. In this combination, you can directly write off commitments and have an up-to-date insight into the budgets the organization has created.

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