Encumbrances and Purchase Orders

Purchase Orders (POs)

A Purchase Order (PO) is the legally binding contract issued exclusively by the Procurement/Purchasing Department to a vendor for the acquisition of goods and/or services.

• Authorization and Payment: Vendors rely on POs as formal verification that a transaction is authorized by Fordham University, ensuring timely payment upon the successful delivery and receipt of items.

• Legal Terms and Conditions: All POs are printed with standard University Terms and Conditions approved by the Office of Legal Counsel. These terms constitute the entire contractual agreement and cannot be altered, modified, or amended by any department.

• Order Modifications: Once a PO has been officially issued, individual departments cannot change or modify the order directly with the vendor. Any required changes, cancellations, or amendments must be submitted to the Purchasing Department for express permission and processing.

4.2 Encumbrances

When a Purchase Order is approved and dispatched, the required funds are immediately committed from the department’s budget. This process is known as an encumbrance.

• Fund Holds: Encumbered funds are held "in suspense" to ensure capital is reserved exclusively for that transaction. The encumbrance remains active until the goods or services are received and the vendor's invoice is paid, at which point the encumbrance is liquidated (released).

• Fiscal Year-End Closing: To comply with standard university accounting principles, all operational fund encumbrances are automatically closed out at the end of each fiscal year ($June\ 30th$). Any outstanding balances or unliquidated commitments do not automatically roll over and must be reauthorized in the new fiscal year budget.