| # Log Commitments (Purchase Transactions) Not An exception is hard commitments in case a purchase order is delivered directly to a Project site. In that case, a hard commitment line is created. In the case of a direct delivery to a project site, the cost of WIP is posted to Finance. Hence, the commitment in Project becomes cost in Finance. This is done because of the timing of the next step: "invoice approval". The moment of the invoice approval is not controlled from Project but from Finance. Therefore, the cost of WIP is posted to Finance . So, on one hand we cannot wait until invoice approval for registering WIP costs because this in many cases will be late. On the other hand, there is still commitment, because the goods are only delivered (not consumed) to the project and may be returned to a warehouse (for example, the goods have been ordered, but are not used). Order and Delivery Commitments are logged at the point of ordering and at the point of delivery (when the goods or services are received)or at the point of releasing the stage payments. Delivery Commitments are logged only at the point of delivery or at the point of releasing the stage payments. |