Committed cost

General

Cost a business has contractually agreed to — for example through a signed contract or purchase order — but has not yet been invoiced or paid. Committed cost sits between the planned budget and the actual spend and shows how much of the budget is already locked in.

Why it matters

Actuals show what has been invoiced; committed costs show what the company has already promised to pay. A project or department that looks under budget on actuals can already be over it once signed purchase orders and contracts are counted, so commitments are the earlier warning.

Formula

Available budget = budget − actual costs − committed costs

Worked example

A project has a €200,000 budget. Invoices booked so far total €90,000, and signed orders for subcontracting and hardware not yet invoiced add €70,000. Only €40,000 is genuinely available, not the €110,000 that actuals alone suggest.

On Flowtly

Budgets Company expenses

In the knowledge base

Budgets

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