Term. A reservation of funds to cover obligations arising from purchase orders, contracts, salary commitments, etc. that are chargeable to, but not yet paid from, a specific account. Encumbrances project future expenditures and provide fiscal officers with a more accurate representation of an accounts available balance. Examples: a college may encumber funds for a later payment to cover expenses associated with a facility member's trip to recruit new Assistant Professors; or encumbrances are established when a Purchase Order is approved to reserve funds payable to a vendor.