When is a commitment in a purchasing process reduced?

In the context of the purchasing process within SAP S/4HANA, a commitment is specifically reduced when the goods receipt arrives. When goods are received, they confirm that the items listed in the purchase order are now physically present in the company's inventory. This triggers a reduction in the financial commitment recorded against that purchase order in the system, reflecting that the obligation to pay for those goods has now been fulfilled to some extent.

The reduction of commitment during the goods receipt step allows for more accurate financial reporting and inventory management, as it directly links the physical movement of goods to changes in the company's accounting records. This ensures that the organization's financial obligations are updated real-time, promoting both operational efficiency and effective cash flow management.

In contrast, other stages of the purchasing process do not result in an immediate reduction of commitments. For instance, creating a purchase order establishes the commitment, but it does not reduce it since the goods have not yet been received. Similarly, while invoice verification and payment processing are critical to completing the purchasing cycle, they do not directly reduce the commitment associated with the purchase order until the actual good receipt is processed.