Oracle General Ledger 11i enables a user to define an encumberance type. As such, Oracle GL comes with two predefined Encumbrance Types: Commitment and Obligation. In case you are setting up budgetary control in your Oracle GL, it makes sense to enable the encumberance type. This is not all, if required, you can also define further encumberance types as required. This can be easily done by defining various encumberance types with different names for easy identification.

To take an example, suppose in Purchasing which is a crtical business function, encumberances can be set which can be monitored at various stages.