Credit Card Expense Cards and Encumbrances

Credit Card Expense Cards and Encumbrances

To help ensure projects do not overspend their available funds, Social Good Fund applies an encumbrance related to credit card expense cards.

• We temporarily encumber the total line of credit for all credit cards associated with your project.

• This encumbrance reduces the project’s available fund balance for spending, even before charges are made.

• The purpose of this control is to account for potential future charges and protect projects from exceeding their fund balance.

Encumbrances are adjusted as follows:

• When a credit limit is increased, the encumbrance for that card is increased accordingly.

• When a credit limit is decreased, the encumbrance is reduced.

• When a credit card is closed, the encumbrance related to that card is removed entirely.

These encumbrances are not expenses and do not represent actual charges. They are internal controls used to manage spending capacity and cash risk.