A ceiling positioned on bills deemed reimbursable or payable below a selected settlement or regulation. This restrict is established to regulate expenditure and guarantee fiscal accountability. For instance, a authorities contract may stipulate that solely prices as much as a sure stage for journey or supplies will probably be lined.
This follow is significant for funds administration, stopping overspending, and offering monetary predictability. It’s common in sectors like healthcare, authorities procurement, and insurance coverage. Traditionally, the institution of such limits arose from a must curtail extreme expenses and enhance transparency in monetary transactions.
