In Finance, transaction management processing is one of labor intensive task in ERP, as it requires extensive data entry , chance are very very high for duplication/re-entry. As we know Procure to Pay life cycle start itself from contract management till making payment.

As we know the efficient Procure to pay process have these sub processes;

• Contract Management
• Purchase Requisitions
• Purchase Orders
• Accounts Payable - Managing invoice
• Supplier Payment

In real business world, many time when system is running external/internal auditor are more interested in scrutiny of:

• Goods received / invoices received
• Inaccurate or duplicate vendor & material master records
• Discrepancies in payment terms
• Delays / long processing times
• Detect duplicate vendor
• Unusually large or small payments
• Unauthorized changes made to invoices
• Detect Duplicate invoice
• Detect Duplicate payment
• Approval status

Therefore, it is Inhouse ISD/Finance IT or implementing company responsibility is to provide such kind of adhoc reporting for auditor so that they can satisfy the audit requirement.

A ‘P2P’ query that made Auditors happy

It was brought by ISD team , as part year end audit for a ERP system which went live 3 month back. It was a one of requirement to display data for a particular PO which covers data from there all 5 five phases, means a particular PO line consist of:

1. Requisition Detail
2. Purchase Order Details
3. Receiving Details
4. Invoicing Detail
5. Payment Details

Therefore thought to share this query, hope this would be great help who have such kind of adhoc requirement from daily life.

Here is query:

SELECT
A.ORG_ID “ORG ID”,
E.VENDOR_NAME “VENDOR NAME”,
UPPER(E.VENDOR_TYPE_LOOKUP_CODE) “VENDOR TYPE”,
F.VENDOR_SITE_CODE “VENDOR SITE”,
F.ADDRESS_LINE1 “ADDRESS”,
F.CITY “CITY”,
F.COUNTRY “COUNTRY”,
TO_CHAR(TRUNC(D.CREATION_DATE)) “PO DATE”,
D.SEGMENT1 “PO NUMBER”,
D.TYPE_LOOKUP_CODE “PO TYPE”,
C.QUANTITY_ORDERED “QTY ORDERED”,
C.QUANTITY_CANCELLED “QTY CANCALLED”,
G.ITEM_DESCRIPTION “ITEM DESCRIPTION”,
G.UNIT_PRICE “UNIT PRICE”,
(NVL(C.QUANTITY_ORDERED,0)-NVL(C.QUANTITY_CANCELLED,0))*NVL(G.UNIT_PRICE,0) “PO Line Amount”,
(SELECT
DECODE(PH.APPROVED_FLAG, ‘Y’, ‘Approved’)
FROM PO.PO_HEADERS_ALL PH
WHERE PH.PO_HEADER_ID = D.PO_HEADER_ID) “PO STATUS”,
A.INVOICE_TYPE_LOOKUP_CODE “INVOICE TYPE”,
A.INVOICE_AMOUNT “INVOICE AMOUNT”,
TO_CHAR(TRUNC(A.INVOICE_DATE)) “INVOICE DATE”,
A.INVOICE_NUM “INVOICE NUMBER”,
(SELECT
DECODE(X.MATCH_STATUS_FLAG, ‘A’, ‘Approved’)
FROM AP.AP_INVOICE_DISTRIBUTIONS_ALL X
WHERE X.INVOICE_DISTRIBUTION_ID = B.INVOICE_DISTRIBUTION_ID)”Invoice Approved?”,
A.AMOUNT_PAID,
H.AMOUNT,
I.CHECK_NUMBER “CHEQUE NUMBER”,
TO_CHAR(TRUNC(I.CHECK_DATE)) “PAYMENT DATE”
FROM AP.AP_INVOICES_ALL A,
AP.AP_INVOICE_DISTRIBUTIONS_ALL B,
PO.PO_DISTRIBUTIONS_ALL C,
PO.PO_HEADERS_ALL D,
PO.PO_VENDORS E,
PO.PO_VENDOR_SITES_ALL F,
PO.PO_LINES_ALL G,
AP.AP_INVOICE_PAYMENTS_ALL H,
AP.AP_CHECKS_ALL I
WHERE A.INVOICE_ID = B.INVOICE_ID
AND B.PO_DISTRIBUTION_ID = C. PO_DISTRIBUTION_ID (+)
AND C.PO_HEADER_ID = D.PO_HEADER_ID (+)
AND E.VENDOR_ID (+) = D.VENDOR_ID
AND F.VENDOR_SITE_ID (+) = D.VENDOR_SITE_ID
AND D.PO_HEADER_ID = G.PO_HEADER_ID
AND C.PO_LINE_ID = G.PO_LINE_ID
AND A.INVOICE_ID = H.INVOICE_ID
AND H.CHECK_ID = I.CHECK_ID
AND F.VENDOR_SITE_ID = I.VENDOR_SITE_ID
AND C.PO_HEADER_ID IS NOT NULL
AND A.PAYMENT_STATUS_FLAG = ‘Y’
AND D.TYPE_LOOKUP_CODE != ‘BLANKET’;

The important section which cover in the query output is as:

1. Information for Supplier

2.Purchase Order details

3. Receiving Items Details

4.Invoice Details

5.Payment Details

You download the query and details here.

Since last fortnight,I was looking into R12 GIS Module, seems some of the old features and functionlity have been greatly enhanced with addition of some more new features introduced.The point which should be noted here is,R11i GIS get new name commonly known as “Advanced Global Intercompany System” in short ‘AGIS’. The difference is the prefix ‘A’, therfore will take a close microscopic view on feature that makes 11i GIS into Advanced GIS of R12. Here are the candidate features :

Ability to create invoices (AR and AP)
Oracle Advanced Global Intercompany System can create invoices in payables and receivables sub ledger from intercompany transactions.

Using Oracle Advanced Global Intercompany System user can enter transactions for multiple recipients within a single batch. This allows user to submit intercompany transactions from one initiator to one or more recipients in a single batch.

Proration of transaction distribution amounts

When user allocates more than one distribution account in a batch that has multiple recipient transactions, Oracle Advanced Global Intercompany System can automatically prorate the distribution amounts based on the recipient transaction amounts. The proration of amounts is also used by Oracle Advanced Global Intercompany System to adjust the distribution amounts in the batch when a recipient transaction is deleted or it is rejected.

Upload Transaction Batches created in Excel

This was a missing link in the earlier version, as earlier product does not have capability to use direct upload functionality, rather than interfacing through Open GIS interface. In Release 12 ADI is heavily used in this module, which is replacement of external integration for AGIS System using by mean of Microsoft based Excel spreadsheet. Now flexibility is provided to user that can generate spreadsheet templates that have features of intercompany entry pages and using the templates the user can enter transactions in the spreadsheet and upload them into Oracle Advanced Global Intercompany System. The good thing has found the standard templates can be customized by removing or adding the entry fields from a list of available fields. This feature is used to create a template that contains only the entry fields that are important for the business. The required fields cannot be removed from the template. Once the templates are generated, user can save them in their local computer to reuse them in the future. This figure describe the options available in both the versions.

Multiple recipients Support

Reversal of batch/transaction

This changed feature enables a user to reverse a whole batch or an individual transaction in a batch. When the user reverses a batch or a transaction, a new reversal batch is created, which displays the references to the original transaction. One point to be noticed is that new batch is submitted automatically immediately after it is created. Not both the parties (Sender /receiver), its only users with access to the initiator organization can reverse its batches or transactions. The set up is there where a user can choose a reversal method determining if the new batch will be created with opposite signs, or with switched debits and credits.

Descriptive flexfield support

In AGIS descriptive flexfields is supported on the batch and also on individual transactions within the batch. Descriptive flexfields allow user to enter any additional information specific to the nature of business, in the batch and in the transactions. Important to note that these DFF can be used by sender. The user can enter descriptive flexfield information for the recipient in the Recipient Accounting section.

Flexible Approval Rules and Workflow Notifications

In R12, AGIS very similar to other module, home page displays notifications about approval or rejection statuses of intercompany transactions. You should note that notifications can be sent to the users via email. The rules for approvals and notifications can be customized using Oracle Approval Management Engine (AME), which allows the user to add extra approval rules and hierarchies to suit their business needs.

Document attachment

The user can attach the documents for the batch as well as for each of the transaction. When user submits the batch, the documents are transferred to respective recipients.

Transaction security

Intercompany transactions entry pages incorporate various security features. The user can enter transactions only for those intercompany organizations that are assigned to the user. Other security features include minimum transaction amount, control amount and function security.

For example:

Intercompany accountant processes intercompany transactions for many intercompany organizations in the enterprise.What is different between these two is :

• R11i - Each responsibility has only one subsidiary assigned, therefore a user can initiate intercompany transactions for one subsidiary from each responsibility
• R12 – the user can initiate intercompany transactions for many trading partners without changing responsibility

Intercompany Periods

The new Intercompany calendar gives the user the option to control intercompany transaction processing by periods status.

What is observed in this functionality can be best describe as:

If a user wants to control intercompany cut-off dates, then the user can choose which General Ledger calendar will be used to control transaction entry by intercompany period status. Intercompany Calendar prevents users from entering transactions in closed periods and from closing the period if open transactions exist for the period user wants to close. When the user tries to close General Ledger accounting period, or Oracle Payables period or Oracle Receivables period while Intercompany Period is still open, the warning message can be displayed informing user about the status of intercompany period.

Setup Profile Options

In AGIS there is no profile options that means these three as below intercompany profile options used in R11i are obsolete in this release.

• Intercompany: Protect Receiver Natural Account
• ntercompany: Subsidiary
• Intercompany: Use Automatic Transaction

Intercompany Reconciliation and Reporting

There are two new reports avaible in XML Publisher format

• Intercompany Transaction Summary report
• Intercompany Account Details report.

These reports replace reports that were available in the Global Intercompany System (GIS) in Release 11i.

The new reports offer all of the functionality of the obsolete reports plus additional benefits.

A bit on these 2 reports:

1)Intercompany Transaction Summary report replaces the Intercompany Transaction Detail report and Unapproved Transaction Listing report.

The purpsoe of this report is to give user a clear overview of intercompany transactions and their statuses, there so that day-to-day tasks and speeds up period close activities.

This report also provides supporting documentation for intercompany reconciliation and helps keep intercompany in balance by uncovering any potential discrepancies.

2) Intercompany Account Details report replaces the Transaction Activity Summary report

This new report provides a detailed listing of all accounting lines for intercompany batches, grouped by transaction.

The report is divided into two sections:

• one section for outbound batches
• one section inbound transactions.

The outbound section shows transactions initiated by the organizations to which the user has an access, the inbound section shows transactions received by these organizations. The user can choose whether to include inbound, outbound, or both sections in the report.

The user can run the report for one or many organizations to which the user is given the access.

User can select what parameters like initiator, Recipient, GL Date range, Batch Number range, Transaction Status, Currency, Batch Type, Invoice Number, and many more to run the report by. User can run the report by ranges of initiator and recipient accounts to see what transactions make up their balances.

Know the difference in product version functionality.This document might be very helpful to those group and team, who is still working on some older version of OracleApps and same time exploring the new feature of higher versions release. This document is compiled for Fixed asset and put all five different version’s new and enhanced feature in one place.

You can download the document here for Fixed Asset.

Here are the six new and Changed features for Oracle Assets in Release 12 .

• Sub Ledger Accounting Architecture
• Enhanced Mass Additions for Legacy conversions
• Automatic Preparation of Mass Additions
• Flexible Reporting using XML publisher
• Automatic depreciation rollback
• Enhanced functionality for Energy industry

Fixed Assets tied with SLA(Sub Ledger accounting)

As we have already seen in few earlier post “Oracle Subledger Accounting ” is a rules-based engine for generating accounting entries based on source transactions from ALL Oracle Applications. Therefore Fixed Asset module does integrated with such functionality to cater the asset accounting at ledger level. With this feature:

• Oracle Assets is fully integrated with SLA, which is a common accounting platform for Sub Ledgers.
• Customers can use the seeded Account Derivation definitions or modify them as required.
• Continue to support Account Generator functionality for existing Asset Books.
• New SLA Accounting report and online account inquiry.

What you will notice create Journal Entries (FAPOST) process feeding into the GL_INTERFACE table is no more exist .This is replaced with the Create Accounting – Assets process (FAACCPB). With this replacement, the some of high point in term of benefits are:

Therefore with this new enhancement allows clients to meet multi-GAAP, corporate, and fiscal accounting requirements. The tool, Accounting Methods Builder, allows you to determine the accounts, lines, descriptions, summarization, and dates of your journal entries.

This can be best understood as this example, if you do a large amount of asset additions on the first day of the month, you can run Create Accounting and get all the Cost and Cost Clearing lines over to GL at the close of business that day.

Enhancements have been made to the FA_MASS_ADDITIONS table.

Now with this enhanced feature, we can populate the values for the new attributes directly in the FA Mass Additions interface table rather than accepting default values from the asset category. Legacy conversion can be completely automated.These are new adds-on:

What it is understood , is that Web ADI has also been upgraded to include the new Attributes.

• New columns in the Asset Additions WebAdi
• Additional attribute can be used to populate values directly thereby eliminating the need to override the defaults from the Asset Category
• These new data fields will benefit data conversion by allowing the converted data to be brought into Oracle with the asset life information.

New Automatic Preparation of Mass Additions

• This new feature consists of default rules and Public APIs that can be used by customers to complete the preparation of mass addition lines automatically.
  • Auto populate required fields such as Expense Account, Asset Category etc.
  • Avoid manual intervention during the Mass Additions prepare process
  • Avoid customization and use public APIs to effect custom business logic.
• Assets now uses Flexible Reporting using XML publisher
  • Major Asset Transaction reports have been modified to support XML publisher.
  • Users can modify or use new templates to view report output.

Those who are very new to Asset module must have question, What is maent by Default Rules.

• Asset Category – this is derived from the asset cost clearing account, as long as there is a one to one relationship between the account and asset category. This process will only impact items in the ‘New’ and ‘On Hold’ queue names.
• Expense Account – this is derived from the clearing account combination and overlaying the natural account segment with the value of the natural account segment of the depreciation expense defined in the asset category. If the program cannot derive an expense combination, the queue name is set to ‘On Hold’.

So what is meant for Consultant by this feature..please note

• This should minimize the amount of manual efforts involved in the Prepare Mass Additions Process. Manual updating is still required some fields may not be populated but are required.
• Asset Category – a one to one relationship between cost clearing account and asset category – this will expand the COA of many companies.
• Expense Account – the expense combination is going to be derived from a BS account. Oracle will simply overlay the natural account segment, replacing the cost clearing account with the depreciation expense account leaving all other segment values alone. If there are certain requirements for P&L accounts versus BS accounts, I.e. cost center required for P&L, this may present issues.
• Manual efforts are required to perform Merging, Splitting, Add to Assets, and Merge Then Split functionality.

Flexiable Reporting into XML Publisher

These Thirteen asset reports have been converted in XML Publisher based report.

• Create Accounting – Assets
• Transfer Journal Entries to GL – Assets
• Journal Entry Reserve ledger Report
• Asset Additions Report
• Asset Transfer Report
• Asset Retirement Report
• Transaction History Report
• Asset Reclassification Report
• Mass Additions Create Report
• Mass Additions Posting Report
• Cost Adjustment Report
• Cost Detail report
• Cost Summary Report
• Reserve summary Report
• Reserve Details Report
• Mass Revaluation Preview Report
• Revalution Reserve Details Report
• Revalution Reserve Summary Report
• CIP Capitaliization report
• CIP Detail Report
• CIP Summary Report
  

You can design and control how the report output will be presented in separate template files. Publish in PDF format that can support colors, images, font styles, headers and footers, and other formatting. You can create new report templates, or modify existing templates to view your report output.

Automatic Depreciation Rollback

Depreciation is rolled back automatically by the system when any transaction is performed on an asset if the following conditions are met:

That mean, it is no longer required to run depreciation rollback program manually as we have seen in release 11i.

Depreciation rollback is executed only on select assets as required and not on the entire Asset Book this enhances performance of the program.

Since release 11i, users have been able to run depreciation for an asset book without closing the period. If additional adjustments are required in the current period, then the user submits a process to roll back depreciation for the entire book, performs the necessary adjustment(s) and then resubmits the depreciation program. In Release 12 the intermediate manual step of rolling back depreciation for the entire book in order to process further adjustments on selected assets is no longer necessary. As before users may submit depreciation for the entire book prior to closing the period. If it becomes necessary to process financial adjustments on one or more assets, the user may proceed with the transaction normally via the asset workbench or mass transactions.

Oracle Assets automatically rolls back the depreciation on just the selected assets (instead of the whole book) and allows the transaction(s) to be processed normally. The asset(s) for which depreciation was rolled back is automatically picked up during the next depreciation run or at the time that the depreciation period is finally closed.

Enhanced functionality for Energy Industry

As per RCD , this can be understood as;

• Energy Units of Production Method for Group Assets

In the oil & gas industry, asset properties may include fields, leases and wells. These assets are typically associated with units of production (UOP) and are depreciated using a special UOP depreciation method. ‘Energy’ assets are generally structured into two levels, group and member assets, where the group asset is a collection of several members.

• Allow Production method for Group Assets
• Allow Production upload to Group Assets

• Energy Straight line Method

This feature is used in oil & gas industry ,where non-producing assets are depreciated using the energy straight-line method based on the asset’s net book value. Assets that depreciate using the energy straight-line method may either depreciate at the member asset level or group asset level.

A note on Straight-Line Depreciation – Assets that depreciation using energy straight-line method may either depreciate at the member asset level or group asset level.

• When at the member level, depreciation is calculated based on each member’s life and then summarized up to the group asset.
• When at the group level, depreciation is calculated at the group asset level, the life of the group asset is used.

• Net Book Value / Remaining Life
• Asset Impairment – this is basically an unplanned depreciation and will utilize this feature to perform asset impairments. Now the ‘impairment’ expense account may be derived from the asset category setup or manually entered.

Suggested Reference

• Note:421352.1 :Release 12: Where is the Option for Rollback Depreciation?

This is in response of one offline mail as one of consultant asked some more information for Cash Clearing Account and Clearing Account, so thought to share here. His question was:

What is difference between “Cash Clearing Account” and clearing account in AR?

If you are using Oracle Cash Management, you need to define

• Bank Errors Account
• Bank Charges Account
• Cash Clearing Account

That mean for each bank account you plan on reconciling by using Cash Management. If you use Payables, you can override these accounts for
each payment document you define.Right.

If you set up Oracle Receivables to account for payments at clearing time, enter the cash clearing account you are associating with a bank account. When you create accounting entries for your unreconciled invoice payments, you credit your cash clearing account using this account. After you reconcile your invoice payments using Oracle Cash Management, when you create accounting entries for the cleared payments, you debit this cash clearing account and credit this bank account’s cash account. The account you enter here defaults to the Cash Clearing Account field in the GL Accounts region of the Payment Documents window.

If you are using future dated payment methods, enter the clearing account you are associating with a payment document. When you pay an invoice with a payment document that uses a Manual Future Dated or Future Dated payment method and post payments within Payables,Receivables automatically debits your liability account and credits this account. When you clear this payment using automatic or manual reconciliation within Oracle Receivables or Oracle Cash Management then post payments within Payables, Receivables debits this cash clearing account and credits this bank account’s cash account.

Clearing Accounts are used for AutoInvoice

The clearing account is for your imported transactions. Receivables uses the clearing account to hold any difference between the specified revenue amount and the selling price times the quantity for imported invoice lines. Receivables only uses the clearing account if you have enabled his feature for the invoice batch source of your imported transactions.

Normally, cash clearing account is used if your accounting is accrual Based.

Is there any relation between Cash Clearing and Reconciliation?

Cash clearing and reconciliation have no relation. You can use cash clearing if you want to account for the payment after its cleared in the bank and not on payment issue.

More over, you should note that reconciliation is a activity of matching a Payment / Receipt with bank statement.

Have a nice weekend.:)

My last two post was on netting , lot of people asked me to provide some more insight view for netting, so this post is meant to walk through ,the concept to someone not very familiar with accounting in real world…so here to go..(adopted)

When trading partners agree to offset their positions or obligations, they are netting. By doing so, they reduce a large number of individual positions or obligations to a smaller number of positions or obligations, and it is on this netted position that the two trading partners settle their outstanding obligations. Besides reducing transaction costs and communication expenses, netting is important because it reduces credit and liquidity risks, and ultimately systemic risk. For a non accounting personal risk can be best understood as :the risk of a trading partner not fulfilling his obligations in full on due date or at any time thereafter is a risk that affects all aspects of business.

Definition of Netting

In this method of reducing credit, settlement and other risks of financial contracts by aggregating (combining) two or more obligations to achieve a reduced net obligation.

• Netting rules a basic part of master agreements.
• Netting rules define precisely the netting of positions or claims between counter parties.

Benefits of Netting

Netting potentially address four major risk in financial area, there are

Types of Netting

Payment Netting

Also called “Settlement Netting” or Also called “Position or Accounting Netting”.

On a payment date, each party will aggregate the amounts of a currency to be delivered by it, and only the difference in the aggregate amounts will be delivered by the party with the larger aggregate obligation.

This can be best understood as:

• Daily settlement or offsetting of several, due claims in the same currency
• Reduction of transaction costs, settlement risk and liquidity risk.
• No impact on credit risk.

Types of Payment Netting Agreements

• Master Agreement with a Payment Netting Clause
• Stand-Alone Payment Netting Agreement
• Informal, “ad hoc” agreement

Novation Netting

If the parties enter into a transaction which gives rise to an obligation for the same value date and in the same currency as an existing obligation, then the two obligations are cancelled and simultaneously replaced with a new obligation for the net amount.

• Settlement of not yet due claims in the same currency and the same maturity.
• Reduction of limit usage and credit risk.

Two Types of Novation Netting:

• Matched Pair Novation Netting
• “Comprehensive” Novation Netting

Matched Pair Novation Netting

Netting only occurs if the two transactions involve the same pair of currencies.

Example1: Matched Pair Novation Netting

Deal 1: Buy JPY / Sell USD
Deal 2: Buy USD / Sell EUR
Deal 3: Buy EUR / Sell JPY

No two deals involve the same currency pair, and therefore no netting under matched pair novation netting.

Example 2: Matched Pair Novation Netting

Example 3: Comprehensive Novation Netting

A Payment Netting vs Novation Netting

• Payment Netting reduces settlement risk, but does achieve netting for balance sheet or regulatory capital purposes because the transactions remain in gross.
• Contrast with Novation Netting, which achieves true netting through the cancellation of offsetting transactions and their replacement with a new, net transaction.

Close-Out Netting

Effective upon a default:

• Existing transactions are terminated
• Termination values are calculated
• Termination values are netted to arrive at a single net amount
• Recourse to credit support, if any

That mean:

• Settlement/offsetting of not yet due claims in different currencies in case of a default event or an early termination event of the contractual relationship.
• All outstanding gross obligations or payments are replaced by a single obligation or payment

Multilateral Netting

Bilateral Netting is between two parties.

Multilateral Netting involves netting among more than two parties, using a clearing-house or central exchange.

 

When it come to party , it may be two party interacting with third party. Th two party may be your other entity in the same instance, which do business internally, what we called Intercompany.

Multilateral netting is a settlement mechanism used by companies to pay for goods and services purchased from affiliated companies. The netting process consolidates
intercompany transactions and calculates settlement requirements internally instead of using external payment systems. Netting is typically used by companies with a number of affiliates in different countries. By netting, these companies reduce bank fees, currency conversion costs, bank balances and improve operating efficiency.

Will take this in some more details in another post.

Requirement Mapping with Existing Oracle EBS Product

Still these two processes are not fully enabled in Oracle EBS suite. Though first type of netting somehow mapped as Contra Charging in post 11i10 releases where as in R12 this functionality can be mapped as part of AP/AR netting, a new feature of R12.

Here is summarize list of the different types of netting and there corresponding netting.

Feel Free to comment or share any information.:)

AP/AR Netting automatically compares Payables to Receivables and creates the appropriate transaction in each system to net supplier invoices and customer invoices. With this functionality, A receivables user can

• View netted receipt details directly from the receipt
• Create Netting Agreements and Netting Batches

With this functionality, there is significant increase in user productivity and effectiveness because of tight integration and automation.

You can access the process via:

As we have seen Contra charging has been replaced by AP/AR Netting, lets take a setup walk though to use this functionality.

1.Define netting control account

Setup>Financials>Flex field>key>values

2.Create bank

Setup>payment>Bank and Bank Branches

You should note ,Payment document is not required for netting bank account.

3.Go to receivables responsibility, receipt class definition form

Setup>Receipts>Receipt class

Query the ‘AP/AR Netting’ receipt class which is a seeded one.

4. Attach your bank account in this receipt class.

5.Go to system options, transaction and customer tabbed region, there enable ‘Allow payment of Unrelated Transactions’check box

6. Create netting agreement

Receipts>Netting>Netting Agreement

7. Enter an Invoice in Payables, validate and run create accounting.

8. Enter a transaction in receivables.

9. Create Netting Batch

Receipts >Netting >Netting Batch

10. Query your netting batch and see the status as Complete. also click on view report icon on right side.click on run push button, you can see the final netting report.

11.Go to view>request>find

You can see 3 concurrent request programs

• Create Netting batch
• Settle netting batch
• Netting Data Extract

12.Now go to receipts and query the AP/AR netting receipt.

13.Now Go to Tools >view Accounting, you can see Netting control account (defined in first step a) debited and receivable account credited.

14. Now go to payables and query your invoice number and click the tab view payments. You can see the payment details and copy the document number.

15.Query your copied payment document number.What you can see the payment type as Netting .

16.Click actions button and enable the check box create accounting .

17.Go to tools>view accounting .You can see the accounting entry

1. Customer ABC raise an order to your company and your have made shipment of goods they have requested and you have raised an invoice of X amount, that you are expecting the money should be paid by customer.
2. Same time , you have some taken some services to the same customer which is a vendor in your Payable, and now you have liability to pay the amount Y, you received against PO.

What the business demand here is “Net off your supplier balance in AP (Payables) with customer balance in AR (Receivables)”

These kinds of business scenario always exist, specially if you are dealing with client whose line of business is either Airlines or Cargo or Healthcare domain. Such events are always there, therefore designing, configuring and identifying such need is foremost important step while implementing ERP.

What we seen after 11.5.9 , where similar kind of functionality Oracle has offered in term of “Contra Charging” which initially limited in European Localization and on and after 11.5.10, the same functionality have been standardize and incorporated in the product.

Contra Charging

Contra Charging allows you to select customer and suppliers through the screen and net their balances. This will submit two requests used to populate the Receivables and Payables Transaction Interface. This credit memos can then be imported through the standard invoice import in AR and AP.The base Functionality that currently exist in 11.5.10 are:

• Use the Contra Charging window to physically match the customer to the supplier and allocate an amount for contra charging
• Automatically populate the AR and AP Invoice Interface tables to create credit memos for the source Contra
• Import the invoices
  • in AR with the Submit Invoice Import window, using the source Contra
  • in AP with the Auto Invoice Import Program on the Run Auto Invoice window, using the source Contra
• Use the standard functionality to post the imported credit memos to Oracle General Ledger
• Use the Contra Netting Report
  • to report on the netted contra charging transactions
  • to check that the contra charging has been carried out successfully in Oracle Receivables and Oracle Payables

How to make Contra Charging Feature enabled

Follow the below mentioned steps and you should be able to use the contra charging functionality.

1.Define document sequences, assign the document sequence to Contra document category.

2. Setup Payables Contra Source.

A lookup is any predefined value that was not defined in a setup window.

3. Setup user profile for AP Responsibility, including the following:

• Tax: Allow Override of Tax Code (Yes)
• Tax: Allow Override of Customer Exemption (Yes)
• Sequential Numbering (Partially Used)
• JG: Contra - Include Future Dated Payment in Supplier Balance (Yes)

4.Define Document Category called ‘Contra’.

5. Define Payables Lookup for ‘Contra’.

A lookup is any predefined value that was not defined in a setup window. Use the Oracle Payables Lookups window to review and maintain sets of values, or lookups, that you use in Payables. Use the Oracle Payables Lookups window to create a new Payables lookup for contra charging.

This New Contra Lookup Code will be used as a source when the Contra Charging Credit memos are created.

6. Assign a ‘Contra Charging’ Menu to ‘AP_NAVIGATE_GUI12′ main menu,which tied to AP Responsibility.

To attach the Contra Charging Form to the Existing Payables Responsibility, attach JG_CONTRA_CHARGE_GUI Sub Menu to AP_NAVIGATE_GUI12 Main Menu.

Navigation Path: System Administrator responsibility: Application: Menu Form

7. Having created the new form ‘Contra Charging’, enter Contra Charging Transactions, then ‘Submit Contra transaction.

What’s new in Release 12

When a trading partner is both a customer and a supplier, an agreement may be made to offset open receivables’ against open payables’ items. Netting Agreements add trading partner terms as well as deploying company controls. A selection program automatically pulls information from Oracle Receivables and Oracle Payables taking into consideration discounts, late fees, and withholding taxes prior to determining the final netting amount. A review process and trading partner approval afford further verification to support the netting event.

The matching of open receivables and open payables is automated. You are now able to determine whether you or your trading partner has a greater balance outstanding and update your books, collect payments or make payments accordingly.

Benefits:
AP/AR Netting provides for the ability to “collect” on your receivables balances with the amount owed for your purchases by offsetting one against the other.This will Reduce bank Charges , Fewer Transactions to Process and thus significant Cash flow Improvement.

From 11i to R12

R12 Netting solution replaces 3 solutions(FV,JE,IGI) in 11i.

In R12 the Contra Charge functionality has been optimized and therefore changed into the AP/AR Netting functionality. In the Payables module as well as the Receivables module, there is a Netting submenu.

• Payables: Payments -> Entry -> Netting
• Receivables: Receipts -> Netting

Suggested Reading

• Oracle Financials Common Country Features user guide.

In R12, to cater the need for legal compliance some other counties like Asia, Latin America, and Europe ,two Journal Sequencing options have been provided. These are accounting and reporting sequence, in reality there is bit difference in these two terms.

Accounting Sequence
This is sequence used in GL journals when posted in GL ,Sequence subledger journals when completed in Subledger Accounting.

What we have seen in Release 11i, we had document sequencing that sequentially numbered documents upon creation. Accounting Sequencing will automatically assign a sequence number to GL journal entries that are posted in GL. There’s also an option to sequence subledger journals when they are completed in SLA Accounting.

Reporting Sequence
This sequence is used in GL Journals when you close a GL Period.Sequence sub ledger Journals when you complete the accounting in SLA .This is one of replacement of Accounting Engine (AX) legal sequencing and Italian Journal Book commonly known Libro Giornale.

These two Sequences can be assign mutually exclusive sequences based on:

• Ledgers or Reporting Currencies
• Journal sources
• Journal categories
• Balance types

The benefit of using these sequnces are summarized :

a) Legal Compliance made easy: The one biggest advantage of it will now addresses business requirements in many countries, such as Europe & Asia. Therefore its allows fiscal authorities to verify the completeness of a company’s accounting records.

b)Flexibility get enhanced:With this it provides greater flexibility in choosing different journal sequencing options, as mention above, these can be based out of these different criteria, such as by ledgers, reporting currencies, journal sources, journal categories, and balance types.

c)No Localization Required: Somehow related to (a) discussed above, earlier it the local reporting need was catered by localization , which now is part of GL activity.

Where to Define the the sequence.

You can define the accounting sequence in the context of a ledger in Accounting Setup Manager.There is another way ie Accounting Sequencing menu function which we can create and manage our sequencing rules.

For Accounting Sequences which is internally a posting event, the GL journals are sequenced when they are posted in GL and Subledger journals are sequenced when completed in SLA. For Reporting Sequences (period close event), GL journals and subledger journals are sequenced when a GL period is closed.You can see both can be appear in the Journal screen as below.

:)

In this series SAP-ORCL, here are some question & answers from “GL Journal” functionality wise between these two products. Hope this is good to have for managers who still evaluating Oracle or SAP in there daily operations.Please take a note, the GL functionality which is mapped agaist SAP is Oracle 11.5.10.2, FYI..there is slight change in Journal functionlity in Oracle R12 onward.

Journal Import

Can journals be imported into all modules?

In Oracle Journals are only processed in the GL, Payables and receivables would either be an invoice or a payment/receipt or adjustment. Invoices and payments can however also be imported.Other Modules like Inventory, purchasing and others also imported to GL.

SAP : Similar to Oracle, each module in SAP is interfaces with FI and accounting documents are created automatically.

Reversing a Journal

If you reverse a journal, can the journal be automatically allocated against its reversal?

ORACLE :GL journals can indeed be backed out.Within Payables and receivables incorrect postings can be backed out and allocated returning the invoice etc to its original state and due date but retaining a full audit trail

SAP :Yes, where a journal is selected for reversal it will automatically be set-off and cleared against the original posting.

Deletion of Journal

Can journals be deleted once posted?
Oracle :No, it can’t, as the system keeps a full audit trail.

Once a journal is deleted, there is no way to trace it. However, if a journal is posted and reversed instead of deleted, then it can be traced.

SAP :No. They can be only reversed

InterCompany Journal

What functionality exists for Intercompany journals? How does the system deal with cross-company authorizations?

Oracle :The General Ledger includes an GIS(AGIS IN R12) which ensures that both entries are approved by each company and provides both with visibility of status. The recipient (have the concept of sender and receiver)company would typically receive a notification to alert them of the transaction. This will ensure that Intercompany balances retain in sync. Transactions not posted via the Intercompany system can also be captured via an Intercompany analysis segment within the GL which can automatically be populated.

In General Ledger 11i, there are four options to automatically account for intercompany transactions in a single set of books.

• Standard Intercompany Balancing : This automatic Intercompany creates generic balancing lines against the intercompany accounts that are defined for specific sources and categories.
• Enhanced Intercompany Balancing : This allows definition of separate intercompany accounts to record more detail for the intercompany journals and track the intercompany balances.
• Intercompany Segment Balancing: This is used instead of using different natural accounts to track intercompany balances, it is possible to use an intercompany segment in your chart of accounts to record the same detail as enhanced intercompany
  balancing.
• Clearing companies :It allows to define one company to act as the trading partner for all subsidiary companies in the organization for certain types of intercompany transactions.

SAP :When posting, inter-company functionality automatically creates to documents one to the sending company and the other to the receiving company. Only authorized users may access these functions.

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