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R12 : Setting up for AP/AR Netting

Posted on January 21st, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

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:

  • Navigation: Receipts > Netting > Netting Batch
  • Navigation: Receipts > Netting > Netting Agreement
  • Receipts > Receipts > Action Menu : AP/AR Netting
    After Querying a netted receipt, the user can see more details about the batch by selecting AP/AR Netting from the Action menu. This launches the AP/AR Netting batch window. Netted Receipts are created automatically by the AP/AR Netting process and cannot be updated by the user from the Receipts Workbench

As we have seen Contra charging has been replaced by AP/AR Netting, lets take a setup walk though to use this functionality.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

netting

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

2-1

6. Create netting agreement

Receipts>Netting>Netting Agreement

3

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

4-1

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

Posted in Oracle Payable, Oracle Receivable, R12, Release12 | 10 Comments »

“Contra Charging” to “R12 AP/AR Netting”

Posted on January 21st, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

  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.

double-arrowContra 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

double-arrowHow 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.

  • You can assign a unique document sequence to each invoice and payment document in your Payables system so you have a unique identifier for each document.
  • A document category is a set of documents (invoices or payments) that share similar characteristics. You can assign a single document sequence to one or more document categories.
  • Use assignment window in System administrator responsibility to attach the document category with the document sequence created for contra charging invoices.

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.

double-arrow 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.

r12netting

double-arrowBenefits:
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.

double-arrowFrom 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.

Posted in Oracle Receivable, R12, Release12 | 5 Comments »

R12 : Sequence in GL made Legal Compliance Easy

Posted on January 17th, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

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.

double-arrowAccounting 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.

double-arrowReporting 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

double-arrowThe 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.

double-arrowWhere 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.

accounting

reportingcontaxt-1

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.

journal

:)

Posted in Oracle General Ledger, R12, Release12 | 7 Comments »

SAP-ORCL – ‘ GL Journal’

Posted on January 16th, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

sap oracle

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.

double-arrowJournal 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.

double-arrowReversing 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.

double-arrowDeletion 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

double-arrowInterCompany 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.

Read the rest of this entry »

Posted in Oracle General Ledger | No Comments »

Is ..”Oracle Applications Not Secure “?

Posted on January 14th, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

Last week there was some note in metalink for Oracle Critical patch (CPU)updates. Oracle spends a lot of time producing its Critical Patch Updates, but apparently most DBAs don’t pay much attention to them a website reported....read this intresting research note....

Read this:Research: Oracle Applications Not Secure

Posted in News | 1 Comment »

SAP-ORCL: “Security”

Posted on January 12th, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

sap oracle Over the coming weeks , I will feature a series(SAP-ORCL) of posts on some functionality gap among two great ERP product: SAP and Oracle.The posts will include comparative study ,answers in two product dimensions,the functionality gap and ofcourse end user/FinanceIT/ISD/IT department frustration with Oracle EBS which was replaced with SAP, as whole in term of initial acceptance.

Lets start with four question in 'Security' from end user prospective !

double arrowIs security defined by user, user group or a combination? Can this be set by Ledger/company/module or is it across the system?

port oracleIn oracle security is defined by user - Responsibility -menus ,request set , which can be easily customized or tailored able and can be reused so can use include/exclude functions.Menu Exclusion is also embedded to exclude from standard menu list.

Read the rest of this entry »

Posted in Oracle Application | 4 Comments »

What is the maximum number of lines in a GL journal?

Posted on January 11th, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

It was one of the requirements of my current client, who has replaced SAP to Oracle.In migration there are journals from SAP systems are over 45,000+ lines long, so client are bit concern . I took lot of research over internet and metalink,and refer Oracle benchmark data sheet, it was no help, but still manage those activity.Finally , thought to share...

What we can assume we have to reach the maximum as the journal line ID allows 15 characters so 999,999,999,999,999 is theoretical maximum .

Lines

 

 

 

UBS have benchmarked the GL system and upload over 1 million lines per hour.

There is a case mention in document , and a benchmark test was conducted to validate overall performance.

  • Data Load: Import and post at least 10M postings in less than 1 hour
  • Month End: Perform a "period open" in less than 12 hours (transfer 500M balances into the next month)
  • Daily Extract: Extract 500M balances in less than 60 minutes and calculate the daily balance sheet of the bank by cost center in less than 30 minutes

And these are the outcome of benchmark set of the EBS tool

  • They Imported and posted 11.42M journals per hour
  • Period Open on 500M balances in 11 hours and 8 minutes
  • Extracted 500M balances (including the merge of 26 dimension values) in 48 minutes
  • Generated the daily balance sheet on the base of 500M balances in 23 minutes

Sound great ! what you say.

Suggested Reading

Posted in Oracle General Ledger | 2 Comments »

Understanding AR Receipt, Point of sale, API’s & Intergration with Oracle Application

Posted on January 11th, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

Implementing a POS system in Healthcare sector is not easy task in Oracle application. In healthcare there is always a need to integrate with a POS solution for front desk user, which is exposed directly to end customer. The typical requirement for such kind of segments in term of 'point of sales' are:

  • Transaction entry
  • Receipt creation
  • Receipt printing
  • Recognizing the payment from Remittance bank.
  • Reconciliation in General ledger

So what is POS Software?

POS stands for Point Of Sale. This is a rather broad definition that can include merchandising aids, displays and the methods used to enable transactions. A PC point-of-sale system designed around a standard personal computer.

Customers can add various peripherals to the system to meet their own particular needs. Basically a POS system consists of a receipt printer, a reader (check reader, magnetic stripe reader), keyboard, barcode scanner, applications, software, etc. The main goal of a POS system is to complete the whole transaction in an acceptable amount of time.

POS systems now are days can automate several other areas of company business and are not limited to simple cash register functions which was once a time. With new technological development these can be automate accounting functions like payroll, accounts receivable and payable, they can track inventory, control and automate price updates and much, much more.

Read the rest of this entry »

Posted in Oracle Receivable | 21 Comments »

Managing receipts for credit card or ACH transactions – Part II

Posted on January 2nd, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

Read this: Managing receipts for credit card or ACH transactions

Very similar to prepayment functionality in Oracle AR, the alternate options can be use of Receivables Automatic Receipts feature to automatically generate receipts for customers who use a credit card to remit payments for open debit items. By providing a credit card number as payment, your customer expects that the credit card issuer will transfer funds to your bank account as payment for their open debit items. The Automatic Receipts program lets you collect payments according to a predefined agreement with your customer. The Automatic Remittances program transfers funds from the customer's bank account to yours on the receipt maturity date.

The Following Steps are Required to Process Credit Card Payments In Receivables:

  • First things is to assign a credit card payment method and credit card bank account to the transactions that you want to pay by credit card in your oracle side. This assignment "flags" transactions for credit card payment.
  • Next is to run the Automatic Receipts program and this will select the transactions that are flagged for credit card payment. The Automatic Receipts program creates a batch of receipts (payments) for the selected transactions.
  • Then , approve the batch of automatic receipts to reserve the payment amount from your card holder's account and close the selected transactions. When the approval process is complete, automatic receipts that do not require confirmation close the invoices that they are paying. Receipts that require confirmation close invoices when you manually confirm the receipts in the Receipts window.

As per Technical Reference manual(TRM) ,from the Oracle side , when you approve a batch of automatic receipts, Receivables checks the Payment Server Order Number (PSON ) field for each receipt in the batch. If the Approve Automatic Receipts program encounters a null value, then it generates a PSON and sends the receipt batch to Oracle iPayment for credit card authorization. iPayment integrates with third party payment processors to authorize your customer's credit card account number and assign an approval code to the transaction. If authorization is successful, then iPayment assigns the approval code and the receipt is approved. If authorization is not successful, then the receipt is rejected from the batch. If the PSON exists, then Receivables will not attempt to authorize, but will create and approve the receipts. We will take ipayment architecture in greater details in some other post.

  • Then, have to create and approve a remittance batch to request transfer of funds from the credit card issuer to your bank. For automatic receipts, you remit receipts to your bank so the bank can transfer funds from the customer's account to your account on the receipt maturity date. For manual receipts, the bank credits your account when the customer's check clears. The remittance process initiates the transfer of payment for transactions that are paid by credit card or electronic funds transfer . The remittance process is very similar to the automatic receipt creation process. You must Create, Approve, and Format your remittances. You can combine these operations into a single step or perform each separately. You can either create one remittance batch per remittance bank account or choose a clearing institution. If you choose a clearing institution, Receivables will select all the receipts belonging to remittance banks that have this clearing institution assigned to them.

Following Step are The Key Set Up Considerations for Credit Card Set Up in Receivable

  1. Step-1 Define Remittance (Internal) Bank Account
    Define Remittance Bank
    Setup->Receipts->Bank
  2. Step-2 Define Receipt Class
    Define Receipt Class
    Setup->Receipts->Receipt Class
  3. Step-3 Create And Assign Document Sequence For Automatic Receipts
  4. Step-4 Verify That The Ipayment Server URL Is Defined
    In Sysadmin
    Profile->System
    Check Site Level
    Query Profile: ICX: Payment Server URL
  5. Step-5 Create Invoice And Flag For Credit Card Processing
  6. Step-6 Run Automatic Receipts For Approval
    N->Receipt -> Batches
    Provide Appropriate Values For Automatic Receipts,Payment Method,Receipt Class and approve in the last.
  7. Step-7 Run Automatic Remittances For Capture
    Receipts->Remittance
    Choose The Batch That You Created And Run Automatic Remittances. This Program Captures (Settles) The Funds Via The Ipayment Server.

Suggested Reading

Posted in Oracle Application, Oracle Receivable | 3 Comments »

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