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Oracle should do something for ‘Stale cheque ‘ …in newer versions

Posted on May 1st, 2008 by Sanjit Anand |Print This Post Print This Post |Email This Post Email This Post

Yes, that true, this is one of the functionality that Payable managers are expecting in EBS. The Oracle payable still requires enhancement in few area where this is one called is 'Stale Cheque management. This is very common trends seen by APAC entities , forced to do customization to automate this process.

double-arrow-28 What is Stale cheque ..

When payment cheques remain unpresented after certain period of drawing, the cheque has become stale and thereby should not be honoured by the bank. All entries made to the general ledger in respect of the stale cheque will need to be reversed by completing the necessary vouchers.

double-arrow-28 Is there any stipulated time when is a cheque considered stale-dated, and is it no longer valid after that point?

Yes, Checked with Financial controller and found as per CPA Rule A4, Section 21, a cheque is considered stale-dated after six months, unless it has been certified . Although it may be returned through the clearing for that reason, there is no obligation to do so, and the payers financial institution may still accept it as a valid payment item. An institution accepting a cheque that is dated more than six months earlier may choose to contact the payor’s financial institution to confirm whether the cheque will still be accepted.

double-arrow-28 What is the difference between cancelling or Voiding a payment and reversing it?

Payments should only be cancelled or voided if the goods or services have not been supplied or where the cheque is to be re issued due to some reason.

Where the goods and services have been received but the payment has not been processed within 6 months of issue, this becomes a Stale cheque. Stale cheques are reversed by receipting the same amount back into the system.

double-arrow-28 Why this is Need in Oracle ?

In the new world most of entity payment is processed by there banking partner, therefore important aspect for entity in term of managing this is bit challenging for.

  1. Reconciliation AP with CM bank statement?
  2. Internal Control which is subject to query by auditors?

As mention there is no automated way to manage such process, still we might can club with these manual intervention which consist of :

  1. To Void the payment and choose No Action on the invoice if its to be paid again.
  2. Place an appropriate hold on invoice if investigation is required, or cancel invoice from void screen.

double-arrow-28 Does Oracle Recommend a process for handling stale checks?

No not yet , as of latest 12.0.4.

The only information that Oracle has for there EBS customers is based out of metalink note:147077.1,Oracle does not have a recommended process for handling stale checks. Each business should define how they would handle this process.

One suggestion is to print on the Check that they are only valid for so many days and then to void the check after that time period if they have not come in.

double-arrow-28There was something called "Escheating Checks" in Earlier Releases..

Don't get confused with this functionality with stale checks. This is what Oracle documentation mention in section 5.86;

In the U.S.A., each state has different rules regarding checks that have been issued by which have not cleared the bank. In most cases, the organization that issued the check is required to remit the funds (escheat) to a state tax authority. You can use the following method to create payments for the tax authority.

Prerequisite

Complete the due diligence required by the state. To pay escheated checks to the state tax authority:

1. For each supplier for which you will escheat payments, create a new supplier site. Use the tax authority's name and address for the pay site.
2. Void each payment. You may want to add a note in the description of the invoice that it was escheated to the relevant tax authority. Change the invoice pay site to the new tax authority site. Optionally assign a unique Payment Priority or Pay Group. This will help allow you to create a Payment Batch for just the escheated checks.
3. Pay the invoices and provide the necessary documentation to the tax authority.

So now, it is time to comment, share your thoughts .should this functionality is real need or customer should still manage by customization...

Posted in Oracle Payable | 2 Comments »

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