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Automated Receipt Handling for Credits: How It Works

Posted on August 15th, 2013 by Sanjit Anand ||Email This Post Email This Post

When you need to process a Credit Memo against an Invoice that has already been paid by a receipt, you need to define how you want to handle the funds from the Receipt payment.

In that case, you have the option of putting the receipt amount On-Account to be applied to a future invoice of the same customer, or you can choose to refund the payment back to the customer upfront .

With this Out of box featue in AR , this process involves unapplying the receipt payment against the invoice, and then handling the receipt to either:

  • Generate a refund, or
  • Put funds on account to use as payment for a later time

The process of automating what will be done to the receipt is what Automated Receipt Handling for Credits feature handles.

If you want to use this Feature , You must ensure that you set up your feeder systems with business processes that support this assumption.


These five settings affect automated receipt handling for credits:

  1. Transaction Source: you need to define an imported transaction source and set the Receipt Handling for Credits option to indicate your enterprise policy. Assign this transaction source to the applicable imported credit memos.
  2. Minimum Refund Amount system option: If you plan to process refunds, specify in the Minimum Refund Amount system option the minimum amount necessary for AutoInvoice to create a refund.
  3. Receivables Activity: If you plan to process refunds, define a Credit Card Refund receivables activity for credit card refunds and a Refund receivables activity for non-credit card refunds. The receivables activity identifies the general ledger clearing account to use to clear the refund amounts.
  4. Credit Card Transaction Remittance Method: On the original credit card transactions, use a receipt class with a remittance method of Standard.
  5. Transaction Type: The transaction type assigned to the debit items must be set to Natural application only. If the transaction type of a debit item is set to Allow overapplication, then you must process the credit manually.


During AutoInvoice import, the process flow for automated receipt handling for credits is as follows:

  1. AutoInvoice verifies that the transaction source assigned to the credit memo has automated receipt handling enabled.
  2. AutoInvoice evaluates each credit memo and its associated transaction to determine eligibility for automatic receipt handling. To be eligible:
    • The transaction type of the paid transaction must be set to allow natural application only.
    • The transaction must not be in doubt.
  3. If eligible, then AutoInvoice unapplies the paid transaction from the receipt to be credited.
  4. AutoInvoice creates thecredit memo in the amount of the requested credit, and applies the credit to the transaction.
  5. If your policy is to automatically refund your customers, then AutoInvoice evaluates the receipt for refund eligibility. To be eligible, the receipt must not be in doubt.
  6. If eligible for refund, AutoInvoice creates the refund for all credit request amounts that are greater than or equal to the value entered in the Minimum Refund Amount system option.
    • AutoInvoice places on account any credit amount that is less than the specified minimum.
  7. AutoInvoice applies the appropriate receivable activity to the receipt, as determined by the transaction source.


There may be few senarios , when autoInvoice rejects a credit memo from automated receipt handling if one of the following conditions exists on the transaction to be credited:

  • The transaction type of the transaction is set to allow overapplication.
  • An on-account credit memo was previously applied against the transaction.
  • A regular or chargeback adjustment already exists against the transaction.
  • The credit memo is imported against a transaction with a negative creation sign.

If the credit memo is ineligible due to one of these conditions, AutoInvoice processes the credit memo using standard validation. This way you can evaluate the appropriateness of the credit request before taking action.

For refund requests, AutoInvoice automatically places on account the amount of a refund request if one of the following conditions exits:

  • The receipt to be refunded has not yet been remitted.
  • Receipts with different payment types (ACH, cash, credit card) were used to pay the same transaction to be credited.
  • Installments exist on the transaction and are not fully paid.
  • The receipt has an on-account credit memo against it.


Automatic receipt handling for direct debits is not working as expected. When running the Autoinvoice program, a credit memo is created correctly, then instead of creating a Refund application against the receipt, it creates an On-Account application instead.

You need to apply the patch #The issue is addressed in Bug 9473751

Posted in Oracle Receivable | No Comments »

Integration of Oracle Credit Management with other modules

Posted on August 3rd, 2013 by Sanjit Anand ||Email This Post Email This Post

Oracle Credit Management have mainly three integration touce-point for credit needs with these EBS appliucation:

  1. Oracle Order Management
  2. Oracle Lease Management
  3. Oracle Loans
  • Oracle Order Management : This have integration for Order Management Credit Review.As we know Credit Management is used by Credit/Receivables analysts to allow more in depth management of customer credit worthiness and credit availability.Credit Management allows the C/R analysts to assign a level of credit worthiness/risk to customer accounts.In OM when a sales order is placed on credit check failure hold, a case folder is created in Credit Management
    • Setups to be verified for Review from Order Management
      • Credit check checkbox should be checked in payment terms
      • Setup order credit limit in customer standard page for the currency for which credit application needs to be created.
      • Checklist for review type order hold needs to be created along with credit classification of the customer.
      • Make sure credit check rule is selected on Order Transaction type.
  • Oracle Lease Management :Lease applications are created and managed in Lease and Finance Management for the purpose of obtaining credit approval from Oracle Credit Management. A lease application contains both a lease sales quote and a credit application. Once a prospect has accepted a lease sales quote, you can convert the lease quote into a lease application, add customer credit data and pricing information and submit it for approval. You can also create a lease application without converting a lease sales quote.
    • Setups to be verified for Review from Lease Management
      • Lease application template has been setup in Lease for credit classification for the customer with review purpose as New Deal Lease Application
      • End of term option should be set up in lease
      • Checklist for review type new deal lease application needs to be created along with credit classification of the customer.
  • Oracle Loans – Oracle Loans integrates with Oracle Credit Management to perform credit reviews for loan application requests and decide to approve or reject it. The Credit Review option is set at the Loan Type level. You can either create a loan with a loan product that requires credit review or request review while creating or updating a loan. You must complete as much of the application including recording assets, financial data, co-borrowers, guarantors and other loan details to request credit review. Loans displays information from Oracle Credit Management in the Borrower Summary.
    • Setups to be verified for Review from Loans
      • Loan type should have credit review enabled
      • Checklist for review type Loan needs to be created along with credit classification of the customer.

Posted in Oracle Credit Management | No Comments »