Receivables is integrated with the following modules Cash Management, General Ledger and ipayment in Oracle Financial and have a integration with OM , Pricing , Inventory module within EBS. This can be best understood as:

Lets take some of integration aspect of Oracle AR.

Projects to Receivables

Normally invoices are transferred from Projects to Receivables for billable projects by running the PRC: Interface Invoices to Receivables request from a Projects Responsibility.

Important data in the information flow are: Customer, Line Detail.

Receivables to Cash Management

Cash Management selects Receipts directly from the Receivables tables to reconcile with bank statements.

Important data in the information flow are: Receipt Number, Receipt Amount, Date, Customer, Application Detail.Cash Management selects Unpaid Invoices and Receipts directly from the Receivables tables as Inflow components in the Cash Forecast.

Important data in the information flow are: Amount.

Cash Management to Receivables

Cash Management directly updates Receivables tables with reconciled Receipt information. Important data in the information flow are: Amount Cleared, Receipt Cleared Date, Bank Charges, Bank Errors, Rate Gain/Loss.

Receivables to General Ledger

Invoices (including Debit Memos and Credit Memos), Receipts (including Miscellaneous), Adjustments, and Charge backs are transferred from Receivables to the General Ledger by running the General Ledger Interface request from a Receivables Responsibility. Important data in the information flow are: Code Combination, Journal Amount.

Shared Data

The following data is shared with other modules: Customers, Banks, Payments Terms, Tax Codes, Code Combinations, Units of Measure, Items, Categories, Employees.

Receivable Integration in OPM

The following diagram clearly explain the Receivable Integration in OPM.

This post is more on basic table structure of Oracle Account Receivable.

1.Table that holds AR Invoice data

The following tables can give most of the invoice information.

• RA_CUSTOMER_TRX_ALL stores invoice header information. RA_CUSTOMER_TRX_LINES_ALL stores information about invoice, debit memo, credit memo, bills receivable, and commitment lines.
• The AR_PAYMENT_SCHEDULES_ALL table stores all transactions except adjustments and miscellaneous cash receipts.
• RA_CUST_TRX_LINE_GL_DIST_ALL stores accounting distribution records for all transaction lines except bills receivable.The RA_CUST_TRX_LINE_GL_DIST_ALL table stores the accounting records for revenue, unearned revenue, and unbilled receivables for each invoice or credit memo line.
• RA_CUSTOMERS - Customer information
• RA_CUST_TRX_TYPES_ALL - Customer Transaction Type
• AR_PAYMENT_SCHEDULES_ALL
• RA_CUSTOMER_TRX_LINES_ALL - Transaction Line information
• MTL_SYSTEM_ITEMS - Base table for item

The ER Diagram for a customer Transaction can be easily understood as:

2.Customer Payment

These are the main tables which holds Customer Payment information

• AR_CASH_RECEIPTS_ALL stores one record for each receipt entry.
• AR_CASH_RECEIPT_HISTORY_ALL stores all of the activity that is contained for the life cycle of a receipt.
• Each row represents one step., Possible statuses are Approved, Cleared,Confirmed, Remitted, and Reversed.
• AR_MISC_CASH_DISTRIBUTIONS_ALL stores all accounting entries for miscellaneous cash applications.
• AR_DISTRIBUTIONS_ALL stores the accounting distributions for cash receipts, miscellaneous receipts, adjustments,credit memo applications, cash receipt applications, and bills receivable transactions.
• AR_RECEIVABLE_APPLICATIONS_ALL stores all accounting entries for cash and credit memo applications.
• Each row includes the amount applied, status, and accounting flexfield information.

The ER Diagram for a customer Payment can be easily understood as:

3. Accounting Link between the tables

• For Invoice:

ra_customers (This is for capturing customers information)
ra_customer_trx_all,
ra_cust_trx_types_all,
ar_payment_schedules_all,
ra_customer_trx_lines_all

and joins are customer_trx_id for ar_payment_schedules_all & ra_customer_trx_all & ra_customer_trx_lines_all .
ra_cust_trx_types_all.type IN ('INV')

• For the Receipts:

ar_receivable_applications_all,
ra_customer_trx_all,
ra_customer_trx_lines_all,
ar_cash_receipts_all

ar_receivable_applications_all.application_type = 'CASH',
ar_receivable_applications_all.cash_receipt_id = ar_cash_receipts_all.cash_receipt_id,
ar_receivable_applications_all.applied_customer_trx_id = ra_customer_trx_all.customer_trx_id

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.:)

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.

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 »

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

• Managing receipts for credit card or ACH transactions
• ACH briefing
• Managing receipts for credit card or ACH transactions - Part II

Someone ask offline for ACH, as term appears in my last post, so thought to have a briefing...here to go

What is ACH?
ACH stands for Automated Clearing House.

The rules for ACH transactions are prepared by the National Automated Clearing House Association (NACHA).

Normally it refers to a national network used by banks and other financial institutions to move transactions (i.e., checks) between financial institutions.

In other sense moving money electronically to and from checking and savings accounts. Typical example would be a check by phone or taking recurring payments directly from a checking/saving account.

• ACH is a “loosely” defined standard for electronic fund transactions.

• Why use ACH payment processing?

• More secured transaction than hardcopy check
• Convenience of electronic banking. No visits to bank
• Increases good-will with employees and suppliers
• Immediate, tangible savings on every ACH transaction vs. hardcopy check!!!

The Difference with ACH & Credit Card

The MAJOR difference between ACH and credit card processing is that a credit card transaction “captures”
the merchant’s funds from the consumer and essentially guarantees payment. An ACH transaction is a request to transfer funds. The transaction may reject for several reasons with the most common being NSF (non sufficient funds) or a closed account. The funds are not guaranteed.

To debit a consumer's checking or savings account you need their permission to do so. Failure to produce proof of the authorization either by voice recording (one-time payments) or an ACH Authorization form can have consequences.

Where it is popular?

ACH Transaction in US iteslf sharing more than 40% payment pie. This was provided in recent releases Federal Reserve Payment Study.

Suggested Reading

• The Evolution of the ACH

Today world credit cards have become part in the our daily life. Not only have credit cards and different electronic payment options,changed the way that consumers manage their personal finances, these have also enabled companies to reduce the risk associated with receivables and improve their cash flow, and reduce the product delivery timeline.Specially in some sectors where there is direct interaction with Consumer , it is important to manage and do the efficient credit processing and recording hundreds of credit card/ACH remittances in Receivable area.

During in implementation, many times it requires the ability to more efficiently manage receipts for credit card or ACH transactions, therefore this post will brief you on the seeded functionlity offered within EBS.

The Importance?

Oracle Receivables integrates with any feeder system, such as Oracle Order Management, to automatically record and process customer payments made before the delivery of goods or services , such of business Scenario that have company companies who is selling there product through internet channel, which is very similar as buying a Dell laptop from internet and paid most of time credit card transactions or Internet banking. Oracle in there EBS environment refers to these transactions as prepayments.

How ?

Oracle receivables creates prepayments as receipts before the related invoices are created. Later, a business event from your feeder system triggers the invoicing process in Receivables, and an AutoInvoice postprocess matches the prepaid receipts to their related invoices.

When you determine that a prepayment is required, you record the payment information in your feeder system, and the information is passed to Oracle Receivables.

What is expected in the setup side is , in Oracle Order Management, if an order is to be evaluated for prepayment, the underline order must utilize both a Payment Term (Collect Credit Card Prepayment check box) at the order level that enables prepayments and a Payment Type of Credit Card, payment terms for an order line are ignored. At the time of order booking, Order Management will determine if the order is Prepaid and make a call to the Oracle Receivables Receipts API for receipt creation.

The Oracle Receivables Receipts API creates a prepayment receipt in Receivables, and processes the receipt using the payment information provided.

Receivables immediately applies all prepayment receipts against the Prepayment application type, and records accounting according to a special prepayment receivables activity. Receivables reserves these receipts for subsequent reapplication to the invoice or invoices that are eventually generated for the order.

When the order is later sent to Receivables for invoicing, AutoInvoice creates an invoice that is marked as prepaid . Additionally, AutoInvoice initiates a postprocess matching program to identify any open prepaid invoices and search for matching prepayment receipts.

Prepayment matching occurs when a prepayment receipt is created from a feeder system such as Order Management. When the subsequent order is shipped and an invoice is created in AR, the AR Automatic Receipts program automatically creates an application of the prepayment against the Transaction. This ONLY occurs if the Prepayment and Transaction stem from the SAME ORDER. If the order is different then a manual application is required to apply the prepayment.

The other functionality for AR Prepayments is , you can also be modified or cancelled for the orders processed. You can:

• Increase the order amount
• Decrease the order amount: For credit card prepayments, you can refund the original credit card for a full or partial refund.
• Change an order without changing the order amount: If an order change does not result in a price change, then Receivables does nothing.
• Cancel an order: For credit card prepayments, Receivables refunds the original credit card using standard credit card refund functionality.For prepayments made with other payment types, Receivables places the refund amount on account.
• Reallocate prepaid funds towards an overdue invoice: You can unapply a prepayment receipt and manually reapply the amount to another invoice. When you later import the order into Receivables using AutoInvoice, Receivables considers the prepaid invoice that was associated with the receipt to be unpaid and treats it as a typical overdue invoice.

What's the difference between Deposits and pre-payments?

In reality , it looks very similar kind of process...

A prepayment is payment in advance of the delivery of goods or services.As discussed above , receivables creates prepayments as receipts before the related invoices are created. Later, a business event from your feeder system triggers the invoicing process in Receivables, and an AutoInvoice postprocess matches the prepaid receipts to their related invoices.

On the other hand Deposit a payment/receipt made against a Transaction or Invoice in advance.

How does a Receipt applied to a Credit Card Prepayment that is created and captured in Oracle Order Management get applied to the Invoice once it has been interfaced via AutoInvoice?

The matching of a Credit Card Prepayment Receipt and the associated Invoice is completed when the Invoice is interfaced into Oracle Receivables via AutoInvoice. The AutoInvoice process will look for all Invoice marked as 'Prepaid'. Once it finds one, it will then unapply the Prepayment from the Receipt that was created via the API AR_PREPAYMENTS_PUB.create_prepayment, and apply the Invoice.

Glossary of terms used in payments

• ACH Automated Clearing House
• BOC Back Office Conversions
• COGS Costs of Goods Sold
• DTC Depository Transfer Check
• EFT Electronic Funds Transfer
• FAS Financial Accounting Standards
• GDR Global Depository Receipt
• HPR Highly Protected Risk
• IRD Image Replacement Document
• JIT Just-in-Time Inventory
• KFC Kansas City Financial Center
• L/C Letter of Credit
• MICR Magnetic Ink Character Recognition
• NACHA National Automated Clearing House Association
• OBSA Off-Balance Sheet Arrangements
• POP Point-of-Purchase
• RCK Re-Presented Check Entries
• STP Straight Through Processing
• TEL Telephone Initiated Entry
• UCC Uniform Commercial Code
• VAT Value Added Tax
• WIP Work-in-Progress
• XBRL eXtensible Business Reporting Language
• YTM Yield-to-Maturity
• ZBA Zero Balance Accounts