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- 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.
- 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 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.
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.
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 receivablesâ€™ against open payablesâ€™ 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.
AP/AR Netting provides for the ability to â€œcollectâ€ 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
Oracle Financials Common Country Features user guide.