Business case - Customer on Credit Hold

Business Scenario:
There is a requirement to put all open orders in Order Management on Hold by putting a Credit Hold on customer under the following two conditions:
1. Customer exceeds the Credit limit set
2. Cutomer has not paid an invoice even after 'x' days of the invoice due date on invoice. However, this customer may not have exceeded the credit limit.

Solution:
The solution to the first scenario is to enable the Credit Check for the customer and put an amount in the Credit Limit field for the customer. Oracle Order Management would use this information to place an order on hold.
However, for the second scenario there is no standard solution. We have to create custom program to put the customer on a 'Credit Hold'.
Step1: Enable a DFF (we can name it as say 'Over Due Days') for the customer which would hold the maximum number of days the payment is overdue that is accecptable to the business.
Step2: Write a small program that would check daily for all customers where the system date is greater than the due date by the number of days specified in the DFF. A report would also be an output of the program which is something very similar to the standard report "Past Due Invoice Report" with a couple of additional fields to capture the days beyond the maximum number of days after due date as per DFF. This program would put all customer on a Credit Hold where the invoice Due date is greater than 'Due Date + No of days in DFF'.
Ensure that the program is scheduled to run just after midnight to so that the program does not miss out on any new invoices created.

Customer Refund in Receivables

There are cases when customers overpay, or pay one invoice twice. In all such cases the customer is due for a refund. The easiest approach would be to ask the customer to absorb the overpayment if the amount is small. However, if the amount is large the customer would no doubt ask for a refund. There are basically three ways to handle customer refunds:
1. Issue a manual check for refund to the customer and record a Debit Memo in Receivables and match this to the receipt.

2. Ask the customer to leave the cash as "on-account" and apply this later to any other open invoice.

3. Setup customer as supplier in Payables, and issue a check out of payables. The third option is more cumbersome but will make bank reconciliation a lot smoother. First create a debit memo in receivables, using a clearing account (the clearing account should always show zero balance). Match the receipt to this Debit Memo. Then create an invoice for this customer (set as supplier in AP), using the same clearing account as the expense account in the invoice. Pay the invoice in the normal way and do a bank reconciliation.

The above process of customer refund is only limited to 11i. In Oracle R12, Oracle Receivables is fully integrated with Oracle Payables to deliver a seamless, automated process to generate check and bank account transfer refunds for eligible receipts and credit memos.

Oracle Apps Marketing for Upgrade projects - A small tip

It has been my observation that a lot of time and effort goes waste knocking the wrong door for Oracle Apps project. Then the question arises, how to know which door to knock. Obviously, one should not waste precious resources uselessly pursuing organizations that are running on a fully supported version of Oracle Apps like R12, 11.5.10, 11.5.9, unless the organization comes to you with a view to upgrade to R12 or 11.5.10. Please refer chart below to find the support time lines for different releases of Oracle E- Business suite and plan accordingly which organizations to target and whom to avoid.

Configuring Accounts Payable in Oracle 11i

I have tried to put in the basic setup required to set up Accounts Payable in Oracle 11i in this article.

I will limit the article to only AP setup, assuming basic setup of other dependent modules like General Ledger and Oracle Purchasing is already done. I have knowingly avoided the setup of some features of Oracle Payables like Automatic Payment, Withholding Tax, Credit Card, Procurement Card, Expense Report, Invoice Approval etc. Some of my previous articles speak on some of these topics like Procurement Card and Setting up Invoice Approval. Only some of the very basic setup that one needs to make Payables up and running is mentioned in this article.

1. Define your Responsibilities and attach your custom Menus to it in System Administrator.

2. Setup your Descriptive Flexfields (Invoice header and line, Supplier and Supplier Site, etc) depending on the requirement.

3. If you want to enter foreign currency transactions, define additional rate types, and enter your daily rates in General Ledger module.

4. Define your accounting period types and accounting calendar periods in General Ledger.

5. Define a set of books in General Ledger. Then, specify a set of books name and assign it a calendar, functional currency, and a chart of accounts structure.

6. Assign Document Sequence in System Administrator responsibility. This is necessary if you wish to have an unique sequence number attached to each invoice, credit/debit memo that you create. Navigation: System Administrator > Application > Document > Assign

7. Set up your System Profile options IN system Administrator responsibility. I am listing down some of the more important Profile options that we usually fill in.

MO: Default Operating Unit

MO: Distributed Environment

MO: Operating Unit

MO: Security Profile

AP: Use Invoice Batch Controls

GL Set of Books Name

HR:User Type

Sequential Numbering

Tax: Allow Override of Tax Code

HR:Business Group

HR: Security Profile

8. Select your Set of Books in Accounts Payable. Navigation: Setup > Set of Books > Choose

9. Define the Payable Lookups like 'TAX TYPE', 'SOURCE' (Invoice source types, if you are importing invoices using AP Open interface from various systems), AWT Certificate and AWT Rate Types, etc.

10. Define your Purchasing Lookups like 'PAY GROUP', VENDOR TYPE', etc.

11. Define distribution sets. You can use a distribution set to automatically enter distributions for an invoice. If you use Multiple Organization Support, perform this step for each organization. You can assign a default Distribution Set to a supplier site so Payables will use it for every invoice you enter for that supplier site.

12. Setup Employees. If Oracle HRMS is already installed, use this to setup Employees, else you can use Payables module to setup employees. Navigation: Payables> Employees> Enter Employees. Ensure that the correct email address is provided, so that Oracle Workflow and Alert messages can reach to targeted person automatically.

13. Setup Country. Select the Address Style that you wish to use.

14. Setup Locations.

15. Check that Inventory Organization is defined in Oracle Inventory or Oracle Purchasing module.

16. Next very important step is to set up the Financial Options (Setup > Options > Financials).

Define your following accounts: Liability, Prepayment, Future Dated Payment, Discount-taken, PO Rate variance Gain/Loss, Expenses Clearing and Miscellaneous.

Define the Supplier Numbering i.e. should you use Manual numbering or Automatic numbering of Suppliers. Also this number could be Alphanumeric or a pure Number. In case of automatic numbering, you have to specify the starting number.

Also, we define the default Supplier Payment Terms and Payment Method. Please note that we also define the same at Supplier/Supplier Site which overrides the default setup here. However, while creating the invoice we can override the Payment Terms and Payment Method defined earlier in Financial Options, Supplier/Supplier Site and this is only considered during payment.

We also, define the default Ship-to location, Bill-to location, Inventory organization, Encumbrance, Default Tax code, tax calculation rounding rules and HR Business Group and Employee numbering method (Automatic/Manual).

17. Setting up Payable Options (Setup > Options > Payables): First define your Primary Accounting Method. Usually this is Accrual type. If you want to use combined basis accounting, select Accrual as your primary accounting method, and Cash as your secondary accounting method. If you do not want to use a secondary accounting method, select ‘None’ as the secondary accounting method. I am mentioning the most common settings used in most of the organizations.

Set in “Transfer to GL’ tab,

Transfer to GL

In Detail		Yes
Summarize By Accounting Date		No
Summarize by accounting Period		No
Submit Journal Import		Yes
Transfer Reporting SOB		No
Override Submission Program		Yes
Submit journal import		Yes

Payment Accounting

Account for Payment		When Payment is issues–Yes When payment Clears -Yes
Account for Gain/Loss		When Payment is issues–Yes When payment Clears -Yes
Calculate Gain/Loss		For each Invoice
Future Dated Payment		From payment Document

Currency

Use this region to enable multiple currencies in Oracle Payables and define currency defaults for your foreign currency invoices and payments.

Use Multiple Currencies		Yes
Require Exchange Rate Entry		Yes
Calculate user exchange rate		No
Exchange Rate Type		Corporate
GL Accounts: realized Gain		Enter the Account for Realized Gain
GL Accounts: realized Gain		Enter the Account for Realized Loss
Rounding		Enter the Account for Rounding Errors

Invoice

Main
Use Invoice Approval Workflow		Yes (If you do not want to use this, set this as No)
Allow Force approval		Yes (If ‘Use Invoice Approval Workflow’ is ‘No’ then this is not selected)
Require Validation Before approval		Yes
Use Batch Controls		Yes
Confirm Date as Invoice number		No
Allow Online Approval		Yes
Allow Adjustments to Paid Invoices		No
Recalculate Schedule Payments		Yes
Allow Document Category Override		Yes
Automatically Create Freight Distribution		No
Freight Account		No

Withholding Tax (Retention Money)

Use Withholding Tax		No (Set as Yes if you use Withholding tax)
Allow manual Withholding		No
Tax Group		No
Apply Withholding Tax		Never
Withholding Amount Basis (checkbox)
Include Discount Amount		N/A
Include Tax Amount		N/A
Create Withholding Invoice		Never

If you are using Withholding tax then set ‘Use Withholding Tax” as ‘Yes’, and ‘Create Withholding Tax’ either during Invoice creation or during making a payment. However, to setup Withholding tax you need to create your Tax Authority as a Supplier, and set up Withholding tax codes accordingly. Associate the defined withholding tax codes to the suppliers from whom you would like to withhold tax.

18. Setting up AP Accounting Period (Payables > Setup > Calendar >AP Accounting Periods)

Use this form to define Period Status which Oracle Payable periods as Never Opened, Future, Open, Closed, and Permanently Closed. The values default from GL Set ups.

18. Setting up AP Aging Period (Payables>Setup>Calendar>Aging Periods)

Use this form to define the aging periods you want to use for your Invoice Aging Report

E.g. of Aging Period

Column Order	Days: From	Days: To	Column Headings: First	Column Heading: Second
1	1	30	Due < 30 days	Overdue
2	31	60	Due <o 60 days	Overdue
3	61	90	Due < 90 days	Overdue
4	91	180	Due < 6 Months	Overdue

18. Setting up Document Sequencing (System admin > Application > Document > Define)

Define document sequences for Standard Invoices, Debit/Credit Memo, PO Default, Mixed, Quick match & Vendor Prepayment

18. Defining Document Categories (System admin > Application > Document > Categories)

A document category defines what type of transactions you will be assigning document numbers to. It also specifies what table the transaction information will be written to. This step is optional for Oracle Payables transactions because Payables seeds categories for all payment and invoice types.

18. Assigning Document Categories (System admin > Application > Document > Assign)

Use this form to assign your defined document sequences

In this article i have not elaborated on many of the settings like Withholding Tax, Expense Report, Credit Card, Invoice Approval, etc which I have not delved into. Hopefully in subsequent articles i will blog on some of these ones in detail.