Monday, April 07, 2008

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.


  1. 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.


  1. 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


  1. 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


  1. 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.


  1. 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.

4 comments:

Anonymous said...

Dear Krishanu, It is nice to read your blogs. Really a knowledgable and helpful. I would like to request some more things. Can you provide configuration steps in GL and some documents of real applications. And also it would be highly appreciable if you can provide MD50 and BR 100/80 doc. for it.
Rajesh
rajes_ktm@hotmail.com
Thank you

Anonymous said...

Krishanu,i need your help on how to setup the document number in the confirm payment batch window so that it appear automatically without user input.

Ahmad
Sujairi@gmail.com

sunil said...

Hi Krishanu,Really a knowledgable and helpful. I would like to request for configuration docs and steps in GL.Can you provide me MD50 and BR 100/80 doc.The format which is present on AIM.That's ok but i wanted to know that How we can be able to prepared.what are the steps and logic behind that.

Sunil
sdhrubu@gmail.com
Thank you

Sridevi Koduru said...

I am Sridevi Koduru, Senior Oracle Apps Trainer at Oracleappstechnical.com With 8 Yrs Exp on Oracle Apps and 13 Yrs IT Exp Providing Online Training on Oracle Apps Technical, Oracle Apps Financial Functional, Oracle Apps SCM, Oracle Apps HRMS, Oracle Financial for Indian Localization, SQL, PL/SQL and D2K. I have Provided Training for 500+ Professionals Most of them are Working in Real Time now.

Contact for (One to One Personal Online Training) on Oracle Apps Technical, Oracle Apps Financial Functional, Oracle Apps SCM, Oracle Apps HRMS, Oracle Financial for Indian Localization, SQL, PL/SQL and D2K at training@oracleappstechnical.com | sridevikoduru@oracleappstechnical.com | +91-9581017828 | http://www.oracleappstechnical.com

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Krishanu's Oracle Applications Blog - Oracle Apps consulting services scenario in India. Also, an inside view of Oracle Apps outsource services in India. Also the blog features new developments in Oracle Apps and my learning's in this field. The views expressed are my own only and not of my employer Wipro Technologies. The views and opinions expressed by visitors to this blog are theirs and do not necessarily reflect mine.