Accounts Receivables FAQs

1. What are the two key flexfields in Oracle Receivables and what is its purpose?
Location Flexfield: - Mandatory
This Flexfield is used for calculating the Location based tax (i.e.) Sales tax.
Territory Flexfield: (Max 20 segments) - Optional
This Flexfield is used for tracking the location in which the sale is taking place.
This Flexfield is for ascertaining the profitability of each of the sales location through generating reports.

2. What are the modules that are interfaced with Oracle Receivables?

i. General Ledger
ii. Order Management
iii. Fixed Asset
iv. Inventory

3. What is Auto invoice ? What are its related setup steps?

Auto invoice is the process used for importing the transactions from feeder modules like order entry, project accounting etc. and also from existing applications/systems if the receivable module is installed for the first time.

To invoke auto invoicing the navigations is - Interfaces à Auto Invoices
Run a program called Auto Invoice Master Program and specify the Invoice source and submit it.
If any error occurred during validation all the transactions will be stored in the below mentioned tables

RA_INTERFACE_ERRORS_ALL

4. What are the database tables involved for performing Auto invoice?

1. RA_INTERFACE_LINES_ALL
2. RA_INTERFACE_SALESCREDITS_ALL
3. RA_INTERFACE_DISTRIBUTIONS_ALL

5. What is an Application Rule set?

Application rule sets specify the default payment steps for your receipt applications and how discounts affect the open balance for each type of associated charges. By defining your own application rule set, you can determine how Receivables reduces the balance due for a transaction's line, tax, freight, and finance charges.
Receivables provides the following application rules:
· Line First - Tax After: Apply to the open line item amount first. Apply any remaining amount in the following order: tax, freight, and then finance charges.
· Line First - Tax Prorate: Apply a proportionate amount to the open line item amount and the open tax amount for each line. Apply any remaining amount to freight and then to finance charges.
· Prorate All: Apply a proportionate amount to the line, tax, freight, and finance charges.
6. What is a flexible address format? How can a user-defined format be defined and where will this be affected?
Oracle Applications let you enter customer, supplier, bank, check, and remit–to addresses in country–specific formats. For example, if you have customers in Germany, you can enter German addresses in the format recommended by the Budapest, or you can enter addresses for customers in the United Kingdom in the format recommended by the Royal Mail.

This is done by using descriptive flexfields to enter and display address information in the appropriate formats. The flexfield window opens if the country you enter has a flexible address style assigned to it, which lets you enter an address in the layout associated with that country. If there is no address style associated with the country, Oracle Receivables uses the standard address format.

Attention: (Receivables users only) if you use a Sales Tax Location Flexfield that contains a segment other than country and wish to set up a flexible address format for your home country, every component in your Sales Tax Location Flexfield structure must also exist in your flexible address style for that country.

7. What do you mean by Auto Accounting?
It helps the Receivables to determine the general ledger accounts for transactions that are entered manually or import using Auto Invoice.
Receivables creates default accounts for revenue, receivable, freight, tax, unearned revenue, unbilled receivable, finance charges, bills receivables accounts, and Auto Invoice clearing (suspense) accounts using this information.
When you enter transactions in Receivables, you can override the default general ledger accounts that Auto Accounting creates.
You can control the value that Auto Accounting assigns to each segment of your Accounting Flexfield, such as Company, Division, or Account.
You must define Auto Accounting before you can enter transactions in Receivables.
8. What are the different classes of Transactions available in Receivables?
(I) Chargeback (ii) Debit Memo (iii) Credit Memo (IV) Deposit (v) Guarantee (VI) Invoice
9. What are Transaction Sources?
Receivables uses transaction sources to control the transaction and transaction batch numbering, provide default transaction types for transactions in batch, and to select validation options for imported transactions. Receivables provides the following predefined transaction sources: MANUAL–OTHER, DM Reversal, and Chargeback.
10. What are Adjustment Approval Limits? Where & why are they used?
Approval limits, defined in the approval limits window are used for adjustments created in receivables and request for credit Memos initiated from I-Receivables. Receivables uses transactions that have a document type of Adjustment when we create an adjustment in the Adjustments, Submit Auto Adjustments and Approve Adjustments windows.
When you enter an adjustment that is outside the approval limit range, Receivables assigns the adjustment a status of pending until someone with the appropriate approval limits either approves or rejects it.

Glossary of Terms – AP

Glossary of Terms in Accounts Payables:

http://download-uk.oracle.com/docs/cd/A60725_05/html/comnls/us/ap/gls.htm

ORACLE PAYABLES FAQs continued

Payables FAQs Continued

31. What are the Payment Programs?

The following are the Payment Programs which is used in the payment batches.

1. Build Payment Programs

2. Format Payment Programs

3. Separate Remittance Programs.

Build Payment Programs

It groups the Invoices of the suppliers in the manner in which payment should be made.

Format Payment Programs

This program is used to know the layout of the payment documents and accordingly format the payments.

Separate Remittance Programs

If the Payment Documents does not contains the Remittance advice, then we need to run the Separate Remittance Programs other this will run along with Payment Documents.

32. What is difference between entering Invoices in Invoice Gateway and Invoice Work Bench Window?

Invoice Workbench used for entering and maintaining more complex invoices for which you require extensive online validation and online defaulting where as Invoice Gateway used for your everyday entry of invoice records. Use this window for rapid, high–volume entry of Standard and Credit Memo invoices that are not complex and do not require extensive online validation or defaulting of values during entry.

When you use the Invoice Gateway, you enter invoice header and line information in the same window, and can view only one record at a time. In the Invoice Workbench, you enter invoice header information in the Invoices window, and the related invoice distributions in the Distributions window. You can view multiple invoices at the same time in the Invoices window.

In the Invoice Workbench we can enter and apply prepayments. In the Invoice Gateway we cannot enter prepayments, but we can apply existing prepayments to invoices you enter.

33. What are the tables involved in AP Invoice Interface?

AP_INVOICES_INTERFACE

AP_INVOICE_LINES_INTERFACE

34. What is Proration of Invoice Lines?

When you check the Prorate in the Invoice Lines it will prorate expenses and Tax according to the Proportion of Line amount in the Invoice.

35. What are the Offset Taxes? Where it is used?

Offset Taxes

Offset tax codes are used to record self–assessed taxes on invoices, while reducing or completely offsetting tax liability. Offset taxes have negative–amount rates, so when you use them, you enter negative–amount invoice tax distributions.

It used in European Union, if you are a member of the European Union (EU), you can report on these zero–rated taxes using the Intra–EU VAT Audit Trail report.

36. What are the types of Holds that are used to prevent the payment of Invoice?

Holds that we can apply manually or that Payables applies, prevent payment and, in some cases, creation of accounting entries for an invoice. We can remove holds that we apply, and we can manually release certain holds that Payables applies during Approval.

Payables provides some generic invoice holds for our use, and we can define our own, based on our invoice approval needs. We can also prevent payment of supplier invoices by placing a hold on the supplier rather than on each individual invoice.

There are two major category of hold 1] Manual Hold 2] System Hold.

Manual hold we can create and release manually where as system hold is created by system and normally released by system after due rectification.

There are three types of holds we can use to prevent payment of an invoice

Invoice Hold. We can manually apply one or more Invoice Hold Reason Approvals (”holds”) to an invoice using the Invoice Holds window of the Invoice Workbench.

Scheduled Payment Hold. We can hold payment on part of an invoice by placing one or more of the scheduled payments on hold in the Scheduled Payments window of the Invoice Workbench.

Supplier Hold. In the Supplier Sites window, we can enable the Hold All Payments, Hold Unapproved Invoices, or Hold Unmatched Invoices options. We also have the option of

Specifying an Invoice Amount Limit for a supplier site.

37. What are the hold options at the supplier Site?

In the Supplier Sites window, we can enable the Hold All Payments, Hold Unapproved Invoices, or Hold Unmatched Invoices options. We also have the option of specifying an Invoice Amount Limit for a supplier site.

38. What are the ways in which invoice can be approved?

Before you can pay or create accounting entries for an invoice, including prepayments, you must submit Approval for the invoice in one of three ways:

• Online by using the Invoice Actions window.

• Online by using the Approve button in the Invoice Batches

• Batch by submitting the Payables Approval program from the Submit Request window.

39. What are the methods of taking Discounts in Payables?

There are two ways to take discounts with Payables:

• Enable the Always Take Discount Supplier option. Payables takes a discount regardless of when you pay the invoice.

• Select Discount for the Pay Date Basis for the supplier, and disable the Pay Only When Due check box for your payment batch. Payables takes a discount if you pay the invoice within the discount period.

40. What are the matching approval Levels?

Match Approval Level. If we use Oracle Payables with Oracle Purchasing or another integrated purchasing product, we can perform online matching of invoices and original purchase orders or purchase order receipts. Matching ensures that we only pay for the goods and services we ordered and that our suppliers do not over–billed us. If we are billed for an item over the amount and quantity tolerances we define, the Payables Approval Program applies holds to the invoice and prevents payment until we release the holds.

41. What are the Payable Open Interface Table?

The Payables Open Interface tables store invoice information. The Payables Open Interface Import program builds Payables invoices based on the invoice records in the Payables Open Interface tables.

After the import program builds the invoices, they can be viewed, modified, and approved in the Invoice Workbench.

The invoice data is from e–Commerce invoices from your suppliers, invoice records that you entered in the Invoice Gateway window, invoices that you loaded with Oracle SQL*Loader, lease invoices that were transferred from Property Manager, and credit card transaction data.

42. What are the Invoice Matching Options?

The following are the Invoice Matching Options available:

Purchase Order Matching - (2–Way matching): When you match to a purchase order or receipt, Payables Approval performs these control checks:

1. Quantity billed <= Quantity ordered

2. Invoice price <= Purchase order price

Receipts Matching (3–Way matching):

Control checks 1 and 2, plus:

3. Quantity billed <= Quantity received

Invoice Matching ( 4–Way matching):

Control checks 1, 2, and 3, plus:

4. Quantity billed <= Quantity accepted

43. What is the Prepayment Invoice? What are the Types of Prepayment Invoice?

A prepayment is a type of invoice we enter to make an advance payment to suppliers (vendors) or employees.

The Following are the Two Types of Prepayments

1. Temporary and

2. Permanent.

Temporary prepayments can be applied to invoices or expense reports you receive.

Permanent prepayments cannot be applied to invoices.

44. What are the purchase order matching database tables?

Payables uses several of Oracle Purchasing tables for matching. To implement matching in Payables, you need to load these tables with the data from your non–Oracle purchasing application.

The following are the list of such tables:

• PO_HEADERS

• PO_LINES

• PO_LINE_LOCATIONS

• PO_DISTRIBUTIONS

• PO_DISTRIBUTIONS_AP_V (view of PO_DISTRIBUTIONS)

• PO_RELEASES (Blanket Purchase Orders)

• PO_LOOKUP_CODES

Auto Install automatically installs these and other necessary Oracle Purchasing application tables when you install Payables.

45. What are the pre-requisites for entering Payments?

The following are the pre-requisites:

1. The invoice(s) we paid must be approved, uncancelled, validated, without holds, and must have the same currency as the payment.

2. The bank account must have at least one payment document that uses the Recorded or Combined disbursement type.

46. What are the stages in Payment Batches?

Building - Payables is determining which invoices will be paid by each payment document.

Built - Payables has determined which invoices will be paid with each payment document. You can now review the Preliminary Payment Register, Modify the Payment Batch, or Format the Payment Batch.

Cancelled - You have cancelled the payment batch.

Cancelling - Payables is cancelling the payment batch.

Confirmed - You have confirmed the payment batch.

Confirming - Payables is either confirming or partially confirming the payment batch based on the action you selected in the Confirm Payment Batch window.

Formatted - Payables has completed formatting your payments and has created the output file that you can use to print checks or, if you are making electronic payments, you can deliver the output file to the e–Commerce Gateway or your bank for processing.

Formatting - Payables has created the output file that you can use to print checks or, if you are making EFT payments, you can deliver the output file to your bank for processing.

Modified- Payables has modified the payment batch based on the modifications you made in the Modify Payment Batch window.

Modifying - Payables is modifying the payment batch based on the modifications you made in the Modify Payment Batch window.

Rebuilding - You have modified a payment batch, and Payables is rebuilding the modified payment batch.

Restarting - You have confirmed a partial payment batch and have chosen Restart Payment Batch in the Confirm Payment Batch window. Payables is rebuilding and reformatting the remaining portion of the payment batch.

Selected - Payables has selected invoices that match the payment batch criteria you entered.

Selecting - Payables is selecting invoices that match the payment batch criteria you entered.

Unstarted -The payment batch is unstarted.

ORACLE PAYABLES FAQs continued

Payables FAQs Continued...

16. What are the types of payment terms?

Immediate, 30days, fixed due date, installments, and proxima.

17. What are holds in payables? How are they defined?

Restriction on the invoice for further processing.

Types: Manual and system holds. User can define any types of holds and can be attached to the invoice to stop further processing.

18. How do you create a foreign currency invoice and a foreign currency payment?

Any invoice that has been created from other than the functional currency.

Steps: In Payables options, in currency tab enable use multiple currencies.

Making foreign currency payment

In the payment format enable multiple currency option and in bank enable multiple currency payments under payable option tab.

19. What are Expenses Report and Expense Report Template?

Invoice created for the expense made by the employee.

Expense report template

Defining default values for expense items, and you can then choose those items from a list of values when you enter expense reports.

20. What are recurring invoices?

A feature that lets you create invoices for an expense that occurs regularly and is not usually invoiced. Monthly rents and lease payments are examples of typical recurring payments.

21. What are the perquisites for entering a Standard Invoice?

Supplier, supplier site, payment term, payment method, distribution set (optional)

22. What are Tax Recovery Rules?

Rules defined for the amount of taxes that has to be recovered which is usually a function of the nature (or intended use) of the taxable item.

23. What are payment formats and payables documents?

Format in which the stationary has to be built (i.e. where the attributes or the contents have to be placed.

Payment document

It is the actual negotiable or the legal document presented to the supplier.

24. What are the types of payment methods?

Check, electronic, wire, clearing, future dated (bill of exchange). Two places where you assign the method one is financials option at supplier payables tab and he override option at supplier site level, payable tab.

25. What are the different types of payment methods?

Manual, quick and refund.

26. What are the different types of taxes used in payables?

Sales use tax, offset, user-defined, withholding tax.

27. What are withholding taxes? How are they applied on invoices in payables?

Used for deducting part of amount from suppliers invoice.

Types:

1. Flat rate: Flat rate for all invoices.

2. Period: Amount is specified for that period, beyond which the tax is not withhold with use of special calendar.

3. Amount: Gross amount--- Invoice and period

4. Withheld amount--- Invoice and period.

28. What are Withholding Exceptions and Certificates?

You define a certificate to specify a rate exception for a Withholding Tax type tax code for all invoices of a supplier site.

Withholding Exceptions

You define exceptions on the applied withholding tax type tax code rate assigned to an invoice number.

29. What is future dated payment method?

Payment of invoice where the due date (maturity date) falls in the future. Example - bill of exchange.

Steps: Enable future date use in the future dated payments tab at the payables document.

30. How do you control accounting periods in payables?

Setup àaccounting à AP accounting periods

There is option of toggling between various statuses. never opened, future, open, closed ,permanently closed.

To be continued in next post....

ORACLE PAYABLES FAQs

ORACLE PAYABLES FAQs

The following are the basic questions and answers for them, useful for beginners in interview stand point:

1. What are the modules that are interfaced with Oracle payables?

General Ledger, Purchasing.

2. How does the information defaults in payables?

Financial Option à Payables à Supplier à Supplier Site à Invoice à Distribution and Schedule of Payment.

3. What is a distribution set? What are the types of distribution set?

Distribution Set is to automatically distribute Invoice amount in to different GL Account code Combination. The types of Distribution Set are:

Full Distribution and Skeleton Distribution Set

Full Distribution means we know the exact percentage and exact account code combination. The sum of the distribution percentages must equal 100 or 0.

Whereas in Skeleton distribution set we do not know the percentage but we know the GL Account Code Combination. So percentage may not be entered here.

4. What are the types of invoices used in payables?

Standard, Credit Memo, Debit Memo, Mixed, Prepayment, Expense Report, Withholding Tax, PO Default, Quick Match.

5. What are the encumbrance options for AP? How are they used?

Requisition Encumbrance, and PO Encumbrance available in Financial Option.

Encumbrance used to reserve the Funds at the time of raising the Requisition or creating of PO.

6. What are the different types of supplier sites?

Pay, Primary Pay, RFQ, Purchasing, Procurement Card.

7. What are the types of Accounting Methods?

Accrual method and Cash method.

8. What is Automatic Offset Methods?

Payables automatically create balancing accounting entries for your invoice and payment transactions.

Three types of Offset Methods are there

1. Balancing,

2. Account. And

3. None

9. What is Pay Group?

Pay Group is to group invoices into supplier category for payments.

10. How do you create interest invoice?

In Payable Option under Interest Tab Allow Interest Invoices. Enable this option if you want to allow Payables to calculate interest for overdue invoices and create interest invoices for selected suppliers. Payables automatically creates interest invoices when you pay overdue invoices in a payment batch or with a Quick payment. If you pay an overdue invoice using a manual payment, Payables warns you that interest is due on the invoice and you should pay the invoice in a payment batch or with a Quick payment.

11. What is GL Date Basis & Prepayment settlement date?

The date you want Payables to use as the default accounting date for invoices during invoice entry.

• Invoice Date. Invoice date you enter during invoice entry.

• System Date. Current date for your Payables system. The date you enter the invoice.

• Goods Received/Invoice Date. Date that you enter in the Date Goods Received field. If no value is entered, then the invoice date is used.

• Goods Received/System Date. Date that you enter in the Date Goods Received field. If no value is entered, then the system date is used.

Prepayment Settlement Days. Number of days you want Payables to add to the system date to calculate a default settlement date for a prepayment. Payables prevents you from applying the prepayment to an invoice until on or after the settlement date.

12. What are the levels of Tax calculation?

Level at which the tax has to be calculated.

Levels: Invoice line level, Invoice header level and Tax code level

13. What is additional Pay through Days?

Days specified in this column is added to the system date to select the invoice for payment which has the maturity date falling within these days

14. What are Term date basis & pay date basis?

Term date basis

Date from which the due date will be calculated based on the payment term.

Pay date basis

Selection criteria of invoices based on the due date or scheduled discount date.

15. What is withholding invoice and what are its steps?

Invoice created on the withheld amount that has to be paid to the tax authority from the supplier.

Types: Manual and automatic withholding. Only when allow manual withholding is enabled manual creation of invoice is possible.

Steps: Enable use withhold invoice, Select option when to apply and to create withhold invoice.

Continued in next post...

Procure to Pay Cycle

Procure to Pay Cycle

As I mentioned earlier, the first step to learn the application is to understand the business, thoroughly, in line with that direction let us see the Procure to Pay Cycle.

In general, for any business the major operation at high level would be purchasing and selling in case of trading organization and in manufacturing organization it would be Purchasing, Manufacturing and Selling. Thus, in any business Purchasing (in business language – ‘Procurement’) is one of the major business process / activity.

Procurement process starts with the demand for the material / goods / Services and ends with the payment for the said purchases.

Let us see the overview of the process steps:

Based on the demand requisition would be sent to Purchasing / Sourcing dept.

↓

Sourcing team would Request For Quotation (RFQ)

↓

Quotation Received from the Suppliers (Vendors)

↓

Analyze the Quote and place the Purchase Order (PO)

[Process may differ if the Organization has the system

Of Approved Supplier List (ASL), Contract Purchase Agreement (CPA)

and Blanket Purchase Agreement (BPA)]

↓

Material received against the PO and delivered in Inventory

↓

Invoice is created for the Supplier for the above Purchase

↓

The above invoice is matched with PO / material receipt / material acceptance

↓

Schedule the payment as per the payment term agreed upon

↓

Pay the invoice as per due date

↓

Accounting entries for Invoice & Payment are transferred to

General Ledger

Let us see the meaning of some important components frequently used in Procure to Pay Cycle:

Standard Purchase Order (PO):

A document used to buy and request delivery of goods / services from a supplier.

The order on which the purchasing department approve a purchase.

Blanket Purchase Agreement (BPA):

Blanket Purchase Agreement is created when you know the details of the goods or services you plan to buy from the specific supplier in a period, but you do not know the details of your delivery schedule.

Planned Purchase Order (PPO):

Planned Purchase Order is a long-term agreement committing to buy the item or service from the single source. Must specify the tentative delivery schedule and details of goods.

Contract Purchase Agreement (CPA):

Contract Purchase Agreements created to enter into an agreement with your suppliers to agree on specific terms and conditions without indicating the goods and services that you will be purchasing. You can later issue standard purchase orders referencing your contracts, and you can encumber these purchase orders if you use encumbrance accounting.

Invoice:

A document received from suppliers that list amount owed to them, for purchased goods / services. In Oracle Payables, you create an invoice online using the information provided by suppliers on the document. It is a list of charges, including payment terms, item and other information. Activities like payment, inquiries discounts and adjustments are based on the information entered upon the Invoice.

2-way matching:

The process of verifying that purchase order and invoice information matches within accepted tolerance levels.

Payables uses the following criteria to verify two-way matching:
Invoice price <= Order price Quantity billed <= Quantity ordered

3-way matching:

The process of verifying that purchase order, invoice, and receiving information matches within accepted tolerance levels.

Payables uses the following criteria to verify three-way matching:
Invoice price <= Purchase Order price Quantity billed <= Quantity ordered Quantity billed <= Quantity received

4-way matching:

The process of verifying that purchase order, invoice, and receiving information matches within accepted tolerance levels. Payable uses the following criteria to verify four-way matching:
Invoice price <= Order price Quantity billed <= Quantity ordered Quantity billed <= Quantity received Quantity billed <= Quantity accepted

Approval:

A feature that prevents you from paying an invoice when your supplier overcharges you or bills you for items you have not received / ordered / accepted. Approval also validates tax, period, currency, budgetary, and other information. If you use budgetary control and encumbrance accounting, Approval also creates encumbrances for unmatched invoices or for invoice variances. Approval prevents payment or posting of invoices that do not meet defined approval criteria by placing holds on the invoice. Approval also releases holds when you resolve invoice exceptions. You must submit Approval for each invoice to pay and post the invoice.

Distribution set:

A Payables feature you use to assign a name to a predefined expense distribution or combination of distributions (by percentage). Payables displays on a list of values the list of Distributions sets you define. With Distribution Sets, you can enter routine invoices into Payables without having to enter accounting information.

There are lot of phrases and terms used in Procure to Payables, let me give the link of Oracle Glossary of terms in order to go through, whenever you need it.

Introduction to Oracle Financials

Introduction to Oracle Financials:

Oracle E-Business Suite consists of various applications.

Manufacturing, Supply Chain Management, Customer Relationship Management, Projects, Human Resources, Financials etc.

Oracle Financials consists of mainly five modules that are Accounts Payables, Accounts Receivables, Fixed Assets, General Ledger and Cash Management. These five modules are stand alone applications cater to the specific requirements and together they called as Oracle financials. Likewise each area such as Manufacturing, Supply Chain Management, Projects, and Human Resources etc consists of various standalone modules and all put together called as Oracle E - Business Suite. In Oracle environment each application are called as modules.

An Organization at the outset has to deal with external entities / parties like Suppliers (Vendors), Customers, Banks.

Accounts Payables module used to manage our Suppliers and what we purchased from them, how much we paid them, whether we paid in time to avail the discount and what is the payment method we are using etc.

Accounts Receivables used to manage our Customers, sales to them, are they paid; follow up to receive the payment from them, what is the credit limit etc.

Oracle Fixed Assets used to manage the Assets of the company, like cost of the assets, location and user of the assets, what is the depreciation expenses for individual assets, life and depreciation methods used, accumulated depreciations etc.

Cash Management module used to reconcile with the bank statement at the end of the month and also tells you the status of the bank accounts and whether it syncs with our books of accounts are not, besides it helps to plan and monitor the cash flow and funds flow.

General Ledger and most important module used to maintain the accounting of the company. We can call it as a central repository of all accounting information of the organization. At the end of the day all business transaction are translated into debits & credits and flowing into General Ledger and accounted. General Ledger module is capable enough to Classify, summaries, allocate to concern accounts in order to report as required by statutory authorities, management and share holders.

Accounting is nothing but quantitative measurement of business events that are taking place. How much purchased, sales made, expenses incurred, profit you have made and how much assets and liabilities you have at point in time or in a period . All the accounting information flows into GL in the form of JE from other modules, imported and posted into respective accounts. All the financial reports are run out of GL module and show the financial position and health of the company.

The strength of E-Business Suite is modules talk each other and information flows from one module to other, besides shared entities like Suppliers, Customers, Banks Accounts, Employees, Items are used by all the modules wherever needed but defined only once, which prevents the redundancy, that is where the strength comes.