The Oracle E-Business Suite includes the following important system entities:

Business Group and Departments

Government Reporting Legal Entity (GRLE)

Legal Entity

Ledgers --The Ledger represents an accounting representation for an organization that is accountable in a self-contained way

Operating Unit

Inventory Organization

Human Resources Organization

GL Acounting Cycle:

1) Open Accounting period

2) Create/Reverse Journal Entries

3) post

4) Review

5) Revalue

6) Translate

7) Consolidate

8) Review/Correct balances

8) Run accounting reports

10) Close accounting period

Set Of Books 4 C's

1)Chart Of accounts - chart of accounts is the account structure you define to fit the specific needs of your organization.

In Oracle General Ledger, you build a chart of accounts using Accounting Flexfields.Each flexfield is made up of segments. Value sets are attached to the segments.

We specify only three segments, Natural Account, Balancing Segment, and Cost Center, as mandatory.

2) Currency

3) Calendar

4) Account Convention

Flexfield Qualifier: Identifies a particular segment of a key flexfield.

Choose whether to enable dynamic insertion to allow new account combinations to be entered.

If dynamic insertion is not allowed, account combinations must be defined using the GL Accounts window.

Choose to allow cross-validation rules to control the creation of account combinations

Segment Qualifiers: Identifies a particular type of value present in a single segment of a key flexfield.

Types of segment qualifiers: Allow budgeting, Allow Posting, Account Type, Third party control account, Reconcile

Accounting Period Statuses

Never Opened: You cannot enter or post journals.

Future Enterable: You can enter journals, but you cannot post. The number of future enterable periods is a fixed number defined in the Set of Books window. You can change the number of Future Enterable periods at any time.

Open: You can enter and post journals to any open period.

An unlimited number of periods can be open, but doing so may slow the posting process and can confuse users entering journals.

Closed: You must reopen Closed periods before you can post journals. You should manually close periods after finishing your month-end processing

Permanently Closed: Permanently Closed periods cannot be reopened. This status is required to archive and purge data.

Journal Entry Types:

Manual Journal Entries: The basic journal entry type is used for most accounting transactions.Examples include adjustments and reclassifications.

Reversing Journal Entries: Reversing journal entries are created by reversing an existing journal entry. You can reverse any journal entry and post it to the current or any future open accounting period.Recurring Journal Entries: Recurring journal entries are defined once, then are repeated for each subsequent accounting period you generate. You can use recurring journal entries to define automatic consolidating and eliminating entries. Examples include intercompany debt,bad debt expense, and periodic accruals.Mass Allocations: Mass Allocations are journal entries that utilize a single journal entry formula to allocate balances across a group of cost centers, departments, divisions or other segments. Examples include rent expense allocated by headcount or administrative costs allocated by machine labor hours

Journal information is stored in the following tables:

GL_JE_HEADERS

GL_JE_LINES

GL_JE_BATCHES

Journal entries can be created in the following ways:

1) Manually through front end. Journals -> Enter2) Using ADI3) Import Journal Entries from GL Interface

Conversion refers to foreign currency transactions that are immediately converted at the time of entry to the functional currency of the set of books in which the transaction takes place.PRE-REQUISITE FOR CONVERSIONDefine new currenciesEnable seeded currenciesDefine rate typesEnter daily rates

Revaluation adjusts asset or liability accounts that may be materially understated or overstated at the end of a period due to a significant fluctuation in the exchange rate between the time the transaction was entered and the end of the period.Revaluation is run at the end of each accounting period as part of the closeprocess to revalue balance sheet accounts that are denominated in a foreign currency. The journal is then reversed at the beginning of the next period.At the end of the accounting period, the revaluation process creates an unposted journal to record the change in the converted balances to the Unrealized Gain/Loss Account. The journal is posted, and then reversed at the beginning of the next reporting period.RATE TYPES AVAILABLEDaily ratesHistorical rates

Translation restates an entire set of books or balances for a company from the functionalcurrency to a foreign currency.Rate Types used for Translation:

Period EndPeriod AverageHistoricConversion means foreign currency transactions are converted to functional currency.Translation means all the balances are converted from functional currency to foreign currency.Revaluation is an adjustment done to asset or liability accounts which have been understated or overstated due to fluctuation in the exchange rate between the time the transaction was entered and the end of the period.

Multiple Reporting Currencies (MRC) is beneficial for companies whomust regularly and routinely report their transactions and financial results in multiple currencies. WithMRC, you create a primary set of books then associate several reporting sets of books with different currencies to that primary set of books. Daily transactions are entered in the primary set of books. Then they are posted and transferred to the reporting sets of books where the foreign currency transactions are converted to the reporting set of books functional currency. To use MRC, the primary and reporting sets of books must all share the same calendar and chart of accounts structures.

General Ledger Predefined Rate TypesSpot: An exchange rate based on the rate for a specific date. It applies to the immediate delivery of a currency. REQUIRED TO BE DEFINED FOR ALL TRANSACTIONAL PURPOSESCorporate: An exchange rate that standardize rates for your company. This rate is generally a standard market rate determined by senior financial management for use throughout the organization.User: An exchange rate that you enter during foreign currency journal entry.EMU Fixed: An exchange rate that is used by countries joining the EU during the transition period to the Euro currency.User Defined: A rate type defined by the your company to meet special needs.

RETAINED EARNINGS ACCOUNT:

GL posts the net balance of all income and expenses accounts from the prior year to this account when you open the first period of a fiscal year.

ACCOUNTING CYCLE:

Open periodCreate functional and foreign journal entriesReverse journal entriesPostReview and correct balancesRevalue foreign currency balancesTranslate foreign currency balancesConsolidate sets of booksReview and correct balancesRun accounting reportsClose the accounting period

STATUS OF A NEWLY ENTERED JOURNAL : Unposted

POSTING STATUSES:

UnpostedPendingProcessingSelected for postingPostedError

GL_BALANCES is impacted, when a journal entry is posted.

CONSOLIDATION TOOLS:Financial Statement Generator (FSG): Use FSG to consolidate financial information for businesses using a single SOBs or businesses using different SOBs that share the same calendar and chart of accounts.

Global Consolidation System (GSC): Use GCS to consolidate financial information for multiple SOBs, diverse financial systems, and geographic locations, including both Oracle and non-Oracle applications.

Subledger Tables

XLA_AE_HEADERS

XLA_AE_LINES

XLA_DISTRIBUTION_LINKS

Transfer Journal Entries to GL (XLAGLTRN) process takes the subledger journals and inserts

records into the Interface Tables

Interface Tables

GL_INTERFACE / XLA_GLT_<groupid>

Journal Import (GLLEZL) then reads from the interface table and creates records in the GL

Tables

GL Tables  

GL_JE_BATCHES

GL_JE_HEADERS

GL_JE_LINES

GL_IMPORT_REFERENCES

GL Posting process then posts to the GL_BALANCES table.

Different methods to transfer Subledger journals to GL:

a) ONLINE MODE

GL Transfer can be spawned during Online Accounting using the ”Final Post” option for a

specific document (Example: AP Invoice and AR Transaction).

Example: Navigation in Payables: Invoices/Entry/Invoices: Action: Create Accounting/Final

Post. This  spawns the GL Transfer, the Journal Import, Data Manager and the GL Posting

processes. This request transfers ALL the final accounted data for that document. This

method of transfer uses the interface table GL_INTERFACE to move the journals to the

general ledger.

b) BATCH MODE

GL Transfer can also be spawned by the Create Accounting concurrent request when

submitted with the “Transfer to GL” parameter set to Y.

Example:  Navigation in Payables: Other/Request/Run: Create Accounting

This spawns the journal import and the data manager processes. The GL Posting process is

spawned if the Post to GL parameter is set to Yes when submitting the Create Accounting.

This request transfers all the final accounting created by the Create Accounting request that

spawned it. This method uses the interface table XLA_GLT_<groupid>.

c) CONCURRENT REQUEST

GL Transfer can be submitted in standalone mode using the concurrent request “Transfer

Journal Entries to GL”.

Example: Navigation in Payables: Other/Request/Run: Transfer Journal Entries to GL

This spawns the Journal Import and the Data Manager programs. This request transfers all

the final accounting that exists for the given ledger and end date. This method uses the

interface table XLA_GLT_<groupid>.

COLUMNS ASSOCIATE GL DATA BACK TO THE SLA DATA

GL_IMPORT_REFERENCES.gl_sl_link_id => XLA_AE_LINES.gl_sl_link_id

GL_JE_BATCHES.group_id => XLA_AE_HEADERS.group_id

Trading Community Architecture:

New Trading Entities in R12:

Below are the new entities that are merged in TCA architecture in R12.

Banks & Bank Branches

Suppliers

Legal Entity

Concept of customer is separated into 2 layers: The Party layer and the Account layer.When CRM applications refer to “Customer” they are referring to the Party Layer.On the other hand, when ERP applications refer to “Customer” they are referring to the Account Layer.

The word “Customer” is the combination of both the “Party layer” and the “Account layer”.

Party layer exists independent of any selling or buying relationship. Customer Account layer exists in the context of a Party and only when a selling     

relationship exists. The Party Layer captures intrinsic truths about a person or organization. The Account Layer captures the details describing the Party’s financial relationship with

the implementing organization. The Account Layer cannot exist without the Party Layer

Party could be a person or an organization having no business relation with the enterprise.But when you establish a selling relationship with the party, then it becomes a customer.

Supplier Tables:

AP_SUPPLIER_INT_REJECTIONS

AP_SUP_SITE_CONTACT_INT

AP_SUPPLIER_SITES_INT

AP_SUPPLIERS_INT

AP_SUPPLIERS

AP_SUPPLIER_SITES_ALL

AP_SUPPLIER_CONTACTS

Banks:

In R12, Banks and Bank Branches are created as TCA parties.The bank Accounts are associated with Bank Branches but reside within the Cash Management Application.During the Bank Account creation, you are able to define in which application this bank account can be used.

Bank Tables:CE_BANK_ACCOUNTS CE_BANK_ACCT_USES_ALLCE_GL_ACCOUNTS_CCID

Overview of Lockbox

Lockbox is a service offered by banks to companies in which the company receives payments from their customersby mail to a post office box and the bank picks up the payments and deposits it in the company’s bank account. In away, the company is outsourcing its AR function of collecting the checks and depositing it in the bank. The bankthen informs the company of all the payments received. They normally send a Flat file (text file) to the company that

gives all the details of the deposits made in the bank account. The details captured in the flat file depend on thearrangement between the bank and the company. This flat file is referred to as the Lockbox file. The company canthen import this Lockbox file in their system to create receipts and apply these receipts to the open invoices. OracleReceivables provide a standard functionality to import the lockbox file to create the receipts.

Lockbox Processing Steps

Import Process – Reading and formatting data from the bank file into Auto lockbox table.Validation Process – Data is validated and transferred to quick cash tables.Post Quick cash process – This updates the customer’s balances.

Auto Accounting is a mechanism for generating default accounting flexfields for revenue , receivables, freight and tax based on the other parameters associated with the invoice you are entering..Define AutoAccounting to specify how you want Receivables to determine the general ledger accounts for transactions that you enter manually or import using AutoInvoice. Receivables creates default accounts for revenue, receivable, freight, tax, unearned revenue, unbilled receivable, finance charges, and AutoInvoice clearing (suspense) accounts using this information.

There are 7 types of transactions in AR-InvoiceDebit memoCredit memoChargebackDepositsGuaranteeBills Receivables

PAYABLES:

The Month End Process in Accounts Payables involves Steps During AP Month End Closure1)Invoices validation2)Payment Batch Confirmation3)creating accounting for payables categories such as Invoices and payments 4)Transferring of accounting information to GL.

Overview of Encumbrance Accounting

With General Ledger you can record pre-expenditures commonly known as encumbrances. The primary purpose of tracking encumbrances is to avoid overspending a budget. Encumbrances can also be used to predict cash outflow and as a general planning tool.

To use the full capabilities of encumbrance accounting, you must enable the budgetary control flag for a set of books. When you enable the budgetary control flag, the system automatically

creates encumbrances from requisitions, purchase orders and other transactions originating in feeder systems such as Purchasing and Payables.

Consolidation - is the period–end process of combining the financial results of separate subsidiaries with the parent company to form a single, combined statement of financial results. Clients can consolidate any number of subsidiaries that use different SOBs and having different COA, currencies and calendars.

GL Consolidation Tools - There are basically two consolidation tools which can be used for consolidation within Oracle GL.1. Financials Statement Generator (FSG) - Used for consolidating financial information for businesses using a single SOB or using different SOB that shares the same calendar and COA.2. Global Consolidation System (GCS) - GCS is a multi-source consolidation solution that can accumulate information from diverse financial systems, geographic locations, including Oracle and non-Oracle Applications. With GCS one can consolidate data from multiple SOBs, multiple instances and non-Oracle applications.

AutoLockBox:

Interface Tables : AR_PAYMENTS_INTERFACE_ALL (POPULATED BY IMPORT PROCESS)

Interim tables : AR_INTERIM_CASH_RECEIPTS_ALL (All Populated by Submit Validation)

: AR_INTERIM_CASH_RCPT_LINES_ALL,

AR_INTERIM_POSTING

Base Tables : AR_CASH_RECEIPTS_ALL, AR_RECEIVABLE_APPLICATIONS_ALL,

AR_PAYMENT_SCHEDULES_ALL ( All Populated by post quick cash)

Grouping Rules? (Used by Autoinvoice)

Grouping rules specify the attributes that must be identical for lines to appear on the same transaction.Each grouping rule can be assigned a line ordering Rule for importing invoices. Grouping rules tell AutoInvoice how you want to group records in the interface tables into invoices, debit memos, and credit memos. Grouping rules specify which attributes must be identical for lines to appear on the same transaction.

Line Ordering Rules? (Used by Autoinvoice)

Line ordering rules are used to order transaction lines when grouping the transactions into invoices, debit memos and credit

memos by autoinvoice program. For instance if transactions are being imported from oracle order management , and an invoice

line ordering rule for sales_order _line is created then the invoice lists the lines in the same order of lines in sales order.

Invoice line ordering rules allows to specify how AutoInvoice should order the transaction lines when it groups data into transactions. Each grouping rule can be assigned a line ordering Rule for importing invoices.

Receivables Descriptive Flexfields

Oracle Receivables uses the transaction flexfields to uniquely identify each transaction line that is imported though AutoInvoice.

AutoInvoice is capable of using information from four types of transaction flexfields:

Line Transaction Flexfield Link-to Transaction Flexfield Reference Transaction Flexfield Invoice Transaction Flexfield

If Autoinvoice is used it is mandatory to define: (1) Line Transaction Flexfield (line level information) and (2)  Invoice Transaction Flexfield (header level information).

If Link-to and Reference Transaction flexfields is not explicitly defined, Autoinvoice will use the flexfield structure of the Line Transaction Flexfield to determine Link-To and Reference information.

Creating a Line Transaction Flexfield:

The Line Transaction Flexfield must be defined if implementing AutoInvoice. Line Transaction Flexfields are unique for each record in the interface table and therefore can be used as record identifiers.

Use columns INTERFACE_LINE_ATTRIBUTE1-15 and INTERFACE_LINE_CONTEXT

The data from the Line Transaction flexfield is stored in RA_CUSTOMER_TRX_LINES_ALL.INTERFACE_LINE_ATTRIBUTE1-15 andRA_CUSTOMER_TRX_LINES_ALL.INTERFACE_LINE_CONTEXT.

Creating a Link-to Transaction Flexfield:

Link-To Transaction Flexfields have the same structure as the Line Transaction Flexfield. Link-To Transaction Flexfields are used to relate rows within a batch of interface table data to each other. This is used to import tax and freight charges associated to specific transaction lines.

Use columns LINK_TO_LINE_ATTRIBUTE1-15 and LINK_TO_LINE_CONTEXT to link a Freight or Tax Line to a particular transaction line.

The data from the Link-to Transaction flexfield is stored in RA_CUSTOMER_TRX_LINES_ALL.LINK_TO_ATTRIBUTE1-15 andRA_CUSTOMER_TRX_LINES_ALL.LINK_TO_CONTEXT.

Creating a Reference Transaction Flexfield:

Reference Transaction Flexfields have the same structure as the Line Transaction Flexfields, this is used to apply a credit memo to an invoice, or associate an invoice to a commitment within the same interface batch data.

Use the REFERENCE_LINE_ATTRIBUTE1-15 and REFERENCE_LINE_CONTEXT columns to contain the line transaction flexfield values of the invoice or commitment this transaction is associated to.

The data from the Reference Transaction flexfield is stored in RA_CUSTOMER_TRX_LINES_ALL.REFERENCE_LINE_ATTRIBUTE1-15 andRA_CUSTOMER_TRX_LINES_ALL.REFERENCE_LINE_CONTEXT

Creating an Invoice Transaction Flexfield:

Invoice Transaction Flexfield is for header level segments. If you define this flexfield, then the segments you use here should also be included in the AutoInvoice grouping rules.

Use columns HEADER_ATTRIBUTE1-15 and HEADER_ATTRIBUTE_CATEGORY.

The flexfields captured here are stored at the transaction header level as opposed to the transaction line level used by the previous 3 flexfields.

The data from the Invoice Transaction Flexfield are stored in RA_CUSTOMER_TRX_ALL.ATTRIBUTE1-15 and RA_CUSTOMER_TRX_ALL.ATTRIBUTE_CATEGORY

Receivables Payment Terms

Defining payment terms allows to specify the due date, installment and discount date for open items.

NOTE:  Once a payment term has transactions associated to it, it cannot be updated.  A new payment term would need to be created.

Receivables uses the following hierarchy to determine the default payment term for your transactions, stopping when one is found:

Bill-to site, set at the Site level profile of the customer record Customer, set at the Account level profile of the customer record Transaction Type

The defaulting hierarchy described above is only used for manually entered transactions. When AutoInvoice is used then either a TERM_ID or TERM_NAME in RA_INTERFACE_LINES_ALL (depending on how you have set up your transaction batch source) needs to be provided.  AutoInvoice will not default a payment term for, as doing so would significantly slow down the performance of the process.

Receivables provides the following predefined payment terms:

30 NET: The balance of the transaction is due within 30 days. IMMEDIATE: The balance of the transaction is due immediately.

If you need to define payment terms specific for your business requirements, you can create additional payment terms.

Auto Invoice Setup with Sample Script

1. Define Common Accounts Receivable Configuration: Setup the Accounting Flexfield which is a common Accounts. The Accounting Flexfield Setup is done using General Ledger Responsibility. Please see the link for more details: Define Common Accounts Receivable Configuration

2. Define Common Accounts Receivable Configuration: Transaction Flexfields in Oracle Receivables uniquely identify each transaction line that is imported using Auto Invoice. Please see the link for more details: Receivables Descriptive Flexfields

3. Receivables Profile Options: Profile options impact the behavior of Auto Invoice. Please see the link for more details: Receivables Profile Options

4. AR Transaction Types: Oracle Receivables by seeded provides the following five transaction types: Invoice, Credit Memo, Projects, Credit Memo, Projects Invoice, Intercompany. Based on the Business requirements needs to setup a new one. Please see the link for setting up a new transaction type: AR Transaction Types

5. AutoAccounting Rules: AutoAccounting enables to create default accounts for revenue, receivable, freight, tax, unearned revenue, unbilled receivable, late charges, bills receivables accounts, and AutoInvoice clearing (suspense) accounts when a transaction is entered or imported from API/AutoInvoice Import Program. Please see the link for more details: AutoAccounting Rules

6. AutoInvoice Line Ordering Rules: By using this setup the Transaction lines will be ordered in a single transaction based on the setups. Please see the link for more details: AutoInvoice Line Ordering Rules

7. AutoInvoice Grouping Rules: By using this setup the Transaction lines inserted in the Transactions interface tables will be grouped and be created in single Invoice based on the setups. Please see the link for more details: AutoInvoice Grouping Rules

8. Receivables Payment Terms: Payment terms allows to specify the due date, installment and discount date for open items. There is a BFB Balance Bill Forwarding option which is newly added in R12 which allows to send the dunning letters based on the Day mentioned and also allows to send the letters on the customer level as well as at the site level. Will be adding BFB in detail. Please see the link for setting up Payment Terms: Receivables Payment Terms

9. Transaction Sources: Based on the Transaction Source setup Transactions, Batch Source, AutoInvoice Options, Customer Information, Accounting Information, Sales Credit validation and Other Information will be dependent. Please see the link for more details for setting up Transaction Sources: Transaction Sources

10. Receipt Classes and Methods: By using this setup the default payment method is derived for the Transactions. Please see the link for Setup: Receipt Classes and Methods Setup

11. Receivables Customer Profile Classes: Based on the Profile class the Customers can be Categorized. Please see the link for setup:  Receivables Customer Profile Classes

12. Create Customer for Auto Invoice: Create a new customer by using the Receipt Classes, Methods, Customer Profile classes. Please see the link for defining the Customer: Create Customer for Auto Invoice   and API with all required Setups

13. Receivables System Options: In Receivables System Options we can define the Accounting setup, Trans and Customers, Claims, Miscellaneous Setups. Please see the link for more details: Receivables System Options

14. Receivables Accounting Periods: Periods should be open for doing the transaction and create the accounting. Please see the link for more details: Receivables Accounting Periods

15. Remit-To Address: By using the Remit To Address, customers can send the payment details directly to Bank. Please see the link for more details: Remit-To Address

16. Populate Interface Table and Run Auto Invoice Import: Populate ra_interface_lines_all tables using sample script and run the auto invoice import. If any issues check the Log file for error details. If any issue with AutoAccounting Rules check the segments account details. Please see the link for more details: Auto Invoice Import

Suppliers:

Suppliers can have multiple addresses and each address can be used by an operating unit through a supplier site record.

Invoice Types

StandardAn invoice from a supplier representing an amount due for goods or services purchased.Standard invoices can be either matched to a purchase order or not matched.Credit MemoA memo from a supplier representing a credit amount toward goods or services.Debit MemoAn invoice you enter to record a credit for a supplier who does not send you a credit memo.MixedAn invoice type you enter for matching to both purchase orders and invoices. You can entereither a positive or a negative amount for a Mixed invoice type.PrepaymentA type of invoice you enter to pay an advance payment for expenses to a supplier oremployee.Expense ReportAn invoice representing an amount due to an employee for business-related expenses.Withholding TaxAn invoice you enter to remit taxes withheld to the appropriate tax authority.InterestIf you allow interest invoices, payables will automatically calculate interest for overdueinvoices and create interest invoices for selected suppliers.Retainage ReleaseInvoices created for complex work and advance contract financing.

Transportation InvoicesInvoices from freight payment.

Creating Invoices AutomaticallyRecurring InvoicesYou can set up your system to automatically create periodic invoices, for example, rentinvoices.RTS InvoicesIf you use Return to Supplier feature in Oracle Purchasing, the system creates these debitmemos directly in your Payables system.Retroactive Price Adjustment Invoices.If Oracle Purchasing users use the Retroactive Pricing of Purchase Orders feature, thesystem automatically creates Adjustment and PO Price Adjustment invoices.

The default invoice GL date is based on the GL Date Basis Payables option.The GL Date Basis Payables option determines what date is used as the GL date. The GLdate for each invoice defaults based on one of the following options:• Invoice date• System date• Receipt/Invoice• Receipt/System

To import and or enter invoices in batches, you must first enable the AP: Use Invoice BatchControls Profile option. When you enable this option, all new invoices must be entered in abatch.Before manually entering a batch of invoices, optionally prepare a batch control form.

The invoice lines define the details of the goods and services as well as the tax, freight, andmiscellaneous charges invoiced by the supplier.Item LinesItem lines capture the details of the goods and services billed on your invoice.Freight and Miscellaneous LinesFreight lines capture the details of your freight charges. Freight charges can be allocated toItem lines as required.Miscellaneous lines capture the details of other charges on your invoices such as installationor service. Like Freight lines, Miscellaneous lines can be allocated to Item lines.Tax linesPayables integrates with Oracle E-Business Tax to automatically determine and calculate theapplicable tax lines for your invoices. E-Business Tax uses your tax setup, plus fields on theinvoice header and lines, known as tax drivers, to determine which taxes should be applied toFor each invoice, you can manually enter invoice lines, or you can automatically generatelines by matching the invoice to a purchase order shipment, pay item, or receipt.

Scheduled payments are created based on payment terms when the invoice header is saved. An invoice header can have one or more scheduled payments.

DistributionsDistribution details include invoice accounting details, the GL date, charge accounts, andproject information. An invoice line can have one or more invoice distributions.

Invoice distributions can be created on an invoice in a variety of different ways.Manual EntryClick the Distributions button to manually add the distributions to the invoice.Distribution SetSpecify a distribution set for the invoice. A distribution set is a template for invoicedistributions. When you specify a distribution set for an invoice, Payables automaticallycreates invoice distributions based on the distribution set. You can assign a default Distribution Set to a supplier site so Payables uses it for every invoice you enter for that supplier site. If you do not assign a default Distribution Set to a supplier site, you can always assign a Distribution Set to an invoice when you enter it.MatchingMatch the invoice to a purchase order or receipt and creates invoice distributions.Invoice ValidationIf you are using automatic withholding tax or automatic tax calculation, the Validation processcan automatically create the necessary tax distributions.AllocationUse the Allocation window to create freight and miscellaneous distributions. Individual freightdistributions can be added by specifying the distribution amounts.

Match: Allows you to start one of the following matches, based on the invoice youselect. Select the invoice you want to match to from the poplist, then choose the Matchbutton. If you enter a positive amount invoice, then Payables defaults either PurchaseOrder or Receipt, based on the Invoice Match option of the supplier site.- Purchase Order: Match a selected invoice to a purchase order.- Receipt: Match a selected invoice to a purchase order receipt.- Credit Memo: Match a selected credit/debit memo to an invoice.

The Invoice Match option defaults in the following manner:Financials options -> Supplier -> Supplier Site -> Purchase Order Shipment

Payment TermsPayables uses payment terms to automatically calculate due dates, discount dates, anddiscount amounts for each invoice you enter. Payment terms will default from the supplier site.

Payment MethodThe invoice payment method you use most frequently. This will default from the supplier site.If you have to frequently override the payment method, consider changing the default at thesupplier site level.• Check - You can pay with a manual payment, a Quick payment, or in a payment run.• Clearing - Used for recording invoice payments to internal suppliers.• Electronic - You generate an electronic payment file that you deliver to your bank tocreate payments. Use Electronic if the invoice will be paid using EFT or EDI.• Wire - Used to manually record a wire transfer of funds between your bank and yoursupplier’s bank.

Debit and Credit memo in Receivables

DEBIT MEMO :  In AR , Debit memo is issued to a customer to increase his liability. For example , if the customer was not charged with freight charges and we need to add them to his liability, as we can’t prepare one more invoice for the freight charges. We prepare a debit memo.

Debit memo information is stored in RA_CUSTOMER_TRX_ALL, the type of transaction a particular row represents can be found out from the field class of AR_PAYMENT_SCHEDULES_ALL by linking the CUSTOMER_TRX_ID field in the two tables.

Debit memo is usually not linked to any other Invoice like credit memos; the whole idea behind creating a debit memo is to increase the customer outstanding balance.

CREDIT MEMO :  Credit memo is issued when the customer is over invoiced, that customer ‘s charged more than what customer should have been charged.

Credit Memos with negative amount are typically used for crediting the customer’s account with some balance. Credit memo information is also stored in  RA_CUSTOMER_TRX_ALL

Credit memo can be created in two different ways;  the idea behind creating a credit memo is to reduce the customer invoice balance.

Credit Memo can be created in two ways

1. Manually creating a credit memo like any other AR manual invoice.

 Invoice Class: Credit Memo  Invoice Type: OM Credit Memo, Credit Memo

2. Querying an existing AR Invoice and calling the Credit function from Actions menuQuery the AR Invoice for which you want to create a credit memo

Click on “Actions menu” Specify the “Reason for Credit Memo” Enter the Line % for Credit memo (Eg: 25% entered) Enter the Tax % for Credit memo (Eg: 10% entered) Click the Save button

What are the Prerequisite setups for Order to Cash (O2C) cycle ?

Shipping Network: Item must be assign it to the warehouse/shipping organization.

On Hand Quantity:  Item must be in Stock and stockable. Selling Cost: item has to be assigned to the price list. Customer: Customer must be exists in the system.

Oracle Payables : What is Debit Memo and Credit Memo in AP

Credit Memo is Negative amount invoice created by a supplier and sent to you to notify you of a credit. Debit Memo is Negative amount invoice created by you and sent to a supplier to notify the supplier of a credit you are recording. both will be mention in -ve amount.