Sunday, December 9, 2012

Oracle Account Payables FAQs

  1. Do we enter the PO number in the invoice header or click on Match and then provide PO number? What is a good way of doing it?

Answer: If we do not enter the PO number at the header level it gives us the flexibility to match multiple POs to the same Invoice number. However, if you intend to match only 1 PO then it may be fine to use the PO number in the header.

  1. How to enter an invoice which relates to a receipt done in JDE? (How is it different from receipt in Oracle?)

Answer: Usually all the JDE receipt balances will be loaded in Oracle in the GRNI account with location value 4901. If the receipt is done in Oracle the location value will be 0000. Whenever you enter an invoice for a JDE receipt you should use the GRNI account with location value 4901 and DO NOT match it to any PO, Invoice or Receipt. Just enter the invoice header without any PO number and then save, validate and create accounting. This will reduce the GRNI account balance and consequently can be used to verify if all GRNI from JDE has been invoiced in Oracle. 

  1. What holds can be manually released? What holds needs approval or further verification before release?

Answer: Some of the common holds that can be released manually

1)      Amount – (Invoice  Amount Exceeded Limit)

2)      Amt Ord – [Amt billed > Amt Ordered * (1 + % Ordered Tolerance)]

3)      Amt Rec – [Amt billed > Amt Received * (1 + %Receipt Tolerance)]

4)      AP Manager – (Harsco: AP Manager Invoice Hold)

5)      Currency Difference – (Invoice Currency different from PO Currency)

6)      GB CHAPS Payment – (Harsco: Invoices selected for CHAPS payment – UK specific)
7)      Invalid PO – (Invoice has invalid or missing PO number)
8)      Max Ship Amount – (Variance between Invoice and Shipment Amount exceeds limit)

9)      Qty Ord – (Quantity billed exceeds quantity ordered)

10)  Qty Rec – (Quantity billed exceeds quantity received)

11)  Supplier – (Hold all un-validated invoices for the Supplier)

12)  Supplier Updated – (Supplier or Site Updated)

It is recommended that all the system generated holds should be investigated and resolved. Only the manually imposed holds should be released manually. Also, the system can be configured to disallow manual releases for the chosen hold types.

  1. What is invoice price variance?

Invoice Price Variance OR IPV = (PO Price x Qty – Inv Price x Qty)
Note that if there is no difference in the price but there is a difference in quantity then the variance amount doesn’t fall under IPV.

  1. How does accounting of invoice price variance differ when the item is an expense item versus when it is an inventory item?

Answer: IPV for expense item gets accounted to the PO Charge Account. IPV for inventory item gets charged to the Material Price Variance account.

  1. What is Transfer Invoice Price Variance?

Answer: IPV for expense item cannot be transferred. However, IPV from Material Price Variance account can be transferred back to the Inventory average cost account. You can run this concurrent program from the AP Manager responsibility. The program forces you to enter an org since it transfers the IPV to the respective Inventory Org account.

  1. What are the different types of quantity holds?

Answer: The following types of quantity holds exist in the system:

1)      Max Qty Ord – Qty billed exceeds Qty ordered by tolerance amount
2)      Max Qty Rec – Qty billed exceeds Qty received by tolerance amount
3)      Qty Ord – Qty billed exceeds Qty ordered
4)      Qty Rec – Qty billed exceeds Qty received

  1. What should be done when Accounts payable trial balance (APTB) does not tally with AP liability account in GL

Answer: The following reasons could amount to difference in balances between APTB and AP Liability:

1)      There could be un-posted transactions in AP which have not been posted to GL.
Note: GL postings are part of a scheduled activity thus this can occur only between 2 subsequent schedules. Also, even if they are not posted they do not show up in the AP Liability report.

2)      There could be manual journal entries directly to AP Liability account which may not have been accounted in GL. Overall by rule of thumb; all manual transactions in GL can result in trial balance not tallying with AP Liability.

  1. In what scenarios does the AP invoice Aging Report total does not tally with AP Accounts payable trial balance total?

Answer: The following reasons could contribute to the mismatch:

1)      AP Trial Balance shows all accounted unpaid invoices. Whereas, AP invoice Aging Report shows all unpaid invoices whether accounted or not. Hence, they will NOT tally if there are unpaid invoices which are NOT accounted.

2)      Also, AP Aging Report picks the amount from the header of the invoice thus if the accounted lines total is different from the header amount then the same difference will be observed between Aging report and Trial Balance.

3)      Also, Aging Report is always generated as on date and does not have the flexibility to extract data for periods and date ranges.   

  1. What is maximum ship amount hold?

Answer: When the difference between Invoice and Shipment Amount exceeds the tolerance limit then the system imposes a hold on the invoice called the “Max Ship Amount” hold. It can be caused due to IPV or Quantity Variance.

  1. In what ways can we raise an invoice if there is no PO / Receipt?

Answer: In the Invoice line type you can choose “item” if you have a corresponding item number. You may also choose the type as “miscellaneous” based on the requirement.

  1. In what scenario does the Prepayment Account GL balance doesn’t match the Prepayment Status Report?

Answer: Any manual journal entry for a prepayment or entry of a prepayment invoice where you change the account information to a non-prepayment account will result in difference in balances between Prepayment GL Account and Prepayment Status Report. Also, any unpaid prepayments will be accounted in Prepayment GL account however will show as “unpaid” in the status report.

In the parameters for Prepayment Status Report always select NO for “Include Invoices” and “Include Credits/Debit Memos”. This will ensure that the standard invoices/credit/debit memos against the prepayment suppliers are not included.

  1. In what cases do the GRNI (goods received not invoiced) accounts’ GL balance does not tally with PO Accrual Reconciliation Report?

Answers: The GRNI GL balances are loaded onto the PO Accrual Reconciliation report by way of a concurrent program which is called “Accrual Reconciliation Load Run”. This activity happens overnight each day to bring in balances onto the PO Accrual Reconciliation report. However, a user can run this program manually from the AP Manager responsibility. There could be many reasons for the GRNI GL Balance not matching to the PO Accrual Reconciliation report. The reason could be making manual journal entries. In order to investigate the discrepancy there are couple of standard Oracle reports which can help you decipher the problem. They are:

1)      Miscellaneous Accrual Reconciliation reportThe purpose of this report is to show all inventory and AP (not matched to PO) transactions that have hit the accrual accounts. Transactions are grouped by accrual code. The report can be run either in summary where only the distribution information and balance is shown or in detail where all the transaction that makes up a particular distribution is shown as well. Usually this report is run in conjunction with the Summary Accrual Reconciliation Report as part of your period end accrual reconciliation process.

2)      Summary Accrual Reconciliation report – The Summary Accrual Reconciliation Report can be used to analyze the balance of the Accounts Payable (AP) accrual accounts. You can accrue both expense and inventory purchases as you receive them. When this happens, you temporarily record an accounts payable liability to your Expense or Inventory AP accrual accounts. When Oracle Payables creates the accounting for the matched and approved invoice, Oracle Payables clears the AP accrual accounts and records the liability from the supplier site. The Accrual Reconciliation Report helps you monitor potential problems with purchasing and receiving activities that can affect the accuracy of your A/P accrual accounts. It displays the balance of each accrual account as well as partial representation of source of the balance.

  1. Why should Receiving Inventory Account always have a zero balance? In what scenarios is there a balance in the account?

Answer: It is true that the Receiving Inventory Account should always have a zero balance.
There could be 2 reasons due to which the receiving account might have a balance.

1)      The Receiving account is more like a transition account before transferring it to the inventory account. Since we follow the direct delivery routing hence our items are not passing through the receiving account as of today. Thus, this cannot be the reason to have a balance in the Receiving account for us.

2)      Also, when we return items to the supplier sometimes we select the option “return to receiving” instead of “return to supplier”. This error can lead to the item being accounted in the receiving account. The technical team is working to have the option defaulted to “supplier” which will remove this scope of error.

Hence in future we should not see any balance in the receiving account. 

  1. How can we avoid errors in foreign currency purchases or invoices?

Answer: One must always remember that if you are matching an invoice with a PO then in the “invoice form” the currency is defaulted from the supplier set-up information. This currency cannot be changed in the invoice. However, if you are entering an invoice without a PO number in the header then that gives you the flexibility to change the currency and query all invoices for that currency using the match option. The thumb rule is that the currency remains the same throughout the Requisition, PO, Invoice and Payment phases.

Note: During foreign currency payment always check the Bank Exchange Rate and exchange amount that the bank charges for doing a foreign currency disbursement. The same amount should be entered in the payment document. This will ensure that it hits the correct realized gain / loss account.

In cases, where match action is not required for an invoice, for e.g. no PO or receipt, you can simply enter the required currency and save the invoice.

1 comment:

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