Oracle Payables provides the integration and flexibility you need to efficiently manage disbursements while keeping strong controls over matching, budgets, approval processes, and payments. As a cornerstone to the Procure to Pay flow, Payables provides process collaboration across departments within the enterprise and beyond to suppliers. As a key member of the Financial Management Chain, Payables assists users in meeting the demands of corporate governance, promotes fiscal discipline, and meets complex and diverse statutory requirements.
Legal Entity is a new addition to the Oracle E-Business Suite that enhances the ability to manage one’s legal corporate structure and track data from the legal perspective. The solution presents the foundation for features that help daily operations comply with local regulations. Invoices and Payments indicate the operating unit and the legal entity owner of the transaction. The legal entity can be used as selection criteria when preparing pay runs. For more details, please see the Legal Entity section of this document.
Multi-Org Access Control enables companies that have implemented a Shared Services operating model to efficiently process business transactions by allowing them to access, process, and report on data for an unlimited number of operating units within a single applications responsibility. This increases the productivity of Shared Service Centers for users no longer have to switch applications responsibilities when processing transactions for multiple operating units at a time. Data security is still maintained using security profiles that are defined for a list of operating units and determine the data access privileges for a user.
In Oracle Payables, you’re Multi-Org Access Control and Preferences allow users to enter invoices or batches of invoices for one operating unit, and then seamlessly enter invoices for another operating unit. Select invoices across operating units for payment processing within a single pay run. Setup is more manageable and gathering information and running concurrent programs are more efficient. For more details, please see the Multi-Org Access section of this document.
The Trading Community Model is a highly flexible architecture that allows you to fully model real world entities in your trading community and accurately represent the complex relationships among those entities. It is the core data model for trading partners used by Oracle E-Business Suite applications. By representing Suppliers as part of the trading community, you have access to many of the features provided by TCA. These include:
• Data Librarian Function & Processes
• Integrated Enrichment Capabilities including D&B
• Address Validation
• Data Consistency
• Ease of Data Maintenance
This new user interface presents a clear distinction between the supplier’s Company details and terms and controls for the trading relationship. Managing the attributes specific to particular functional areas such as Oracle Payables, Purchasing and Receiving can be controlled with the use of Function Security. Adding new locations or relationships with additional operating units is streamlined. Additional tax and legal registrations provide key information to meet your reporting and compliance needs. Tailor a quick update page with those values most often updated for even faster maintenance. Along with the many attributes that could be captured using the previous Forms based user interface, the new supplier UI also includes a Survey section that provides administrators with access to the results of questionnaires that the supplier has been asked to complete, either during self-registration or as part of profile maintenance through suppliers Portal. Purchasing Category assignments further designate the type of goods and services the supplier will supply.
Enhancements to the setup of supplier bank accounts remove some processing restrictions and achieve greater control and security. Bank accounts are modeled centrally providing the following features:
• The bank account is tied directly to the trading partner allowing one bank account definition to be leveraged by a ‘supplier’ trading partner and shared if the trading partner is also an employee or customer. This approach provides for easier and centralized maintenance and security of the bank account information
• This definition is targeted directly towards ‘trading partner’ bank accounts leaving internal bank accounts out of the user interface. In other words, the supplier’s banking information is entered and assigned right in the Supplier Entry and Maintenance user interface.
• Notification when trying to inactivate a bank account that is associated with unpaid invoices or pay runs that are in process
Oracle Payables incorporates Invoice Lines into the invoice model. Adding
Invoice Lines is a key architectural change, which enables Oracle Payables to better model the paper or electronic business document yet maintain key features that exist at the invoice distributions level.
Merged into the current invoice transaction business flows, Invoice Lines supports the representation of the goods or services as well as tax, freight, and other charges as lines with distributions tied to each line. Additional field’s record attributes such as serial numbers and item descriptions.
This feature offers the ability for line level approval and matching between an invoice line and a purchase order shipment pay item, or receipt. Furthermore, it facilitates the capture and transfer of additional, pertinent information to and from Oracle Projects and Oracle Assets.
Complex payment terms and conditions for fixed price contracts is captured during the procurement contract flow. This includes options to schedule points of progress for invoicing, request an advance or progressive financing support, and record negotiated amounts to retain until completion of the purchased item, service, or project. These terms and conditions are supported in Oracle Payables when recording invoices and managing payment execution during the lifetime of the contract.
Financing: Advances and Progressive Contract Financing
Advances are generally one-time prepayments made before work on the contract begins while contract financing infuses money to the supplier as work progresses. Oracle Payables ensures that the amounts financed are recovered by automatically applying financing to subsequent invoices per the specific terms captured in the purchase order.
Retain age and Retain age Release
Retain age is the common practice of withholding a fixed amount / percentage of payment until all work under a contract is complete and accepted. The retain age terms are agreed upon by the buyer and supplier and are intended to make sure that the supplier finishes the work as per the contract. Retain age is also called ‘retention’ or ‘contractual withholds’. At the end of the project or when agreed events have occurred, the supplier requests the amount retained and payment is made to release it. Payables automatically retains per the purchase order on invoices coming in and supports the retain age release and payment process.
Invoices for Progress
Invoices representing progress are matched to the purchase order, updating the purchase order with the progress. A percentage of the invoice may be retained and contract advances and financing may be automatically applied seamlessly bringing together the relevant contract terms with each invoicing event. In some cases, the progress is reported via a work confirmation process. Suppliers entering a work confirmation directly in Oracle i Supplier Portal have a receipt recorded in Oracle Receiving. Pay on Receipt terms recorded on the purchase order are translated into a self-billed invoice, in Oracle Payables, to be paid.
With the introduction of Invoice Lines, users are able to further extend their approval policy granularity in Oracle Approvals Management for individual lines of an invoice.
Notification details are targeted to the level of approval required and embedded with a view of the invoice including summary amounts, essential line information, approver sequence, and attachments. Approvers of invoices submitted without a purchase order can enter accounting details as they approve.
Invoices entered by Suppliers where a purchase order has not been obtained are represented as Invoice Requests. Invoice Requests are visible in Oracle Payables but are not paid or accounted until the invoice can be verified and approved.
Collaboration with Suppliers to Resolve Disputes Holds on invoices that are a result of differences between the invoiced and planned amounts or quantity result in disputes that must be resolved. Invoices that have been approved by the owner of the purchasing transaction but rejected during the approval process may also be subject to disputes with the supplier.
Leveraging workflow notification, disputes are communicated and negotiations can be suggested to the Supplier. Suppliers are able to accept the suggested changes, withdraw their invoice, or submit their counter proposal. The negotiation continues until the issues are finally resolved. Additionally, Suppliers are able to negotiate online via i Supplier Portal. All changes and comments entered during the collaboration are tracked in Payables and can be viewed at any time.
Disbursement Requests are requests to make a payment to a company or individual that is not a supplier. This feature empowers the Payables Manager with visibility and control over the items selected for payment processing. Disbursement requests carry accounting entries and support funds checking for budgetary control. Oracle E-Business Suite products may submit the request as already approved or take advantage of Oracle Payables’ Approval Workflow.
Currently, Oracle Loans takes advantage of this feature for loan disbursements to borrowers and Oracle Receivables for customer refunds.
Banks and Bank Branches are represented in Oracle’s Trading Community Architecture and shared by other Oracle E-Business Suite applications. The Bank Account is centrally defined, managed and secured and includes the legal ownership and operating unit access for each bank account. The Oracle Cash Management section of this document provides further details.
Payment processing is significantly enhanced with this release. Along with a new user interface, the management and visibility of the payment process are much more robust and easier to use.
Toolset for the Payment Manager
Manage fewer pay runs by choosing selection criteria with multiple currencies, operating units, and pay groups. A new Selected Invoices page displays summary and detail information used to view and analyze invoices selected in a pay run. Powerful search tools improve online inquiry to invoices that you may want to review, modify, or remove. In addition, you can view invoices that matched the invoice selection criteria but could not be selected because they were not validated or approved. This allows you to quickly identify key invoices that you might want to resolve so they can be included in the pay run. Resolve missing exchange rates easily within the pay run itself. Save pay run invoice selection criteria and processing requirements in a template to be reused and/or scheduled. Schedule the submission of your payment runs using a particular template periodically or with a more flexible schedule such as every other Friday and the last day of the month. You are also able to include the pay run in a request set if you want to group other programs or reports with your pay run processing. A Payment Dashboard empowers your payment manager with the ability to monitor all current pay run processing and payment processes that require attention.
More Robust and Flexible Payment Processing Engine
Oracle Payables, in partnership with Oracle Payments, offers the latest generation of electronic payment transmission technologies, formats, and security meeting most industry standards ‘Out of the Box’. For more details, please see the Oracle Payments section of this document.
When a trading partner is both a customer and a supplier, you may choose to offset open receivables’ against open payables’ items. Netting Agreements add trading partner terms as well as deploying company controls. A selection program automatically pulls information from Oracle Receivables and Oracle Payables taking into consideration discounts, late fees, and withholding taxes prior to determining the final netting amount. A review process and trading partner approval afford further verification to support the netting event.
Overview Oracle Payments is a new product in this release. Oracle Payments provides a highly configurable and robust engine to disburse and receive payments. Oracle Payments is a fundamental part of the Oracle Applications architecture, and is provided with multiple products that require support for payment processing. As the new central payment engine, Oracle Payments processes invoice payments from Oracle Payables, bank account transfers from Oracle Cash Management, and settlements against credit cards and bank accounts from Oracle Receivables. Oracle Payments provides the infrastructure needed to connect these applications and others with third party payment systems and financial institutions. In addition to new features, Oracle Payments offers functionality previously released as Oracle i Payment, which will be obsolete as of Release 12.0. The centralization of payment processing in the Oracle Payments engine offers many benefits. Companies are able to efficiently centralize the payment process across multiple organizations, currencies, and regions. Better working capital management can be achieved by providing cash manager’s real-time visibility into cash inflows and outflows. A full audit trail and control is supported through a single point of payment administration. The product supports features designed specifically for its two payment process activities: funds disbursement (paying money owed to creditors, such as suppliers) and funds capture (electronically receiving money owed by debtors, such as customers). In order to centralize the funds disbursement process so that supplier invoices, employee expense reports, loan disbursements, customer refunds and other payments can be made in a consistent way, the payment processing functionality and setup in Oracle Payables has moved to Oracle The approval and selection of invoices for payment remains in Oracle Payables, but Oracle Payments now handles all creation and validation of payments, aggregation of payments into files, format and transmission of files, and so on. Country-specific Oracle Globalizations features are now standard and have also been moved within Oracle Payments. Most of the release 11i Oracle i Payments functionality already supported the funds capture process. This functionality has been enhanced in some cases to take advantage of the new payment architecture. Country-specific Oracle
Globalizations features are now standard and are included in Oracle Payments.
Financial institutions and payment systems require compliance with certain payment formats in order to disburse or capture funds. These formats are created as templates in Oracle XML Publisher, and applied to an XML data file produced by Oracle Payments. These templates can be created or modified with minimal technical effort, using a standard text editor such as Microsoft Word. In the future, when a payment system or financial institution requires a change to its format, the change can be made in a matter of minutes, without costly external consulting help. Oracle Payments offers a rich library of payment formats that support various types of payment files and messages. EFT disbursements, printed checks, ACH debits, bills receivable remittances, and credit card authorizations and settlements are all supported. Deploying companies can use any format in this library.
When a format is required, and it is not provided, it is simple to copy a similar format template, and use it as the basis for creating the new format. This greatly speeds time to implementation and testing, as well as reducing implementation costs.
Special consideration has been given to the complexity of creating fixed position and delimited formats. Oracle XML Publisher’s e Text feature is used for these format types. E Text allows the format layout to be presented in an understandable tabular structure.
In payment processing, it is critical to ensure that payment messages and files sent to third-party payment systems and financial institutions are valid in addition to being correctly formatted. In order to help achieve straight through processing, Oracle Payments introduces a flexible way to ensure that payment related validations are in place. Oracle Payments provides an extensive library of payment validations that are associated with the supported payment formats. The payment validations are implemented using a flexible framework that allows a user to add new rules. Deploying companies are able to choose between using the prepackaged library of validations, using their newly added validations, or using a combination of these rules.
The timing of validation execution also has flexibility. Payment validation rules can be assigned upstream or downstream in the payment process. Or a combination of upstream and downstream rule assignment can be used. Users have the flexibility to adapt this assignment to best support their business model. For example, the upstream assignment and execution of validations may be best for a decentralized payment environment. Or a downstream validation execution may be better in a shared service environment, where payment specialists can resolve any validation failures.
Oracle Payments serves as a payment data repository on top of the Trading Community Architecture (TCA) data model. The TCA model holds the party information. Oracle Payments then stores all of the party’s payment information and its payment instruments (such as credit cards and bank accounts). In release 11i, this information was held separately in different applications such as in the Oracle Purchasing supplier and the Oracle Payables bank account entities. This common repository for payment data provides improved data security by allowing central encryption management and masking control of payment instrument information.
Oracle Payments provides secured electronic payment file and payment message transmission and transmission result processing. All previously existing electronic transmission features in Oracle i Payment, Oracle Payables, and Oracle Globalizations is obsolete and replaced by the new central payments engine. The following new industry-standard transmission protocol is supported out-of the- box: FTP, HTTP, Https, and AS/2.
Companies model their business units in various ways in order to obtain performance improvements and cost savings. Oracle Payments can be flexibly configured to support a variety of payment models. Oracle Payments works in a completely decentralized mode where it is part of accounts payable or collection administration within each business unit. If a company has decided to centralize these kinds of financial activities in a shared service center, Oracle Payments works to efficiently support the shared service center model. This flexibility in Oracle Payments also provides support to companies who wish to use a payment factory model. A payment factory allows operating units to maintain their own accounts payable and other payment administrative functions.
The role of the payment factory is to handle communication and transactions with the company’s banking partners. Invoice selection can be done in Oracle Payables within a single operating unit. Then a payment factory administrator using Oracle Payments can consolidate payments from different operating units into a single payment file for transmission and settlement, thereby reducing transaction costs.
Oracle Payments supports the new Multi-Org Access Control component throughout its processes to build payments and create payment files, as well as in the dashboard pages provided for users to monitor and manage the payment process. Multi-Org Access Control allows users to efficiently process business transactions by processing and reporting on data that resides in an unlimited number of operating units, within a single applications responsibility. Data security is still maintained using security profiles that are defined for a list of operating units and determine the data access privileges for a user.
Enhanced Disbursement Process
The new Oracle Payments disbursement engine allows businesses to greatly simplify their user procedures around managing complex payment processes that span multiple payment methods, formats, check stocks, transmission protocols, currencies, organizations, and bank accounts. Oracle Payments has redesigned the payment build process that Oracle Payables used in previous releases. The Oracle Payables payment batch process required the submission of the invoice selection process to be segregated according to the way the invoices needed to be paid (printed checks, electronic funds transfer, different formats, and so on). The new Oracle Payments funds disbursement process allows the invoice selection process in Oracle Payables and other products to be neutral to the way documents will be paid. This is achieved by effectively splitting the payment build process into two separate processes. The first process creates payments by grouping documents according to various rules such as the payment method and currency. Accounts Payable managers are able to simplify their processes by submitting fewer invoice selection batches, each one spanning multiple payment methods, formats, bank accounts, and payment currencies. Invoices can be selected for payment based on business reasons such as maximizing discounts.
The second process then aggregates payments into formatted payment instruction files, and handles any additional processing. The cost of the disbursement process is lowered by creating fewer check runs and EFT payment files by grouping payments across the criteria of the first process.
Enhanced Electronic Payment Processing
In previous releases, various solutions for electronic payment processing were available throughout the Oracle E-Business Suite. Not all solutions supported a complete information flow. For instance, in some cases an electronic file could be produced, but not automatically transmitted to a bank. Now, Oracle Payments offers end-to-end electronic payment processing that includes validation, aggregation, formatting and secure transmission of payments to financial institutions and payment systems.
Automatically pushing groups of payments through all the steps of electronic processing, known as straight through processing or STP, results in lower costs. The new formatting framework, flexible validation model, and improved electronic transmission capability greatly minimize any need for writing payment customizations.
Oracle Payments offers flexible setup to configure funds disbursement processing. The new configuration offers enhancements over the way payment processing was set up in different products in prior releases. The benefit of these changes is to help ensure an implementation that best support a controlled and efficient disbursement flow. The configuration options are in these general areas:
• Payment methods: each document to be paid requires a payment method to indicate how it should be handled in the funds disbursement process. Payment methods can be defined as broadly or narrowly as appropriate. Rules can be set for when payment methods can be used on documents. Rules can also be specified to default payment methods on documents when they are created
• Processing Rules: the payment method on a document links it to processing rules configured in Oracle Payments. A business user can specify these rules in an intuitive user interface page. Oracle Payments holds these setup rules in a key entity it calls the Payment Process Profile. Users can configure as many of these process profiles as they need for their payment processes. Each profile holds rules for how documents should be built into payments, how payments should be aggregated into a payment instruction file, and how the payment file should be formatted. Rules for printing checks, transmitting electronic files, generating separate remittance advice notifications and other options can be easily configured
Payment Processing User Interface
Oracle Payments offers a new user dashboard for managing the funds disbursement process. The dashboard allows payment administrators to manage every aspect of the process across multiple organizations from the same place. This benefits companies by providing full visibility of a payment as it moves through the financial supply chain. The single location for monitoring the process also helps streamline process management.
A payment administrator can use the dashboard to monitor the payment process and ensure that it is running smoothly. If there are any problems in the process, they are highlighted in a pending actions region. This is also the place where notification of any required actions is shown. Actions may be required based on the configuration choices made at implementation. The dashboard automatically navigates the administrator to the area to take corrective or required action, based on the pending issue the user selects in the region.
These are just a few of the actions an administrator can take from the dashboard:
• Review validation errors
• Review and optionally modify proposed payments
• Transmit payment files or retry failed file transmission processes
• Initiate check printing and record printing results.
Enhanced Check Printing Process
The check printing process has moved from Oracle Payables to Oracle Payments in this release. Check printing has been enhanced to make the initiation of printing, recovery from printing errors, and recording of print results simple and intuitive. Payment document setup has been enhanced in Oracle Cash Management's new internal bank account definition. Check stock can be set up to indicate if it is pre numbered or if numbering is printed as part of the check format (common for laser checks). Oracle Payments uses this setup to present the payment administrator with the appropriate print actions for these different check stock types. The new dashboard guides the payment administrator to each printing action that may be performed.
Migration of Global Features to Central Engine
In previous releases, Oracle provided many payment features as country-specific Oracle Globalizations. These global features have been merged into standard payment processing features provided by Oracle Payments. They are available in all deployments of Oracle Payments without any limitation by geography, while still allowing the ability to configure processing by region where appropriate.
Most of the migrated global payment features support the funds disbursement process. For instance, the new standard processing features lets users:
• Provide payment-level text messages for the payee
• Conditionally report payments to a country central bank
• Specify payment codes required by a financial institution for instructions on transaction handling, which bears the cost of bank charges, and statutory payment reasons
• Sequentially number EFT files for control purposes
• Configure the payment process to place formatted payment files in secure file directories
Consolidation of Payment Formats
All Release 11i payment formats used in the funds disbursement process have been consolidated as Oracle XML Publisher templates used by Oracle Payments. These formats include all those previously supported in Oracle Payables, Oracle U.S. Federal Financials, and Oracle Globalizations.
The following payment industry standard formats are now supported for use by all products that integrate with Oracle Payments: EDIFACT PAYMUL, ANSI X12.0 820, and U.S. NACHA.
Improved Remittance Advice Reporting
In release 11i, Oracle Payables and certain Oracle Globalizations provided some formats to support remittance advice reporting and notify a payee of the remittance detail when a payment is made. Now, Oracle Payments consolidates these formats into an enhanced Oracle XML publisher format. The notification process is improved by allowing the ability to set conditions for when a remittance advice should be produced. Configuration is also supported to set how the remittance advice should be delivered to a payee: via e-mail, fax, or printing and sending manually. All of these improvements help deploying companies better support their payment relationships with suppliers or other payees.
Funds Capture Features
Note that Oracle Receivables retains its existing features for lockbox processing and the electronic upload of remittance messages.
Oracle Payments offers enhancements in its setup to configure funds capture processing. The benefit of these changes helps ensure an implementation that best supports consistent and seamless funds capture processing. The enhancements can be grouped into three general areas:
• Payee Configuration: a Payee is defined for each entity in the deploying company that will process payments; typically only one setup is needed for the enterprise. This setup is done in payment card processing to define the merchant. The Payee setup provides various options for payment processing.
The Payee setup user interface has been enhanced to add new options and clarify existing options. In prior releases, products needed to have their own way to link to the Payee entity. This is improved in release 12.0 by linking operating units to the Payee within Oracle Payments setup Routing Rules: routing rules can be configured to specify how a transaction should be processed. For example, the payment system that a transaction should be sent to is determined by this setup. The input criteria to the routing rules is enhanced in release 12.0, along with improving the user interface
• Improved Ability to Configure Processing Rules: previously in Oracle i Payment some processing rules required configuration by a technical administrator with software coding skills. In release 12.0, a business user can set all processing rules in an intuitive user interface page. Oracle Payments holds these setup rules in a key entity it calls the Funds Capture Process Profile. Users can configure as many of these process profiles as they need for their payment processes. Each profile holds the configuration for how to format and transmit authorization messages and settlement files. Rules for aggregating settlements into batches, limiting the number or amount of settlements in a batch, notifying payers of settlements, and processing acknowledgements can be easily configured
Improved Support for Credit Card Security Features
Oracle Payments consolidates the setup and management of credit card security features such as address verification, capture of a card security code, and masking of credit card numbers. Oracle Payments consolidates the setup and management of these features in release 12.0. This ensures a consistent implementation of credit card security functions throughout the funds capture process.
Enhanced Payment Processing User Interface
Oracle Payments offers an enhanced user interface for managing the funds capture process. The new dashboard page provides a clear overview of the payment process status, and provides the user with greater insight into rejections received from payment systems and into process failures such as communication errors. Reconciliation of funds capture transactions (such as credit card payments) is much easier with the new dashboard.
PIN less Debit Card Transaction Support
Oracle Payments offers support for PIN less debit card funds capture transactions.
Sometimes referred to as “Debit Bill Pay”, this payment method is allowed by the debit networks in certain industries, including utilities, telecom, cable/satellite, government, education, and financial services.
Improved Payer Notification of Settlement
In release 11i, certain Oracle Globalizations provided a notification letter that could be generated and sent when a payer's bank account was debited to capture funds for payment. Now, Oracle Payments consolidates these letters into an enhanced Oracle XML publisher format. The format supports notification for all types of automatic funds capture settlements supported by Oracle payments - card payments or bank account transfers. The notification process is improved by allowing the ability to configure how a notification should be delivered to a payer: via e-mail, fax, or printing and sending manually. All of these improvements help deploying companies’ better support their payment relationships with customers or other payers.
Direct Debit Enhancements
Oracle Payments supports online validation for electronic funds transfers through enhanced API’s. The validation service is provided by some payment systems to perform validity checks on the payer bank account to be debited. Typically this service verifies that the bank account number is valid and not cited for fraudulent payment activity.
Oracle Payments extends its support for electronic funds transfer by adding third party certifications for Payment and Concord EFS net.
Improved Batch Settlement Performance
Bulk processing is now supported in the settlement interface from Oracle Receivables to Oracle Payments. The result is improved performance when running the automatic remittance program in Oracle Receivables.
Payment Process Profile the Payment Process Profile holds all of the rules for how funds disbursement processing will happen on a document to be paid.
The assignment of a process profile to a document is determined by the payment method on the document. When a user creates a process profile, he specifies rules such as:
• Which payment methods should use the profile and under what conditions
• How documents should be built into payments
• How payments should be aggregated into a payment instruction file
• How the payment file should be formatted
• If and how a payment file should be transmitted
• If and when a payment file should be printed