Oracle R12 Account Payable Module Details

We maintain the following things at Accounts Payables Module.

1. Maintaining purchase invoice
2. Making payments to Suppliers
3. Payments reconciliation with bank for cash management

To maintain the purchase invoice the following things are needed.

1. Name and address of the supplier
2. Date of purchase
3. Quantity of purchase
4. Invoice amount
5. Payment method
6. Payment terms

We contact with the suppliers at different levels:

• Request for Quotation (RFQ)
• Purchase Order
• Payments

We create Supplier definition in two levels:

1. Header
2. Site

Header information of Supplier can be accessed by global level; it means all other operating unit people can access Supplier Header information.

Whereas Site information is local level; only specific operating unit people can access. One supplier can have multiple sites (Addresses)

Sites are 3 types based on the purpose: RFQ, P.O and Payment site.

If you want to record invoice we should have minimum one pay site.

Payment methods:

We have 4 payment methods in OF.

1. Check
2. Electronic (EFT)
3. Wire
4. Clearing

At the time of creating invoice we have to opt for payment method and Currency.

Check:                       Payment through the regular bank check

Electronic:                 System will create one instruction file with all the Details of invoice and payment. This file will send to bank for payment.

Wire:                          It is manual process of sending instructions to bank. System will not generate any instruction file.

Clearing:                   In this process we will not make Payment physically. This is used as adjustment for inter company transfers and transfer between the branches.

Payment Terms:

Making payment to supplier (due date) immediate or in how many days referred to Payment terms.

We can set due dates and discount dates through payment terms.

Distribution Set:

Distribution Set is used to automatically enter distributions for an invoice when you are not matching it to a purchase order.

For example:

Total invoice amount:         Rs. 100000

Plant cost       :                       Rs.  90000       90%

Tax                  :                       Rs.    5000       5%

Freight           :                       Rs.    5000       5%

If we receive the invoices in future with the same arrangements we can use the distribution set.

You can assign a default Distribution Set to a supplier site so Payables will use it for every invoice you enter for that supplier site.

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.

We have 2 types of distribution sets.

1. Full
2. Skeleton

We use Full Distribution Sets to create distributions with set percentage amounts.

Skeleton Distribution Sets to create distributions with no set distribution amounts.

We can enter distributions in 2 ways:

1. Manual
2. Automatic (by creation of distribution sets)

Types of invoices in Accounts Payables

1. Standard invoice
2. Debit Memo
3. Credit Memo
4. Mixed invoice
5. Recurring invoice
6. Pre payment invoice
7. Expenses invoice
8. Interest invoice
9. Withholding tax invoice
10. Retain age Release
11. Transportation

System automatically generated invoices:

1.      Recurring invoice

2.      Expenses invoice

3.      interest invoice

4.      Withholding Tax invoice

Remaining all other invoices we have to create manually.

1. Standard invoice:

We can enter only Positive amounts thru standard invoice. We can assign “Distribution set” to update the lines automatically by system or we can enter the distributions manually.

2. Debit Memo

Debit Memo is used by Customers only.

This is used for purchase returns.

To reduce the balance payable to supplier we create Debit Memo.

Only negative amounts can be entered through Debit Memo.

3. Credit Memo

To reduce the supplier balance Credit Memo will be used.

Credit Memo will rise by Supplier and sent to us.

Generally credit memos used, when we get discount on payables or on any price differences.

We can enter only negative balances through Credit Memos.

4. Mixed Invoice

We can enter Positive and Negative balances also thru Mixed Invoices.

5. Recurring Invoice.

We require a calendar to create recurring invoice, called “Special Calendar”.

6. Pre payment invoice.

Pre payment invoice are used when there is advance payment made to Suppliers against purchases or Employees for Travel expenses (Imperest amount).

Pre payments are two types:          Temporary pre payment & Permanent pre payment.

Temporary pre payments are adjusted against the future purchase invoice.

Where as we cannot adjust Permanent pre payments against future purchases. This payment we can receive when the contract cancelled with the supplier.

We can convert Permanent pre payment into Temporary pre payment. After conversion we can use that to adjust against future invoices.

7. Expenses invoice

When employees spent the amount and submit the bills for reimbursement, that information we have to maintain as expenditure report in the system.

With the help of this expenses report information we can create “Expenses Invoice”.

8. Interest invoice

When we make payments after the due date crossed, if interest penalty is applicable, system will create one invoice for only the interest portion amount apart from the standard invoice.

9. Withholding tax invoice

If customer want to with hold the tax amount charged by supplier in the invoice, and he want to pay the tax amount directly to tax authorities instead of paying to supplier.

System will automatically create a withholding tax invoice.

In this case tax authority would be a supplier.

Batch Invoice:

We can enter invoices individual one by one or through batch invoices at a time many.

By default we can enter individual invoices only.

In GL batch journal only control total is there.

But in AP, batch invoices have 2 controls: 1. Control total    2. Control count.

Control total is grand total of all invoices & Control count is total number of invoices.

In GL if control total does not match system will not allow user to save the journal until we change the control total to match with entered total.

In AP if control total and control count does not match also system allows us to post the invoice and allows for further processing. It shows only variance.

Unlike batch journal, we can enter invoices either individual or batch invoices.

If you want to enter batch journals we have to create profile option. In that case we cannot enter invoices individually.

Types of Bank accounts:

We have 3 types of bank accounts:

1. Internal Bank Account
2. Supplier Bank Account
3. Customer Bank Account.

Internal Bank account is maintained by our company to make payments or receive payments in any mode. (Check, Electronic, Wire and Clearing).

In electronic and wire payments our company has to maintain Supplier bank account and Customer bank account.

Payment types:

When we are making payment to supplier we need to have bank account, Check book.

As per OF we called check leaves as Documents.

We have 3 types of payment:

1. Manual
2. Quick
3. Refund

Manual:         We have to write the check manually and then enter the same details into system and hand over the same check to Supplier.

Quick:            System will print payment details on the check. In OF once you save the payment, automatically check will be printed on pre printed stationary. Then check can be hand over to Supplier.

Refund:         When we received funds return from the suppliers we record them as refund.

Work Bench:

We maintain Recording invoices and Payments in AP.

We have two work benches in AP:

1. Invoice work bench
2. Payment work bench

In invoice work bench we can enter and maintain invoices.

Payment work bench is to maintain 3 types of payments 1. Manual  2. Quick  3. Refund.

Payment Batch:

Payments also can be processed as individual payments or through batch.

Batch payments are automation.

Automation means if we give instruction to system, system will make payment automatically.

There are various stages in payment batch:

1. Selection
2. Building
3. Rebuilding
4. Formatting
5. Confirm

Selection:      We have to select the invoices for payment.

Building:       We can view the invoices that selected for payment through building.

We can make modifications also.

Rebuilding:  If we make modifications system will show as   Rebuilding.

Formatting:               Formatting is nothing but for print purpose. If we format only we can get print the payments.

Confirm:        Once we confirm only system considered the payment has been done and the balances will be updated. If we do not confirm system will not allow to create one more payment batch.

** We can cancel the payment batch before confirmation.

OPTIONS:

We have 3 types of options.

1. Financial Options
2. Payable Options
3. Payables System Setup

Payable options are specific to “Accounts payables” module only.

Financial options we can see across AP, PO and FA modules.

These options will work as heart to application. Using these options we can set some CONTROLS & DEFAULTS.

We use these options to manage application functionality. We can set some properties or to set behaviors of the application through these options.

** Invoice Structure is 2 parts: 1. Header information   2. Distribution

Data flow into Application of Accounts Payables:

Financial Options

↓

Payables options

↓

Supplier header

↓

Supplier Sites

↓

Invoice header

↓

Invoice Distribution

↓

     Payment

** In payables also we can enter foreign currency invoices. There is some setup required. The exchange rate we setup in GL is applicable to all modules.

** If we record the invoice in one currency, we cannot make payment other than that invoice currency. Currency should be same in PO, invoice and payment.

Cross currency payment is not possible in AP. But that is possible in AR.

** To cancel the invoice we have to enter Credit memo.

** Zero payments:   If we cancel the invoice, there is no balance to pay, but system will show as zero balance. For elimination of zero balance payments we have to create dummy bank accounts and dummy checks.

Payables Integration:

1.      Purchasing

2.      General Ledger

3.      Cash Management

4.      Accounts Receivables

5.      Web Expenses