Oracle Account Receivable

Invoice Adjustment And Receipt Write Off

By
Himanshu Madan
Evosys
 PART
I
(Adjustments & Approval)
 Adjustments

• An Adjustment in AR is an amount added or subtracted from

the amount due of an Invoice, Debit Memo, Chargeback,
Deposit or Guarantee.
• For example, your customer sends payment of $75 for a $100
invoice—you apply the receipt to the invoice, then create a
adjustment for the balance due.
• You can create multiple adjustments against each transaction,
for positive or negative amounts.
• You can approve adjustments that are within your approval
limits and give pending statuses to adjustments that are
outside your approval limits.
 Business Need for Adjustment

• If there is any unapplied balance in invoice after

application of receipt in small value for
rounding off purpose , that will be adjusted
while making receipt application.
• when Invoice amount is wrongly entered you
can also add a line by adding or reducing
amount.
 Adjustment & Transaction Type

• Receivables uses the transaction type of the

transaction you are adjusting to validate the
adjustment amount. If the transaction type does not
allow over application, you cannot enter an amount
that would reverse the sign of the balance of the
transaction.
• Adjustments do not follow the natural application
rules. This lets you adjust transactions in either
direction, regardless of the Natural Application
setting.
 Topics covered for
Adjustment & Approval
• Define Adjustment Activity
• Define Adjustments Approval Limits
• Create Adjustments
Manual Adjustments
Automatic Adjustments
API (Application Programming
Interface using SQL) (Doc ID 808758.1)
• Approve Adjustments
• Reports
• FAQs
 Adjustment Activity
Receivables >> Set up >> Receipts >>
Receivable Activity

Revenue Nature Account

 Adjustment Approval Limit
• Account Receivables >> Set Up >> Transactions
>> Approval Limits

Approval Limits are defined per user per

currency, i.e. separate limit for every currency.
 Create Adjustment
Manual Adjustments

Transaction

Through
Form
Transaction
Summary Receipt
 Manual Adjustment
Transaction Form

• Enter Transaction or query through Document No,

complete it and select Adjust in Action Tab.
 Manual Adjustment
Transaction Summary Form

• Query transaction through Document No and

select Adjust
 Manual Adjustment
Receipt Form
Open Receipt and click on Apply button Click on Adjustment Button
 Adjustment Window
(With in approval Limit)
The following screen allows you to enter the adjustment details,
regardless of the navigation used to get here.

Balance Updated

Choose Activity from List With in Limit , i.e.

of Values (LOV) defined in between -1000 to 5000
precious steps Means can approve
 Accounting Entry

Invoice Entry

Adjustment Entry
 Adjustment Window
(Not in Approval Limit)

Adjustment Date
has to be later
then Transaction
Date
Balance not
updated as
adjustment is
not approved
 User with Approval Authority will approve
Adjustment
Account Receivables >> Controls >> Adjustments
>> Approval Adjustments Form
Adjustment will get approved
Accounting Entry
 Automatic Adjustments
Account Receivables >> Controls >> Adjustments >> Create Auto Adjustments Form

Enter the Low and

High range of
Remaining
Amounts or
Percentages, Due
Dates, Transaction
Types, or
Customer Names
to adjust only
transactions
matching that
criteria.
 Approving Adjustments

• Control >> Adjustments >> Approve Auto Adjustments

 Related Reports
• Adjustment Approval Report
To see your transaction adjustments with
information about their status, creator, reasons, GL
date and amount.
• Adjustment Register
Use the Adjustment Register to review approved
adjustments.
• Adjustment Journal Report
Use this report to view Adjustment Journals.
 FAQs

• While entering an adjustment amount you receive

the following error "value entered is not valid for
current field please re-enter." What should be
done?
Adjustment Limit for that user have not been defined.
 FAQs

• Invoice Created and Completed

• Invoice Type Adjustment Created to bring invoice balance
to zero. User creating the adjustment doesn’t have
approval power, thus status becomes Pending Approval.
• Meanwhile, a receipt or credit memo is created and
applied to the Invoice to fully pay/credit it. At this point
the balance of the invoice is zero.
• The adjustment is approved by a user with the proper
approval limits and results in error.
• Cause
An adjustment of type Invoice indicates that you are adjusting
the full balance of the invoice. However, the sequence of
events causes the process to try to adjust an invoice for the
full amount, when in fact the invoice already has a zero
balance, due to a payment that was made to the invoice
between the time the adjustment was created in pending
status and the time the adjustment was approved.
• Recommended Action
Review the applications done to the Invoice and determine if
you want to retain them.
• If the applications are valid, then you can just reject the
adjustment.
• If the applications are not valid, you can unapply them to
restore the full balance of the invoice, then you can
approve the adjustment.
Note, if an adjustment is Pending Approval, you cannot go
back to the adjustment and attempt to change the
adjustment type, if you do this the form will just raise the
error:
 FAQs
• You can create full adjustments on Invoices but when making
partial adjustments you get the error:
APP-AR-11503: Invoice type adjustment must make the balance
due zero.
The Adjustment Type chosen was Invoice, which requires you to
adjust for the full balance. To make partial amount adjustments, use
the other Adjustment types: Line, Tax, Freight or Charges
Recommended Action
• If you have not yet saved the adjustment, you can just modify
the adjustment type.
• If you already saved the adjustment, the form will not allow you
to change the Adjustment type, you will need to create an
offsetting adjustment instead.
 FAQs

• When attempt to assign the Adjustment Receivable Activity to the

Document Sequence, the adjustment receivable activity is not
appearing in the list of values for the Category field under System
Administrator responsibility.

Cause
The Document Category for Adjustment Receivable Activity was not
created.
Solution
Under System Administrator responsibility navigate to Application,
Document, Categories
Create new category for the adjustment receivable activity.
Example - setup Document Category for 'Write-Off' adjustment
receivable activity.
• Application = Receivables
Code = 'Write-Off' (note: must be identical spelling/case of
adjustment Receivable Activity name)
Name = 'Write-Off' (can be anything you choose)
Description = Adjustment Write Off (can be anything you choose)
Table Name = AR_RECEIVABLES_TRX_ALL
• Navigate to Application, Document, Assign
and assign the new Category 'Write-Off' to the Document
Sequence you already have setup.
 FAQs
• Difference between Adjustment & Write off?
Adjustment ( 188070.1 )
Create adjustments to increase or decrease the balance due on an invoice,
debit memo, chargeback, or commitment.
Write Off (203243.1)
Receipt write-off functionality is provided to account for small
overpayments that you do not intend to refund or maintain as unapplied
amounts. The write-off amount is credited to an account, such as a
miscellaneous revenue account, and no longer reflects as an unapplied
amount. Receipt write-offs can be processed for standard receipts only.
You cannot write off amounts from miscellaneous receipts.
You can only write off unapplied amount.
In short , Adjustments are related to Invoice component and write offs
are related to Receipt component.
 PART
II
(Write Off)
 Write Off
• Receipt write-off functionality is provided to account for small
overpayments that you do not intend to refund or maintain as unapplied
amounts.
• you can choose to write off an unapplied cash receipt amount to a specific
general ledger account such as a miscellaneous revenue account, and no
longer reflects as an unapplied amount on the receipt or on the
customer’s account.
• Receipt write-offs do not change receipt amounts nor do they affect
customer balances or general ledger Cash account entries.
• Receipt write-offs can be processed for cash receipts only. You cannot
write off amounts from miscellaneous receipts.
• You can write off individual unapplied receipt amounts during receipt
application or later, at any time using the Applications window.
• You can also write off balances of multiple receipts in mass using the
Create Receipt Write-off option.
 Topics covered for
Adjustment & Approval

• Receipt Write off Setup

• Write off Foreign Currency Receipt
• Receipt Write off
Manual Write off
Mass Write off
• Reversing Receipt write off
• Accounting for Receipt Write off
 Receipt Write off Setup
• Receipt Write-off Receivable Activity
Define one or more receivable activities with an activity type
of Receipt Write-off.
• Receipt Write-off User Approval Limits
Define approval limit ranges for document type Receipt Write-
off for all users who will be allowed to write off unapplied
receipt amounts.
• Receipt Write-off Maximum System Limit
Define the system level Maximum Write-off Amount for a
single receipt in your functional currency. No users can write
off unapplied receipt amounts that are greater than the
system maximum even if their user limits allow it.
Receipt Write-off Receivable Activity
 Receipt Write-off Receivable Activity

Approval Limits are defined per user per

currency, i.e. separate limit for every currency.
Receipt Write-off Maximum System Limit
 Write off Foreign Currency Amount

• At the time of write off an unapplied amount on a foreign

currency receipt, Receivables uses the same exchange rate as
used for original receipt.
• If you adjust the exchange rate of a foreign currency receipt,
Receivables reverses the write-off with the original exchange
rate and then applies the new exchange rate to a new write-
off application record.
• Receivables completes this process only if the converted
amount does not exceed the user approval limit for receipt
write-offs or the system Maximum Write-off Amount.
• If the converted amount exceeds either of these limits, then
the write-off amount is left as an unapplied amount.
 Manually Write off Receipt Amounts

• You can write off unapplied amounts when

you enter and apply a receipt, or later at any
time.
• You can enter multiple Receipt write-off lines
in the Applications window for a single receipt
provided that the write off amount is with in
your approval limit and system maximum
write off amount.
Manually Write off Receipt Amounts
Receivables >> Receipts >> Receipts Form

Select
Receipt
Write Off

Select Activity Defined in

previous steps
Manually Write off Receipt Amounts
 Mass Write off Receipt Amounts

• you can write-off multiple unapplied receipt

amounts with minimal manual intervention to
individual receipt records.
• Always use the Generate Report Only option to
preview the receipt amounts you want to write
off before submitting the update.
• You can only reverse write-off receipt amounts by
manually unapplying each receipt write off from
the Applications window.
Mass Write off Receipt Amounts
Control>Create Receipt Write-off

Enter Search Criteria

System will select all Error comes if
unapplied Receipts Amount entered is
which are <= 10,000 not in approval limit
of the user
Pre Write off Report

Write off Report

 Reversing Receipt write off

• Receipt write-off amounts can be reversed at

any time and the write-off amount will be
added to the Unapplied total for the receipt.
• To reverse a receipt write-off, unapply the
original write-off application by unchecking
the Apply check box on the Applications
window for the write-off amount.
Reversing Receipt write off
Receivables >> Receipts >> Receipts Form
Query Existing Applied Receipt

Untick this
check box and
save your work
Accounting for Receipt Write off
Entry for General Receipt of GBP 8000

GBP 7800 Applied to transaction and GBP 200 Write off

 FAQs
• How to setup an AR responsibility with disabled
"Reverse " button in the receipts form?
Solution
Navigate to System Administrator Responsibility
Security>Responsibility>define
Query your responsibility name
In Menu exclusion tab, select functions
• Receipt Reversal Standard
• Receipt Reversal Debit Memo
 FAQs
• When creating Receipt write-off activities against a
receipt, noted that the Balancing Segment for the GL
account does not match the original setup value?
Solution [ID 1068133.1]
Setup > Receipts > Receivables Activities (Original Set up)
Review the settings for Type = Receipt write-off
Activity GL Account 01-000-4150-0000-000
Set ups >> Receipts >> Receipt Classes >> Bank Account Button
Unapplied Receipt Account for Receipt Method 05-000-1240-0000-000

The value 05 from this setup is used to replace the balancing segment
value default from activity GL account

When Create accounting run for Write off the account shows GL account
write off 05-000-4150-0000-000
The existing behavior is intended functionality and is not a bug. It is a
predefined workflow as described in Oracle Receivables
Implementation Guide-Deriving Balancing Segment Values, which
says
• For transaction-related activities such as adjustments and
discounts, Receivables derives the balancing segment value from
the receivable account that is associated with the transaction.
• For receipt-related activities such as receipt write-off activity,
Receivables derives the balancing segment from the Unapplied Cash
account that is associated with the receipt method bank account.
Disable Balancing Segment Substitution Process for Activities
Profile Option AR: Disable Receivable Activity Balancing Segment
Substitution. (Read Oracle Receivables Implementation Guide -
Disabling the Balancing Segment Substitution Process for
Activities)
 FAQs
• How To Write-Off Prepayments Amount in case of
Excess Amounts?
Prepayment Received 100
Invoice Amount 98.5
When Prepayment Matching program is run, the
Receipts get applied to Invoice.
Due to this Receipt remain open and appear in
Unapplied and Unresolved Receipts Register.

Need to write off this Small pending Amount.

Solution
• If we directly Write Off Prepayment, it won't
work.
• First Unapply the Prepayment Amount.
• Then Apply to "Receipt Write-Off“
The Receipt won't appear in Unapplied and
Unresolved Receipts Register.
Also the Receipt's Balance will be Closed.