20C Financials StudentGuide 2

Oracle Financials Cloud:
Financials Implementation
for 20C
Student Guide II
September 2020
12
Managing Foundation Tax Configurations

Objectives
After completing this lesson, you should be able to:

• Describe Oracle Tax as a centralized tax solution
• Explain foundation tax configuration
• Use the rapid implementation spreadsheets for configuring tax
• Describe Legal Entities and Business Units
• Explain how tax is calculated on transactions
• Use the simulator to test and validate your tax configuration
• Describe third party partner integration with Vertex
• Explain the other tax features
Oracle Financials Cloud: Financials Implementation for 20C 12 - 2

Oracle Tax
Oracle Tax provides a single-point solution for managing your transaction and withholding tax
requirements. In the Define Taxes for Rapid Implementation task list in the Setup and Maintenance work
area, set up your entire tax configuration.
Oracle Tax:
• Provides a single solution for global tax needs
• Uniformly delivers tax services to all Oracle Cloud application business flows through one
application interface
• Provides a single source of truth for tax configuration and reporting
• Provides a single integration point for third-party content providers by automatically importing
predefined tax content
Note: Third-party partner integration is available only with Vertex for US Customers. All other third-
party integrations are available only for on premise customers.
You can model your taxes according to the needs of the following local and international tax
requirements:
• Both simple and complex country-specific tax legislation.
• Cross-border transactions, including exports and Intra-European Community transactions.
• Intercompany transactions.

• Local compliance requirements for recording and reporting.
• Continual changes to tax legislation, such as new taxes, local law changes, special tax rates, and
special exceptions for products and customers.
You can manage the entire configuration and maintenance of tax content from a single Tax application.
Using one application ensures a uniform tax setup across applications, with a centrally managed system
of automated tax services and control over manual intervention and update.

Oracle Tax Architecture
Oracle Tax architecture has a centralized data model that provides a single source of truth for
transaction and withholding tax information. It consists of five tiers:
• Tax Configuration - Foundation: Represents the tax data that you set up for each tax regime
and tax that your company is subject to. A tax authority administers the taxes of a tax regime.
Each tax within a tax regime comprises a certain number of elements including tax statuses, tax
jurisdictions, tax rates, and if applicable, tax recovery rates.
• Tax Determining Factors: Identifies the factors that participate in determining the tax on an
individual transaction. Tax determining factors can be classified into the parties involved in a
transaction, the products transacted, the places involved in a transaction, and the process or kind
of transaction that takes place. Tax determining factors are the building blocks for tax rules.
• Tax Configuration - Advanced: Consists of the defaults and tax rules used to determine and
calculate tax on a transaction. Create tax rules by translating the tax regulations of a tax authority
into determining factors and tax conditions. For each transaction line, the tax determination
process uses the defaults or tax rules to determine the applicable tax regimes and taxes, place of
supply, tax registration, tax rate, taxable basis to use in tax calculation, and any tax recovery to
the extent applicable.
• Services: Consists of calculating tax amounts, determining appropriate tax recovery amounts,
exporting and importing designated tax setups, and integrating with third-party vendor products
for transaction tax data upload, calculation, and reporting considerations where elected.

Tax Management: Maintains all of the tax information pertaining to each transaction for use in tax
reporting.
The configuration repository contains all of your tax setup that you can share across multiple legal
entities and multiple business units.
The tax record repository stores the transaction and withholding tax events and attributes for your
country-specific reporting requirements.
These tiers are discussed in further detail throughout this lesson.

Key Building Blocks of Tax Configuration
Party Who am I and Who Are My Customers or Suppliers?
Place Where Do I Operate?
Product What Products Do I Buy or Sell?
Process What Is the Type of Business I Conduct?
Determining factors are the key building blocks of the tax rules. Conceptually they fall into four groups:
• Party
• Process
• Place
• Product
The determining factors represent the tax-decision criteria that are passed at transaction time derived
from information about the transaction or associated with the transaction.
They are used within tax rules logic to determine the conditions under which specific tax rules apply to a
specific transaction to meet operational needs.

Foundation Tax Configuration
Foundation tax configuration refers to a collection of tax setup that you use to satisfy your transaction
and withholding tax requirements. It is the minimum required configuration to calculate tax.
Note: Each stage of the setup can have a many relationship with the next level of the setup. For
example, a tax regime can have multiple taxes.
To determine how to set up your tax configuration, you must:

• Analyze your transaction and withholding tax requirements.
• Make key decisions when you analyze your transaction and withholding tax requirements.
• Use Oracle Tax and other Oracle Cloud applications to implement a solution.
Use Oracle Tax to set up and maintain your transaction and withholding tax requirements in all
geographic locations where you do business. At transaction time, Oracle Tax uses your tax configuration
to determine the taxes that apply to each transaction and to calculate the tax amounts.
Complete the following setup tasks to create a basic tax configuration for each of your tax regimes by
using the applicable spreadsheets or user interfaces:
• Manage Tax Regimes
• Manage Taxes
The following prerequisite setups must be completed for minimum tax configuration:
• First parties, such as legal entities and business units.
• Master geographies.
• Ledger and accounts.

Tasks to Configure Foundation Tax
• Manage Tax Regimes • Manage Tax Statuses

• Manage Taxes • Manage Tax rules
• Manage Tax Rates • Run Tax Simulation
• Manage Tax Jurisdictions
• Configuration Owner Tax Options: Optional. Use configuration owner tax options to change
default tax options on transactions that belong to a specific configuration owner and event class.
Tax option settings of the configuration owner and application event class are used instead of
the default settings.
• Tax Regimes: Required. Set up tax regimes in each country and geographical region where you
do business and where a separate tax applies.
• Taxes: Required. When setting up your taxes, specify tax rule default values that apply to the
majority of your transactions.
• Tax Statuses: Required. Tax statuses do not depend on tax jurisdictions. You can create tax
statuses from tax rates.
• Tax Jurisdictions: Required. This specifies the association between a tax and a geographic
location.
• Tax Rates: Required. Create a tax rate for each tax jurisdiction
• Party Tax Profiles: Optional. You can edit the tax profile that was automatically created when
the party record was created, but it is not required.
• Tax Rules: Optional. When setting up your taxes, specify tax rule default values that apply to
transactions in the absence of any tax rules. Use tax rules to configure exceptions.
• Tax Reporting: Optional. Set up your tax reporting configuration based on your tax reporting
needs.
• Tax Simulation: Optional. Use the Tax Simulator to test your tax configuration.

Tax Foundation Setup: Examples
Regime Taxes Jurisdiction Status Rates
State Georgia Standard 4%
US Sales and Use Tax County Dekalb Standard 7%
City Atlanta Exempt 0%
GST Alberta Standard 5%
GST Manitoba Standard 7%

Canada GST, PST, and PST Manitoba Reduced 5%
HST
HST Ontario Standard 13%
HST Alberta Zero 0%
VAT United Kingdom Standard 20%
VAT United Kingdom Reduced 5%

GB VAT
VAT United Kingdom Exempt 0%
VAT United Kingdom Zero 0%
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These data examples are introduced to illustrate the foundation transaction tax configuration and may
not represent the complete tax setup for the country.
How you define your configuration depends on your transaction tax and withholding tax requirements.

Setting Up Foundation Tax Components
Minimize your effort in creating the setup by using:

• Defaulting
• Data-Driven Controls
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Use defaulting values to enter your data once and use the defaults that appear on the subordinate or
child records where applicable. For example, many values you enter on the tax regime appear as defaults
on each tax that is associated with that tax regime. Generally, you can override the data where necessary
if the defaulted value is not correct.
Use data-driven controls to enable and control how tax functionality works. For example, you are
required to set up tax recovery for value-added tax (VAT) processing. Enable the Allow tax recovery
option on the tax record so you can set up tax recovery rates for this type of tax.

Tax Regimes
Set up tax regimes in each country and geographical region where you do business
and where a separate tax applies. A tax regime associates a common set of:
• Default information
• Regulations
• Fiscal classifications
• Registrations, to one or more taxes (optionally)
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Tax regimes are based on geography and subscription. For example, in the US create a US Sales and Use
Tax regime to group taxes levied at the state, county, and city levels. For the UK create a tax regime for
GB VAT.
The common tax regime setup is one tax regime per country per tax type. However, you can also have
tax regimes based on parts of a country or more than one country. Select the regime level as:
• Country: The tax regime is applicable to a specific country.
• Tax zone: The tax regime is applicable to parts of a country or multiple countries. Enter the tax
geography type and tax geography name associated with the group of countries or the tax zone
that you want. The tax geography type and tax geography name correspond to the tax zone type
and tax zone respectively.
If applicable, designate the tax regime as a parent regime or indicate the parent regime name if the tax
regime belongs to a parent regime. Use a tax regime defined as a parent tax regime to group other
nonparent tax regimes for reporting purposes.

Tax Geographies
All tax regimes need information about place or geography. It is required to determine:
• Where the tax is applicable
• What tax rules to apply to a transaction when goods are:
– Delivered to another country
– Delivered inside or outside an economic region
• What the specific regions are, such as:
– State, city, and county for US Sales and Use Tax
– Provinces in Canada
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Use place information for determining factors within tax rules in the tax determination process. Also, use
place information while defining tax regimes, tax geography, and tax jurisdictions.
To support these requirements, define and use geography regions and tax zones. Geography regions
and tax zones provide a conceptual model to use place information on transactions and information
related to the transaction.
The following types of places are supported for tax purposes:

• Country information: Country is a required field in all of the tax-related address locations. The
country fields are supported by a predefined ISO 3166 country name and two-character country
code.
• Geography elements: Define geography elements as part of Trading Community Model
geography. They control the use of geography and addresses.
• Tax zones: Use the tax zone functionality when you need to identify a group of geography
elements while calculating tax. Tax zones are defined as part of Trading Community Model
geography. For example, in the EC it's important to know whether goods and services are being
delivered within the EC. Use the tax zone functionality to create a tax zone, which defines the
membership to the EC as well as, the dates on which a country became the member.

Defining Defaults
Default
Field Description
Appears on
Tax Currency The default currency of the taxes within this tax regime Tax
The minimal unit of currency that is reported to the tax
Minimal Accountable Unit authority, for example, 0.05 GBP indicates that 5 pence Tax
is the minimal unit
A one digit whole number to indicate the decimal place
Tax Precision Tax
for tax rounding
A method that describes whether the line amount
Tax Inclusion Method Tax
includes tax or excludes tax
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Enter default values for the taxes in this tax regime. You can update the default values at the tax level.

Defining Defaults
Default
Field Description
Appears on
The specific exchange rate table that is used to convert

one currency into another. For example, the Association
Conversion Rate Type Tax
of British Travel Agents exchange rate used in the travel
industry
The rule that defines how rounding is performed on a
Rounding Rule value. For example, up to the next highest value, down Tax
to the next lower value, or to the nearest value
Allow tax rounding Allow the override of the rounding defined on the tax
Tax
override registration records
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Enter default values for the taxes in this tax regime. You can update the default values at the tax level.

General Controls
Default
Field Description Appears Controls
on
Option that controls
Allow override and
whether you can override
entry of inclusive tax Tax None
and enter inclusive or
lines
exclusive line amounts
Option that controls Controls whether you can enter
whether the tax reporting tax reporting configuration
Use tax reporting
details are available on the None details on the tax registration for
configuration
first-party tax registration this tax regime for your first
record for this tax regime parties
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Set tax-level controls to enable the options that you want to make available to the taxes in this tax
regime. If necessary, you can disable the options that you enable here for individual taxes within the tax
regime. If you disable a controlled option at the tax regime level it is not available as an option at the tax
level.

Compounding Level Controls
Default
Field Description Controls
Appears on
Controls whether this tax
Option that controls whether
Allow cross regime regime is compounded based
cross regime compounding is None
compounding on the tax calculated from
needed for this tax regime
another tax regime
Defines the order in which
taxes within the compound tax Controls the order in which
Compounding
regimes need to be calculated. None taxes within tax regimes are
Precedence
A tax within a tax regime with calculated
a lower value is calculated first.
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Taxes
Set up details for the taxes of a tax regime. Each separate tax in a tax regime includes
records for the:
• Tax statuses
• Tax rates
• Tax rules that are used to calculate and report on the tax
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Oracle Tax applies as defaults tax information from the tax regime to each tax that you create under a
tax regime. You can modify this information at the tax level according to your needs, as well as add
additional defaults and overrides.
For tax rule defaults, specify values that apply to the majority of your transactions. Use tax rules to
configure exceptions to the tax rule defaults.
For example, for US Sales and Use Tax define a tax for each state, county, and city. For the UK, set up a
tax for GB VAT.
You can enable a tax for simulation or for transactions only after you have completed all of the required
setup. Minimum setup for a country-level standard tax with no recovery and always applicable includes
entering:
• Required fields in the Create Tax or Edit Tax pages
• Direct tax rule defaults with the default values for the direct tax rule types, which include place of
supply, tax applicability, tax registration, tax calculation formula, and taxable basis formula
• Indirect tax rule defaults with the default values for the indirect tax rule types, which include tax
jurisdiction, tax status, and tax rate
• Tax liability account
You can also use the rapid setup spreadsheets to create your minimum tax configuration. However, you
can enable tax only for simulation or transactions on the Edit Tax page.

Tax Rule Defaults: Place of Supply
Party Procure-to-Pay Party

Bill-from party Supplier
Location assigned to the business unit for the
Bill-to party
transactions
Ship-to party Ship-to location on the line
Ship-from party Supplier (ship-from) party site
Point of acceptance party Not applicable
Point of origin party Not applicable
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Tax Statuses
Define a tax status:

• To group one or more tax rates that are the same or similar in nature
• Under:
– Tax
– Configuration Owner
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A tax status is the taxable nature of a product in the context of a transaction and specific tax on the
transaction.
For example, for US Sales and Use Tax create a tax status for standard and exempt. For the UK set up
separate tax statuses for standard, zero, exempt, and reduced rates.
This is the appropriate level to:

• Group common tax rates.
• Drive reporting needs.
• Enable manual override to tax rates.

Tax Jurisdictions
Set up tax jurisdictions where a specific tax authority levies a tax for:
• Geographic regions
• Tax zones
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A tax jurisdiction specifies the association between a tax and a geographic location. At transaction time,
Oracle Tax derives the jurisdiction or jurisdictions that apply to a transaction line based on the place of
supply. You must set up at least one tax jurisdiction for a tax before you can make the tax available on
transactions.
For example, for US Sales and Use Tax create a county jurisdiction for every county in the parent
geography type of State and in the parent geography name of California. For the UK, create a tax
jurisdiction for the country of United Kingdom.
This is the appropriate level to define:

• Location-based tax rates
• Tax accounts and tax reporting codes as appropriate

Tax Rates
Set up tax rates for:

• Tax statuses: Set up a tax rate record for each applicable tax rate that a tax status
identifies.
• Tax jurisdictions: Set up tax rate records to identify the tax rate variations for a
specific tax within different tax jurisdictions.
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You must set up at least one tax rate for each tax status. You can set up additional tax rates at the tax
jurisdiction level if the applicable tax rate is unique for a particular tax jurisdiction.
Set up your tax rates in the Manage Tax Rates and Tax Recovery Rates task. For example, for US Sales
and Use Tax create a tax rate for each tax jurisdiction (jurisdiction-based rates). For the UK, set up
separate tax rates for standard, zero, exempt, and reduced (tax status-based rates). In addition to
jurisdiction-based tax rates, at least one non-jurisdiction based default tax rate must be defined for each
tax in order to enable a tax for simulation, transactions, or both simulation and transactions. Thus, in
practice, both jurisdiction-based tax rates and non-jurisdiction based tax rates are typically defined for
each country and both jurisdiction-based default tax rates and non-jurisdiction based default tax rates
are required in a given country.
This is the appropriate level to:

• Define tax rates by effective periods
• Specify tax account variations as appropriate
• Assign default tax recovery rates
The tax determination process identifies the tax rate when taxes are considered applicable on a
transaction. Tax rates can apply to a specific location or jurisdiction. For example, you define state,
county, and city jurisdiction-based rates for a US Sales and Use Tax regime. Tax rates can change over
time. For example, when a tax rate increase occurs, you end date one rate period definition and create a
rate period with an effective start date.

There can be tax exceptions or exemptions to tax rates based on:
• Specific items
• Third parties
• General ledger accounts
• Other factors

Setting Up Tax Rates: Overview
When setting up tax rates, you must consider:

• Tax Rate Types
• Tax Classification Code Set Assignment
• Rate Periods
• Tax Recovery
• Tax Accounts
• Override of Taxes on Tax Lines
• Controls and Defaults
24
The following settings affect the way taxes are used and calculated:
• Tax Rate Types: You can express tax rates in terms of percentage or quantity. A quantity-based
tax rate is based upon the number of items purchased or events that occur. For example, a taxing
jurisdiction passes a law that each package of cigarettes sold is subject to a tax of 0.87 USD. This
tax is considered a quantity-based tax as it is assessed based upon the number of packages
purchased and not the price of the product.
• Tax Classification Code Set Assignments: When defining a tax rate, select the tax classification
code set assignments of Order to cash, Procure to pay, and Expenses. These assignments
determine if the tax rate code you define is applicable within a specific product and set
assignment at transaction time. In addition, the set assignment of tax classification codes is
derived based on the configuration owner that is part of the tax rate code definition.
• Rate Periods: You can define one or more rate periods for a tax rate as long as the date ranges
don't overlap. This allows for a change in tax rates over time without requiring a new tax rate
code definition. You can define default effective periods for tax rate periods. This effectivity must
be unique across tax regime, configuration owner, tax, and tax status. This allows flexibility if
there is a requirement to define a new tax rate code and identify the new rate period as a default
when existing rate periods exist on another tax rate code. Define tax rules as exceptions to
default tax rates.
• Tax Recovery: When the associated tax allows tax recovery you can define tax recovery or offset
tax rates. Associate the offset tax or the default tax recovery rate and tax rule defined for tax
recovery to the tax rate code. If the tax rule doesn't evaluate to true at transaction time then the
default tax recovery rate is applicable. Ensure that the tax recovery rate and tax rate periods
overlap or the application doesn't calculate tax recovery.

• Tax Accounts: Define tax accounting for the tax rate code either as a default from the tax setup
or an override of values at the tax rate level. Tax accounts are defined for the legal entity and
optionally for the business unit. The accounts you define are tax expense accounts, tax revenue
accounts, tax finance charge accounts, and accounts specific to tax recovery.
• Override of Taxes on Tax Lines: See subsequent slide for details.
• Controls and Defaults: See subsequent slide for details.

Override of Tax Rates on Tax Lines
The following controls are available for allowing overrides on tax rates:
• Allow Override of Calculated Tax Lines
• Allow Tax Rate Override
• Allow Ad Hoc Tax Rate
26
Part of the configuration options is to allow you to override the calculated tax rate on a tax line. You
should consider the following controls during setup:
• Allow override of calculated tax lines: Enable this option for a combination of configuration
owner and event class if you want to manually override tax lines. This option exists on the Create
Configuration Owner Tax Options page for the configuration owner and event class. If a
configuration owner tax option doesn't exist, the value on the predefined event class setting is
used.
• Allow tax rate override: Enable this option on the associated tax status record to be able to
override tax rates on a calculated tax line.
• Allow ad hoc tax rate: Enable this option on the tax rate record if you want to allow the flexibility
of not being restricted to predefined tax rates and allow user entered rates on calculated tax
lines. If you allow ad hoc tax rates you must indicate if the adjustment to a tax amount updates
the taxable basis or the tax rate.
Note: You can set the Transaction Tax Line Override profile option to control which users can make
changes to the transaction line such as selecting a different tax status or tax rate.

Other Controls and Defaults
The other controls and defaults to consider are:

• Tax Inclusion Method
• Allow Override and Entry of Inclusive Tax Lines
• Allow Tax Exceptions
• Allow Tax Exemptions
• Tax Point Basis
27
These controls and defaults can be found on the Main Details tab and the Other Details section:
• Tax Inclusion Method: Defines whether the tax is:
- Standard noninclusive handling: This option calculates the taxes as exclusive of the given
transaction line amount.
- Standard inclusive handling: This option calculates the taxes as inclusive of the given
transaction line amount.
- Special inclusive handling: This option calculates the taxes as inclusive of the given
transaction line amount, but the calculation methodology differs from the standard
inclusive process.
• Allow override and entry of inclusive tax lines: Controls whether you can override and enter
inclusive or exclusive line amounts.
• Allow tax exceptions: Controls whether tax exceptions are allowed for this tax at transaction
time.
• Allow tax exemptions: Controls whether tax exemptions are allowed for this tax. Use this option
in conjunction with the Allow exemptions option on the configuration owner tax options and
when both are selected allows tax exemptions to be processed at transaction time .
• Tax Point Basis: Specify the event that is the basis for recoverability or liability of tax. This event
is also the basis on which tax is considered for reporting.

Tax Recovery Rates
• Set up tax recovery rate codes for the recovery types identified on the taxes within a
tax regime.
• A tax recovery rate code identifies the percentage of recovery designated by the tax
authority for a specific transaction.
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For example, organizations that produce VAT-applicable goods and services are allowed to recover
100% of the VAT they pay on typical purchases. They would use a default 100% recovery rate.
Organizations, such as financial institutions who create services that are exempt from VAT, are not able
to recover VAT on their normal purchases. They would use a default 0% recovery rate.

Practice 12-1 Overview: Entering Invoices to View Tax
Calculation
This practice covers the following topics:
• Entering a Payables invoice to view tax calculation
• Entering a Receivables invoice to view tax calculation
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Define Taxes for Rapid Implementation Task List
The primary mechanism for rapid implementation is for you to create your tax setup
by using a spreadsheet upload.
30
Navigate to: Setup and Maintenance > Tasks Panel > Search > Define Taxes for Rapid Implementation.
Use the:
• Define Taxes for Rapid Implementation task list to access the required and most frequently used
setup tasks for implementation scenarios observed in practice.
• Define Tax Configuration task list for the ongoing maintenance of your tax setup and those tax
configurations that cannot be set up using the rapid implementation approach.
Note: Use the Financials Offering setup tasks for on-going maintenance.

Rapid Implementation Spreadsheets
• Use the following workbooks to streamline the organization

of data:
– Tax Configuration Workbook
– Tax Implementation Workbook
• Use the spreadsheets to quickly set up tax details for managing taxes on transactions.
31
The Tax Configuration Workbook and the Tax Implementation Workbook streamline the organization of
data as well as to include additional information required for configuring tax. For better data grouping,
data related to tax rules is now moved from the tax configuration workbook to the tax implementation
workbook.

Tax Configuration Workbooks
Use the tax configuration workbooks to upload your common and organization-
specific tax setups.
Workbook Name Worksheets
Tax Configuration • Manage Tax Regimes
• Manage Taxes
• Manage Tax Rates
• Manage Tax Recovery Rates
• Manage Tax Thresholds
Tax Implementation • Manage Tax Rules
• Manage Tax Exemptions
• Manage Party Classifications
• Manage Tax Reporting Codes
• Manage Tax Payer Identifiers
• Manage Product Fiscal Classifications
• Manage Payables Tax Determinant Defaults
• Manage Tax Regime Subscriptions
• Manage Tax Registrations
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The Implementation Workbook includes these worksheets:

• Tax Exemptions: Create tax exemption configuration for third parties and third-party sites.
• Party Classifications: Associate party fiscal classifications with the parties.
• Tax Reporting Codes: Create tax reporting codes and tax reporting types for downstream use in
tax reports.
• Tax Payer Identifiers: Define specific taxpayer identifiers for third parties and third party sites
for purposes of reporting.
• Product Fiscal Classifications: Create product fiscal classifications for subsequent use in tax
rules having a product inventory linked determining factor class.
• Tax Rules: Define rules that look for a result for a specific tax determination process, such as
determining place of supply or tax registration, in relation to a tax on a transaction.
• Payables Tax Determinant Defaults: Utilizes a segment of an existing chart of accounts to
automatically default a specific intended use value on a Payables invoice and define a tax
determination rule based on the intended use value that is defaulted.
Note: The Tax Account Assignments worksheet was removed to avoid possible inconsistencies in the
Ledger Account assignments. You can continue to setup the Ledger Accounts against a Tax, Tax Rate,
and Tax Jurisdiction directly from the corresponding pages.

Tax Setup Spreadsheets
Task Spreadsheet to Use

Manage Tax Regimes • Manage Tax Regimes
• Manage Tax Regimes Subscriptions
Manage Taxes • Manage Taxes
• Manage Tax Accounts
Manage Tax Rates and Tax Recovery Rates • Manage Tax Rates
• Manage Tax Rate Tax Accounts
• Manage Tax Recovery Rates
• Manage Tax Recovery Rate Accounts
Manage Tax Rules • Manage Tax Rules
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Use individual tax setup spreadsheets inside the applicable tax setup spreadsheet templates to maintain
your tax configuration.

Practice 12-2 Overview: Creating a VAT Using the Tax
Configuration Workbook
This practice covers creating a tax configuration for value-added tax (VAT) in the
United Kingdom by using the Tax Configuration Workbook.
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Legal Entities
35
• A legal entity is a recognized party with rights and responsibilities given by legislation.
• A legal entity has the right to own property, the right to trade, the responsibility to repay debt,
and the responsibility to account for themselves to regulators, taxation authorities, and owners
according to rules specified in the relevant legislation.
• A legal entity’s rights and responsibilities can be enforced through the judicial system.

Legal Entities Definition
Define a legal entity for each registered A legal entity has a separate legal
company or other entity recognized in identity and conducts aspects of your
law for which you want to: business for the following reasons:
• Record assets, liabilities, • Complying with corporate taxation

expenses, and income within local jurisdictions
• Pay transaction taxes • Preparing for acquisitions or
disposals of parts of the enterprise
• Perform intercompany trading
• Isolating one area of the business
from risks in another area
• Facilitating local compliance
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Legal entities are used as tax configuration owners and in first party tax profiles.

Legal Addresses, Jurisdictions, and Authorities:
Overview
• A legal address is the address a legal entity or reporting unit uses to register with a
legal authority.
• A legal jurisdiction is a group of countries, a single country, a state, a county, or a
parish governed by legislation.
• A legal authority is a government or legal body.
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Legal addresses, jurisdictions, and authorities are required by Oracle Financials Cloud Applications only
if you:
• Implement Oracle Payables and Oracle Receivables.
• Perform tax calculations.
Legal Addresses: A legal entity and reporting unit can use different addresses for different authorities
and, hence, can have more than one registered address. This legal address must be located within the
territory entered.
Legal Jurisdiction: During Oracle Tax setups, you register your legal entities with the legal authorities in
the legal jurisdiction where you conduct business as required by law. Examples are French Labor Law,
Singapore Transactions Tax Law, and US Income Tax Laws. Legal jurisdictions generally are defined for
income and transaction taxes. A jurisdiction can also be defined as an identifying jurisdiction, which is
the first jurisdiction a legal entity must register with to do business in a country.
Legal Authority: A government or legal body that is charged with the powers to make laws, levy and
collect fees and taxes, and remit financial appropriations for a given jurisdiction.
Legal jurisdictions and authorities are classified by a legislative category, such as Local Tax, Federal Tax,
Provincial Tax, Foreign Trade, and so on, which identifies the type of law associated with the registration.

Manage Legal Reporting Units
• Each of your legal entities must have

at least one legal reporting unit.
• When a legal entity is created, a legal
reporting unit with the same name is
automatically created.
• You can define both domestic and
foreign establishments.
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When you create a legal entity, the application automatically creates:

• A registration for the new legal entity
• A main legal reporting unit
Define legal reporting units by:

• A physical location, such as sales office
• A logical unit, such as:
- Groups of employees subject to different reporting requirements.
- A Human Capital Management (HCM) system in which you use your legal reporting units to
model your tax reporting units.
Multiple registrations can be associated with a legal reporting unit. However, only one identifying
registration defined with the legal authority used for the legal entity or legal reporting unit can be
associated with the legal reporting unit.

Business Units: Overview
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A business unit is an organization within an enterprise that performs one or many business functions
that can be rolled up in a management hierarchy.
Normally, it has a manager, strategic objectives, a level of autonomy, and a responsibility for its profit
and loss.
A business unit is used as tax configuration owners and in first party tax profiles.
Use business units for:

• Processing Transactions: Process transactions on behalf of one or many legal entities.
• Management Reporting: Rolls up in divisions or a management hierarchy, based on the
structure of your chart of accounts to provide reporting to managers at all levels of your
organization.
• Security of Transactional Data: Secures subledger transactions. For example, if you run your
export business separately from your domestic sales business, secure the export business data to
prevent access by the domestic sales employees. To accomplish this security, set up the export
business and domestic sales business as two separate business units.
• Reference Data Definition and Sharing: Use the reference data sets that reflect your business
rules and policies and can differ from country to country. You can share reference data, such as
payment terms and transaction types, across business units, or you can have each business unit
manage its own set.

Business Unit Structure: Example
40
In this example, Vision Corporation has five business units:

• One for each legal entity
• One Corporate BU to act as a shared services center (Service Provider Model) for procurement
and payables payments

Practices 12-3 and 12-4 Overview: Legal Entities and
Business Units
• Practice 12-3: Viewing the UK Legal Entity setups
• Practice 12-4: Assigning the UK Business Unit and Legal Entity to your tax regime
41

Tax Determination Process: How Taxes Are
Calculated
The tax determination process consists of the following steps:
• Determine Applicable Tax Regimes and • Determine Tax Status
Candidate Taxes
• Determine Tax Rate
• Determine Place of Supply and Tax Jurisdiction
• Determine Taxable Basis
• Determine Tax Applicability
• Determine Tax Calculation
• Determine Tax Registration
• Determine Tax Recovery (if applicable)
42
The tax rules that are part of the tax determination process are organized into rule types. Each rule type
identifies a particular step in the determination and calculation of taxes on transactions.
You must either provide a default value for each rule type or set up a tax rule for each rule type to
determine and calculate taxes.
The tax determination process evaluates transaction header and line information to derive tax lines for
taxes applicable to the transactions.

Step 1: Determine Applicable Tax Regimes and
Candidate Taxes
Components Used and

Process Name Activities
Rule Type (if applicable)
Determine Applicable Tax • Determine the first party of the • Party tax profiles
Regimes and Candidate Taxes transaction. • Regime determination set
(preliminary step) • Identify location types to derive • Configuration options
candidate tax regimes.
• Identify tax regimes.
• Identify taxes using subscriber
configuration option.
43
Tax regimes are considered based on geography and subscription. Either a country or zone associated
with the tax regime definition must be the same as the country or zone identified from the location that
evaluates to true on the regime determination set of the first party of the transaction. In addition, the tax
regime must have a subscription to the applicable configuration owner.
After the tax determination process identifies the appropriate tax regime or regimes, the list of
candidate taxes can be evaluated based on the configuration option setting of the first party in the tax
regime subscription definition.
Options are:
• Common Configuration: Consider all taxes with the configuration owner of global configuration
owner.
• Party Specific Configuration: Consider all taxes with the first party or business unit as
configuration owner.
• Common Configuration with Party Overrides: Consider all taxes with the first party or business
unit and the global configuration owner as configuration owner. If a tax is defined by both the
first party or business unit and the global configuration owner, then the application uses only the
tax defined by the first party or business unit.
• Parent First Party Configuration with Party Overrides: Consider all taxes with the first party
and the parent first party as configuration owner. If a tax is defined by the first party and the
parent first party, then the application uses only the tax defined by the first party.

Steps 2 and 3: Determine Place of Supply and Tax
Jurisdiction and Tax Applicability
Components Used and Rule

Type (if applicable)
Determine Place of Supply and Tax • Identify location type. • Tax rule: Determine Place of
Jurisdiction • Identify tax jurisdiction. Supply or the default value for
Place of Supply for the tax.
• Tax jurisdictions
Determine Tax Applicability • Consider candidate taxes from Tax rule: Determine Tax
the previous process. Applicability and the default
• Eliminate taxes based on tax value for applicability for the tax.
applicability rule of each tax.
44
Tax applicability of each candidate tax is determined based on:

• Direct rate determination
• Place of supply
• Tax applicability
• Tax jurisdiction
The first step in tax applicability is to process any direct rate rules defined for a tax regime, configuration
owner, and candidate taxes.
• If a direct rate rule evaluates to true, then place of supply is processed for this transaction or
withholding tax. In addition the tax is applicable and the tax status and tax rate defined for the
direct rate rule are used in the tax calculation.
• If a direct rate rule does not evaluate to true for this tax regime, configuration owner, and tax,
then the tax applicability rules are processed next. After a tax is found applicable based on an
applicability rule or a default value, the process verifies the place of supply and associated tax
jurisdiction. This is required except in the cases of migrated taxes.
• The place of supply process identifies the applicable location type and associated tax jurisdiction
where the supply of goods or services is deemed to have taken place for a specific tax. If the tax
determination process cannot find a tax jurisdiction for the location that corresponds to the place
of supply location type, then the tax does not apply and it is removed as a candidate tax for the
transaction.
For example, the place of supply for UK value-added tax (VAT) on goods is generally the ship-from
country. Thus, the place of supply of a sale or purchase within the UK is the UK itself. However, if a UK
legal entity supplies goods from its French warehouse to a German customer, then the place of supply
does not find a jurisdiction for UK VAT in France, and therefore UK VAT does not apply.

Step 4: Determine Tax Registration

Determine Tax Registration Determine the party type to use to • Tax rule: Determine Tax
derive the tax registration for each Registration or the default
applicable tax. value for the tax.
• Party tax profile
• Tax registration
45
This process determines the party whose tax registration is used for each tax on the transaction and, if
available, derives the tax registration number. Tax registration is also important for:
• Triggering the application of self-assessed taxes
• Driving tax point basis variations

Step 5: Determine Tax Status
Components Used and

Determine Tax Status • Consider tax statuses of Tax rule: Determine Tax Status
applicable taxes. or the default value defined for
• Consider tax status rules or use the tax.
default tax status.
46
This process determines the tax status of each applicable tax on the transaction. If the process cannot
find a tax status or no default value is defined for an applicable tax, then an error occurs and Oracle Tax
displays an error message.

Step 6: Determine Tax Rate

Determine Tax Rate • Consider tax rates of each applicable tax status • Party tax profiles
of each applicable tax. • Regime determination set
• Determine the tax rate code to use for the tax • Configuration options
status for each applicable tax.
• Determine the tax rate percentage or per unit
tax amount for a quantity-based tax.
• If a tax exception applies, update the tax rate
for each applicable tax.
• If a tax exemption applies, update the tax rate.
47
This process determines the tax rate code for each tax and tax status derived from the previous process.
First, Oracle Tax looks for a tax rate based on a rate code and tax jurisdiction. If these elements are not
found, then Oracle Tax looks for a tax rate without any tax jurisdiction.
If applicable, the tax rate is then modified by any exception rate or tax exemption that applies. The result
of this process is a tax rate code and tax rate for each applicable tax.

Simplified Tax Line Override Setup
Minimum setup options simplify the Tax Rate override process.

• No restrictions when you override the tax rate percentage on a transaction.
• Change to calculated tax amount adjusts the taxable basis of the transaction line.
• Impacts other tax lines option.
48
Navigate to: Others > Setup and Maintenance > Setup: Financials > Transaction Tax > Show: All Tasks >
Manage Configuration Owner Tax Options > Create.
The tax determination process recalculates the taxes on all other tax lines on the same transaction when
an override of automatically calculated tax lines on transactions exists.
Use this option in conjunction with the Transaction Tax Line Override profile option and the Allow
override of calculated tax lines option for the configuration owner tax options to enable you to update
calculated tax lines at transaction time.
Tax setup relating to Tax Rate overrides is simplified with minimum setup options. These options were
removed at the Tax Rate level to simplify the process:
• Allow Ad Hoc Tax Rate
• Adjustment for Ad Hoc Tax Amounts
You cannot override offset tax lines. However, you can update the tax line calculated for the original tax.
When you update the tax rate percentage or amount or when you cancel the tax line, the corresponding
tax line for the offset taxes is updated.
Note: These setup changes apply only to overriding tax rate percentage and tax amount. When you
setup overriding calculated tax lines, you must enable overrides to tax details on a transaction.

Step 7: Determine Taxable Basis
Components Used and

Determine Taxable Basis • Identify the taxable basis formula for • Tax rule: Determine Taxable
each applicable tax. Basis or the default values for
• Determine the taxable basis and the tax.
compounding details based on the • Taxable basis formula
taxable basis formula. • Tax inclusive settings at the
• Consider the tax inclusive settings of tax rate level
the applicable taxes.
49
This process determines the taxable basis for each tax rate code. Depending on the tax rate type, the
taxable basis is amount-based or quantity-based. The tax determination process typically determines
the tax by applying the tax rate to the taxable basis amount.
In some cases, the taxable basis either can include another tax or is based on the tax amount of another
tax. Define taxable basis formulas to manage these requirements.

Step 8: Determine Tax Calculation

Calculate Tax • Identify the tax calculation formula. • Tax rule: Calculate Tax Amounts.
• Calculate taxes using the tax • Calculate tax formula, if
calculation formula. applicable.
• Perform applicable tax rounding. • Tax rounding rule from tax
registration, party tax profile, or
tax
• Configuration owner tax options
50
This process calculates the tax amount on the transaction. In most cases, the application computes the
tax amount by applying the derived tax rate to the derived taxable basis. In some exceptional cases, the
tax amount is altered by adding or subtracting another tax. Define tax calculation formulas to manage
these requirements.

Step 9 (If Applicable): Determine Tax Recovery
Components Used and

Determine Recovery Rate • Allocate tax amount per line • Tax rule: Determine Recovery
distributions. Rate or the default value
• Determine tax recovery types. defined for the tax.
• Determine tax recovery rates. • Tax recovery rates
• Determine the tax recoverable
amounts.
• Determine the nonrecoverable
amount.
51
This process determines the recovery rate to use on procure-to-pay transactions when the tax is
enabled for full or partial recovery of the tax amount. The recovery type is defined on the tax and
identifies whether one or two recovery types are available: primary or secondary. For each tax and
recovery type, the application determines the recovery rate based on a tax rule or default value defined
on the tax.
The recovery process impacts the purchase invoice distributions level, tax amounts, inclusiveness of
taxes, and the tax accounting within Oracle Payables. The resulting distribution amounts are adjusted as
a result of the recovery process.
Examples of recovery rates include:

• For UK manufacturing companies. VAT on normal purchases used for company business is 100%
recoverable.
• For a financial institution that makes VAT exempt only on sales. You are not allowed to recover
any taxes and your recovery rate is zero percent on all purchases.

Practice 12-5 Overview: Enabling Tax Applicability
and Enabling Your Tax for Simulation
• Enabling your tax for applicability
• Enabling your tax for simulation
52

The Tax Simulator
53
The Tax Simulator is a tool for simulating the tax determination process using your tax setup. The Tax
Simulator lets you preview the workings of your tax configuration before you perform tax calculations on
transactions in a subledger application.
The Tax Simulator also enables you to test new tax configuration in conjunction with existing tax
configuration to preview the resulting tax calculation. The Tax Simulator is a useful tool to identify the
root cause when tax calculation or other tax processing is not what is expected on active data.
Run taxes from all applicable tax regimes against a sample transaction to verify that your tax
configuration and tax rules were created and applied according to your requirements. You can either
create a sample transaction within Tax Simulator or copy an existing transaction. The simulated tax
calculations do not affect active data.
Use the Manage Simulator Transactions task to access the Tax Simulator.

Validate Tax Configuration and Calculation Results
Through Tax Simulator
Review tax determinants and defaulting levels, and get more insight into calculated
taxes, using the tax simulator. The Tax Simulator:
• Shows Tax classification code defaulting hierarchy and default values at each level
• Provides additional in-field and static help.
• Displays additional tax configuration and transactional and tax line attributes
54
Navigate to: Others > Financials > Transaction Tax > Manage Taxes >Show: All Tasks > Manage
Simulator Transactions.

Troubleshooting Missing Taxes on Transactions
Using the Tax Simulator
• Improve tax compliance by using the Tax Simulator to analyze why a particular tax
was not automatically calculated.
• Accurately identify the tax configuration errors and apply the corrective fix.
55
Navigate to: Others > Setup and Maintenance > Financials > Transaction Tax > Show: All Tasks >
Manage Simulator Transactions task.
To troubleshoot taxes that were not calculated on a transaction:

1. Navigate to the Manage Simulator Transactions task.
2. In the Edit Simulator Transaction page, click the Create Tax Line button and enter the expected
tax line manually.
3. Navigate to the Tax Lines Details page to review the details of how tax calculation failed,
including tax applicability rules, direct rate rules, place of supply rules, and the rule conditions
and transaction line values for the tax line you entered manually.
Steps to Enable
• This feature is automatically enabled.
Role Information
• No new role or privilege access is required to use this feature.

Practices 12-6, 12-7, 12-8, and 12-9 Overview: Testing
Your Tax
• Practice 12-6: Using the Tax Simulator to Test a Payables and Receivables Transaction
• Practice 12-7: Enabling Your Tax for Transactions
• Practice 12-8: Entering an Invoice in Payables and Reviewing that the Your Tax is
Calculated
• Practice 12-9: Entering an Invoice in Receivables and Reviewing that the Your Tax is
Calculated
56

Outsource Tax Processing and Reporting to Third-
Party Tax Vendor Solution
There are number of key benefits in adopting partner transaction tax management
solutions. The solutions include Partner Transaction Tax Integration with Oracle ERP
Cloud:
• Currently available for tax content, tax calculation, tax determination, and tax
reporting.
• Leverage these partner transaction tax solutions independently or together based on
your different transaction tax requirements.
57

Service Subscriptions in the Cloud: Vertex
58
Third-Party partner integration in the cloud is currently available only with Vertex for US sales and use
taxes and Canada’s GST and HST. This partner integration is planned for Mexico, United Kingdom,
Germany in the near future.
The Vertex solution provides global tax management with universal tax compliance capabilities. The
three offerings are:
• Tax Content Service: The Vertex Tax Content Service offers predefined setups of geographies,
tax jurisdictions, tax rates, and taxability rules for products and services with potential customer-
specific changes. This model supports global country configuration and tax rules. Tax content
can also be defined and uploaded by implementers to Vertex cloud.
• Tax Calculation Service:
- Real-time cloud-to-cloud integration of Oracle ERP Cloud and Vertex O Series Cloud for
transaction tax calculation.
- No software integration components deployed on the cloud.
- Seamless data flow between Oracle ERP Cloud and Vertex O Series for batch transaction
support.

• Tax Reporting Service:
- Vertex Indirect Tax Returns: Signature-ready returns for US Sales and use taxes are
produced for filing.
- Vertex Return Outsourcing Service: Vertex can manage the entire tax compliance function
from tax returns generation to payment remittances.
Note: You can choose to use the tax content and tax reporting services without the tax calculation
service.
Apart from Vertex, the third-Party partner integration in the Cloud Financials is available with the
following:
• Avalara: https://cloudmarketplace.oracle.com/marketplace/en_US/listing/59772485
• Thomson Reuters: https://cloudmarketplace.oracle.com/marketplace/en_US/listing/25651994

Transaction Tax Management Solutions: Key Benefits
The benefits in adopting partner transaction tax management solutions include:
Partner tax content service

Tax Content Offering includes specific changes
and updates.
Data flow between Oracle

Tax Determination
ERP Cloud and Partner Tax
Offering
Cloud.
Signature-ready return for

Tax Reporting Offering
US sales and use tax filings.
60
Tax Content Offering Key Benefits

• Partner tax content service includes geographic tax jurisdictions, tax rates, and taxability rules for
products and services with potential customer-specific changes.
• Updates available on monthly basis for statute changes.
Tax Determination Offering Key Benefits

• Cloud-to-Cloud integration of ERP Cloud and Partner Tax Application Cloud for
transaction tax calculation.
• Separate tax software integration components are not required on ERP Cloud.
• Data flow between Oracle ERP Cloud and Partner Tax Cloud.
Tax Reporting Offering Key Benefits

• Tax partner can manage the entire tax compliance function from tax returns generation to
payment remittances.
Steps to Enable
If you elect to implement a tax partner calculation application with Oracle ERP Cloud, you must complete
the following additional setup steps to successfully enable tax partner calculation integration with Oracle
ERP Cloud:

• Subscribe the applicable business unit(s) to the relevant country tax regime(s) for partner tax
calculation integration using the Configuration Options tab on the Manage Tax Regimes page.
• Set all of the taxes under the relevant country tax regime(s) as ‘Applicable’ by default, and enable
for both ‘Simulation’ and ‘Transactions’ purposes.
• Register the tax partner in Oracle ERP Cloud using the following web service:
- Partner Tax Profile Service: https://docs.oracle.com/en/cloud/saas/financials/r13-
update18a/faitx/external-tax-partner-integrations.html#FAITX1620201 (Operation Name:
registerTaxContentPartner)
- This Register Tax Content Partner web service operation creates the tax profile for the
third-party tax partner to support tax content and calculation services.
• On the main Manage Configuration Owner Tax Options user page, select ‘Actions’ and ‘Manage
Tax Partner Integration in a Spreadsheet’.
- Once the Manage Tax Partner Integration ADFdi spreadsheet is launched, then specify the
Tax Partner Name, Connection User Name, Connection Password, and End Point URL.
Then, select the ‘Upload’ icon at the top of the template under the ‘MyWorkbook’ menu to
load the settings:
- Prerequisite Note: A tax partner is responsible for their registration in Oracle ERP Cloud by
using the Partner Tax Profile web service as outlined above. If a tax partner registration has
not been properly completed, the Tax Partner Name will not be available for selection in the
Manage Tax Partner Integration ADFdi spreadsheet.
- Note: If the Manage Tax Partner Integration ADFdi spreadsheet is not rendered or
launched, be sure to download the latest ADFdi plug-in from the main Oracle ERP Cloud
Navigator under Tools and Download Desktop Integration Installer selection.
• From the Manage Configuration Owner Tax Options user page, select the create icon. Then,
populate the desired Configuration Owner, Application Name, Event Class, and Start Date.
In addition, select ‘Calculate tax by tax provider’ as the Regime Determination Set. After selecting
the Regime Determination Set, the ‘Enable Tax Partner’ link is active.
• Click on the ‘Enable Tax Partner’ link to access the window showing the tax partner currently
registered for tax calculation purposes. Only a tax partner previously registered for tax
calculation is displayed in this window. For the registered tax partner, check the ‘Enabled’
checkbox, and then click on the ‘OK’ button. Finally, click on ‘Save and Close’.
- Prerequisite Note: A tax partner is responsible for their registration in Oracle ERP Cloud by
using the Partner Tax Profile web service as outlined above. If a tax partner registration has
not been properly completed, the individual tax partner cannot be enabled.

Other Tax Features
Other Tax Features include:

• Computation of GST Tax Liability on Receipt of Payment in Advance
• Tax Calculation on Receipt Accounting Distributions
62

Computation of GST Tax Liability on Receipt of
Payment in Advance
You need to opt-in this feature from the offerings page.
After you have opted-in, the feature becomes automatically available.
• Navigate to: Others> Setup and Maintenance > Setup: Financials > Change Feature
Opt in.
• On the Opt In: Financials page, click the Features icon for Financials.
• Select the Enable check box for the Tax on Advance Payments feature and save the
changes.
63
The feature only handles the receipt with the receipt method which belongs to a receipt class with GDF
attribute 'Advance Receipt equals Yes'.
The feature is not applicable to the countries where prepayment invoice needs to be issued before
actual receipt is received.

Tax Calculation on Receipt Accounting Distributions
• Calculate transaction taxes on receipt accounting distributions per tax determinants

and tax rates prevailing on receipt of goods.
• View detailed tax lines for recoverable and non-recoverable taxes on receipt
accounting distributions, including tax lines whose tax point basis (TPB) is Invoice.
• Update tax determinants, such as the intended use, purchase order, and so on. Taxes
are then calculated according to the updated tax determinants on receipt accounting
distributions.
64
Navigate to: Others > Setup and Maintenance > Setup: Financials > Click Change Feature Opt In link <
Click Features icon > Enable Tax Calculation on Receipt Accounting Distributions.
The Tax Calculation on Receipt Accounting Distributions feature provides these capabilities:
• Update tax determinants copied from receiving lines to Payables invoice lines upon receipt
matching. Taxes are then calculated according to the updated tax determinants on the Payables
invoice.
• Account recoverable taxes on Payables invoice.
• Create cost adjustment for Receipt matched Invoices if there is a difference in the taxes
calculated on receipt accounting distributions and taxes calculated on Payables invoice.
Enabling the Feature:

• Navigate to the Setup and Maintenance work area.
• Select the Offering as Financials.
• Click Change Feature Opt In.
• On the Opt In: Financials page, click the Features icon for financials.
• On the Edit Features: Financials, enable the Tax Calculation on Receipt Accounting Distributions
feature.
• Click Done.

To apply this feature, setup Configuration Owner Tax Options as follows:
• Sign in as a Tax Manager.
• In the Setup and Maintenance work area, select the following options:
Offering: Financials
Functional area: Transaction Tax
Task: Manage Configuration Owner Tax Options
• Click the Create icon.
• Select the configuration owner to which you want to apply this feature.
• Select Standard Invoices/Payables as the Event Class.
• In the Receipt Tax Options section, enable Allow delivery-based tax calculation with these
settings:
Report Delivery-Based taxes on: Invoice
Tax Point Date: Receipt date
Tax Point Basis: Invoice.
Note: While setting up configuration owner tax options, if you have not opted in for the feature or have
not upgraded to Oracle ERP cloud version 19A, the taxes on receipt accounting distributions will continue
being prorated from purchase order. Also, cannot view the detailed tax lines on receipt accounting
distributions UI.

Use Default Values when Tax Calculation finds
Inconsistent Tax Configuration
To improve auditability and allow tax specialists to correct the tax configuration:
• Minimize run-time errors during transaction processing by using predefined default
values for tax status, tax rate, and other tax line attributes when the process
encounters an inconsistent tax configuration.
• For example, if a tax rule specifies a tax rate with an end date prior to the tax
determination date, the tax calculation process would end in error.
• By enabling this feature, tax calculation can use the predefined default tax rate for the
tax.
• You can also enable the Use Application Defaults for your tax regime, business unit or
legal entity.
66
If you provide a transaction header level tax control amount or transaction line level tax control amount,
but no applicable tax is found during tax processing, Oracle Tax creates a tax line using predefined
default values for the default tax regime and tax that you configured in the Manage Country Default
Controls task.
Instead of using the values predefined by Oracle Tax, you can choose to specify the default values for
tax rate, tax status, tax recovery rate, taxable basis formulas, and tax calculation formulas to use in place
of any corresponding values that fail during tax processing.
Tips
Upgrading customers need to opt-in to enable the feature.
For new customers, this feature is automatically enabled.
Once the feature is enabled, turn on the use of application defaults at both of the following levels:
• Party Tax Profile for the BU (or LE) that is a Configuration Owner in the Manage Party Tax
Profiles page.
• Tax regime in the Mange Tax Regimes page.
For Configuration Owners and tax regimes for which the feature is enabled, the application default
configuration is created:
• When a new tax is enabled for processing or simulation
• For all existing taxes that are enabled for processing or simulation by a system-scheduled
process.
Role Information

Enable the Use Application Defaults Option in Tax
Regime
67
Enable the option ‘Use Default Values when Tax Calculation finds Inconsistent Tax Configuration’ to use
this feature.
Steps to enable the Option:

1. Navigate to: Others > Setup and Maintenance.
2. On the Setup page, select your offering, and then click Change Feature Opt In.
3. On the Opt In page, click the Edit Features icon for Financials.
4. On the Edit Features page, select the Enable option for ‘Use Default Values when Tax Calculation
finds Inconsistent Tax Configuration’.
5. Save and Close.
6. Done.
Enable the Use Application Defaults Option for Your Tax Regime:
1. Navigate to: Others Setup and Maintenance > Transaction Tax > Manage Tax Regime.
2. Create Tax Regime.
3. Enable Use Application Defaults.

Enable the Use Application Defaults Option in
Business Unit or Legal Entity Party Tax Profile
68
Enable the ‘Use application defaults’ option for your business unit or legal entity, depending on your tax
configuration subscription.
1. Navigate to: Others Setup and Maintenance > Transaction Tax > Manage Party Tax Profiles.
2. Search for: Business Unit Tax Profiles.
3. Create Party Tax Profile.
4. Enable Use Application defaults.
Tips
Once the feature is enabled, turn on the use of application defaults at both of the following levels:
• Party Tax Profile for the BU (or LE) that is a Configuration Owner in the Manage Party Tax
Profiles page.
• Tax regime in the Mange Tax Regimes page.
For Configuration Owners and tax regimes for which the feature is enabled, the application default
configuration is created:
• When a new tax is enabled for processing or simulation.
• For all existing taxes that are enabled for processing or simulation by a system-scheduled
process.

Highlighting Configuration Elements that are not
Optimized
• Display a message on the Manage Taxes page highlighting configuration elements
that aren't optimized.
• For example, ERP Cloud now prevents you from enabling more than 25 taxes for a
country because that adversely impacts the tax calculation performance. A message
alert is displayed when the system encounters an unusually large number of taxes.
• You can deactivate this feature by creating a lookup.
69
Steps to enable:
You need not do anything to enable this feature.
Tips and Considerations
To deactivate this feature, follow the below steps:

1. Navigate to: Others > Setup and Maintenance > Manage Standard Lookups.
2. Click New to create a new lookup type. Enter ZX_OPTIN_OPTIONS in the Lookup Type field.
3. In the Lookup Codes section, click New to create a new lookup code. Enter
ALLOW_NON_OPTIMUM_TAXES in the Lookup Code field.

Leverage Online Help during Tax Configuration
• Online help is now extended to more fields on Oracle Tax Setup pages.
• This new help text gives you information about the impact of enabling certain options
on these setup pages.
Field Application Page

Apply single rate on total taxable
Manage Taxes
basis
Geography Type Manage Taxes
Override Geography Type Manage Taxes
Set as offset tax Manage Taxes
Tax Classification Code Set Manage Tax Rates and Tax
Assignments Recovery Rates
Party Name Manage Party Tax Profiles
Party Site Number Manage Party Tax Profiles
70

Leverage Online Help during Tax Line Review
• You can also read more information about the tax lines in the Taxes region of the
Payables Create and Edit Invoice pages.
• For some tax setups, the tax line details on the Payables Create and Edit Invoice page
are read-only. In such cases, you can see the exact detail from the tax setup. Here’s
an example of read-only details:
Read only Tax detail on the Payables

Flag at the Tax Setup Application page
Create and Edit Invoice page
Configuration
Allow override of
Whole tax line is non editable Owner Tax Options
calculated tax lines
or at Tax setup
Allow tax rate
Rate Name and Rate are non editable Tax Status
override
Rate is non editable Allow Adhoc tax rate Tax Rate
71
Note: These tax lines are read only: Offset tax line, Cancelled tax line, Reference documents attached to
a tax line.
Steps to enable:

Summary
In this lesson, you should have learned how to:

• Describe Oracle Tax as a centralized tax solution
• Explain foundation tax configuration
• Use the rapid implementation spreadsheets for configuring tax
• Explain how tax is calculated on transactions
• Describe Legal Entities and Business Units
• Use the simulator to test and validate your tax configuration
• Describe third party partner integration with Vertex
• Explain the Other Tax Features
72

13
Configuring and Using Subledger Accounting

Objectives

• Explain the role of accounting methods in the Create Accounting process.
• Understand the key features of accounting methods.
• Configure and manage accounting methods.
• Discuss the Create Accounting process.
• Understand manual journal entries and adjustments.
• View the created journal entries.
• Explain the advanced features of subledger accounting.

Oracle Subledger Accounting Overview
In Oracle Subledger Accounting (SLA), you can:

• Generate journal entries for subledger transactions.
• Create accounting entries online for a specific transaction from a transaction view.
• Create accounting for a batch of transactions by submitting an offline process.
• Create manual adjustment entries.
• Review generated journal entries and projected balances on views and reports.
The Create Accounting process uses the transaction and reference objects data, plus the accounting
rules, to create subledger journal entries.
For example, if a subledger journal entry rule set specifies that the supplier name should appear in the
description of a subledger journal entry line, then the supplier name value is taken from the supplier
name source data provided by the transaction objects.

The Create Accounting Process
The graphic above illustrates how subledger transactions with financial impact flow from a subledger
to the general ledger using the Create Accounting process. This process is usually automated.
The Create Accounting process begins with the subledgers completing a transaction.
The Create Accounting process looks for eligible transactions and sends the financial information to
the Oracle Subledger Accounting (SLA) engine. The accounting engine transforms and validates the
transactional financial data into a journal with balanced debits and credits based on the ledger’s
accounting method.
The newly created journals are then transferred to the GL Interface table.
The import process then moves the journals to the Oracle General Ledger journal entry tables
(Batches, Headers, and Lines).
The posting process creates entries in the GL Balances Cube. The GL Balances Cube uses pre-
aggregated balances. Unlike relational database systems with many “narrow” tables, pre-aggregated
data warehouses pre-join tables, creating fat tables with highly redundant columns. This type of
database pre-calculates totals to improve runtime performance.
Financial reports are then generated from the account balances in the GL Balances Cube.

Accounting Methods Overview
Accounting methods group subledger journal entry rule sets together to define a consistent
accounting convention across all accounting event classes and accounting event types for all source
systems. An Accounting Method is attached to primary and secondary ledgers and is the 4th C in a
ledger configuration.
Accounting Methods include the following required elements:
• Journal Entry Rules Sets: Each subledger application has a unique journal entry rule set that
groups all the rules together for creating journals.
• Journal Line Rules: This rule defines the debit and credit side of the journal. Journal line
rules are assigned to journal entry rule sets.
• Account Rules: This rule derives the GL account or segment for each debit and credit of a
journal. Account rules are configured with journal line rules on journal entry rule sets.
Accounting Methods include the following optional elements:
• Description Rules: This optional rule allows you to concatenate any source system values
and constant values to generate a dynamic description at the journal header or line level. For
example, it might include an invoice number, customer name, or supplier name. It can
provide any information useful for drilldown detail.
• Mapping Sets: This element maps your source system transaction attributes to your chart of
accounts. It is used on account rules to derive an account combination or segment.

• Supporting References: Can be used to store additional source information about a
subledger journal entry based on the transactional data transferred through accounting hub.
Optionally, it can also maintain a balance. For example, you may maintain a balance of
revenue by account manager. You may want to use Supporting Reference balances for
supporting:
- Reconciliation back to the source systems
- Profit and loss balances by dimensions not captured in the chart of accounts
• Conditions: Can be placed on Journal Line Rules, Account Rules, and Description Rules. The
rule is only used by Subledger Accounting if the condition is met.
• Custom Formulas: Use their results as sources and input values in some of the subledger
accounting rule definitions. This facilitates complex derivation logic for subledger journal
entry such as amounts, accounts, and descriptions when values are not readily available in
the source transaction systems.
• Multiperiod Accounting Classes: Use to create accounting entries across more than one
accounting period for a single accounting event.
Your goals in defining accounting methods are to:
• Ensure regulatory compliance.
• Facilitate corporate financial reporting.
• Enable audits.
• Facilitate reconciliation to source systems.

Predefined Accounting Methods
Oracle predefines three Accounting Methods:

• Standard Accrual.
• Standard Accrual with Encumbrances.
• Standard Accrual for China.
All primary and secondary ledgers must have a Accounting Method.
Oracle predefines the following three Accounting Methods:
• Standard Accrual: This accounting method can be used on most commercial company’s
primary and secondary ledgers using subledgers.
• Standard Accrual with Encumbrances: This accounting method can be used by public sector
organizations using subledgers.
• Standard Accrual for China: This accounting method is used exclusively by companies
operating in China.
Some companies may use a mixture of subledgers and non-Oracle subledgers. In this case, new
accounting rules need to be defined for the non-Oracle subledgers. The accounting methods that
Oracle owns can be modified only to include any newly registered non-Oracle subledgers. A best
practice is to duplicate a predefined accounting method and then modify it.
Or some companies may require subledgers to account for transactions differently than the
predefined methods. In this case, a new accounting method needs to be defined.
Finally, some companies may need a secondary ledger that accounts differently than the primary
ledger. For example, the primary ledger accounts using Generally Accepted Accounting Practices
(GAAP) rules and the secondary accounts using International Financial Reporting Standard (IFRS) rules.
In this case the primary ledger might use the predefined Standard Accrual accounting method. An
accounting method for the IFRS secondary ledger needs to be defined.

Accounting Event Model Example
The accounting event model is predefined for subledgers. The following example
shows an accounting event model for Payables:
Accounting methods are built on the accounting event model. Each accounting method includes the
accounting rules for each accounting event.
The accounting event model includes:
• Process Category: Consists of specific event classes and the event types within those classes.
To restrict the events selected for accounting, you can select a process category when you
submit the Create Accounting process. This may be useful for segmenting events due to
processing volumes.
• Accounting Event Classes: Categorizes transaction types and groups event types for
accounting rules.
• Accounting Event Type
- An accounting event type represents a business operation that may have an

accounting impact.
- For accounting event types, specify whether their accounting events have
accounting impact. When the Create Accounting process is submitted, it accounts
only business events that are enabled for accounting.

Payables Accounting Event Model
Event Category Event Class Event Type Accounting
Invoices Credit Memos Credit Memo Adjusted Yes

Credit Memo Canceled Yes
Credit Memo Validated Yes
Invoices Debit Memos Debit Memo Adjusted Yes
Debit Memo Canceled Yes
Debit Memo Validated Yes
Invoices Invoices Invoice Adjusted Yes
Invoice Canceled Yes
Invoice Validated Yes

Invoices Prepayment Prepayment Application Adjusted Yes

Applications Prepayment Applied Yes
Prepayment Unapplied Yes
Invoices Prepayments Prepayment Adjusted Yes
Prepayment Canceled Yes
Prepayment Validated Yes
10

Payments Payments Manual Payment Adjusted Yes

Payment Adjusted Yes
Payment Canceled Yes
Payment Created Yes
Payments Future-Dated Payment Matured Yes
Payments Payment Maturity Adjusted Yes
Payment Maturity Reversed Yes
Payments Reconciled Payment Cleared Yes
Payments Payment Clearing Adjusted Yes
Payment Uncleared Yes
Payments Refunds Refund Adjusted Yes
Refund Canceled Yes
Refund Recorded Yes
11
Multiperiod Accounting Classes: Use to create accounting entries across more than one accounting
period, for a single accounting event

Managing Accounting Methods and Rules Flow
Following is the order this course takes to demonstrate how to set up accounting methods
and rules:
• Custom Formulas (optional) • Description Rules (optional)
• Multiperiod Accounting (optional) • Supporting References (optional)
• Mapping Sets (optional) • Journal Line Rules
• Account Rules • Journal Entry Rule Sets
• Conditions (optional) • Subledger Accounting Method
12
The order this course takes is not necessarily the order that your company takes. However, some of
the rules and rule sets are dependent on each other and need to follow a certain order.
It is a best practice to create the lowest setting first. For example, because an Account Rule might need
to use a Mapping Set, the Mapping Set needs be defined first.

How the Different Types of Rules Fit Together
13
Navigate to: Others > Setup and Maintenance > Financials > Payables > Show: All Tasks > Manage
Subledger Journal Entry Rule Set.
This construct is called a journal entry rule set, which determines:
• The debit and credit lines to be generated.
• Which accounts to use.
• How to determine the accounting date.
• The descriptions to stamp on the entries.
• The supporting references to capture on the entries.
Journal line rules and corresponding account rules are mandatory to be able to generate an entry.
After the accounting rules are all defined, you assign them to a particular event class or type to
determine how a balanced journal entry is generated for that event class or type.
You can define multiple subledger journal entry rule sets for an accounting event class or accounting
event type. A single journal entry is generated per accounting event per ledger using the line
assignments from the journal entry rule set assigned to the accounting event class or accounting
event type.

Custom Formulas Overview
• Use results or custom formulas as sources in subledger accounting rule definitions.

• Facilitates complex derivation logic for subledger journal entry amounts.
14
Navigate to: Others > Setup and Maintenance > Financials > Payables > Show: All Tasks > Manage
Custom Formulas.
You can define custom formulas and use their results as sources in subledger accounting rule
definitions.
This facilitates complex derivation logic for subledger journal entry amounts, accounts, and
descriptions when values are not readily available in the source transaction systems.
Within the formula expressions you can use various operators like addition, subtraction, multiplication,
division, greater than, smaller than, and so on to derive values from standard source(s) and constants.
Calculations can be nested using parenthesis.

Managing Custom Formulas
• Derive a value that is used in a Journal Entry.

• Used on various accounting rule components.
15
A custom formula can be used by Subledger Accounting to derive a value that is used in a journal
entry, such as a journal amount or description.
A custom formula can be used to:
• Calculate a numeric value
• Derive an alphanumeric value
• Return a date value
It can also be used in any of the following accounting rule components:
• Journal line rule
• Account rule
• Mapping set
• Description rule
• Supporting reference

Formula Definition
Define custom formulas by using sources for the selected event class. Predefined
functions and conditions can also be used to derive the resulting value.
• Enter source in double quotes (").
• Enter constant values in single quotes (').
• Enter date values in the format YYYY-MON-DD.
16

Predefined Formula Functions
Type Function Description Example

Date YearNum Return the year of a date source in YearNum('2012-FEB-28')
4-digit format. returns the number 2012.
Return the month of a date source MonthNum('2012-FEB-28')
Date MonthNum
in numeric format. returns the number 2.
Return the day of a date source in DayNum('2012-FEB-28')
Date DayNum
numeric format. returns the number 28.
FirstDayOfYear('2013-Jul-11')
Return the first day of the calendar
Date FirstDayOfYear returns '01-Jan-2013' in date
year based on the parameter.
format.
LastDayOfYear('2013-Jul-11')
Return the last day of the calendar
Date LastDayOfYear returns '31-Dec-2013' in date
year based on the parameter.
format.
FirstDayOfMonth('2013-Jul-11')
Return the first day of the month
Date FirstDayOfMonth returns '01-Jul-2013' in date
based on the parameter.
format.
17


LastDayOfMonth('2013-Jul-11')
Return the last day of the month
Date LastDayOfMonth returns '31-Jul-2013' in date
based on the parameter.
format.
Return the date a specified number AddMonth('2013-JUL-11',2)
Date AddMonth of months after the date in the returns 11-SEP-2013 in date
parameter. format.
Round a number to a specific Round(183.1123, 2) returns 183.11

Arithmetic Round
decimal place. Round(183.1123, -1) returns 180
RoundUp(0.01) returns 1.
Arithmetic RoundUp Round up a number to an integer.
RoundUp(1.50) returns 2.
Origination Date, Last Day of
Arithmetic NumberofGLPeriod Predefined number function. Current Accounting Period) /
NumberofGLPeriod
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Round down a number to an RoundDown(0.01) returns 0.
Arithmetic RoundDown
integer. RoundDown(1.50) returns 1.
Arithmetic Power Return the power of a number. Power(3,2) returns 9.
Concatenate two strings into one Concatenate('This is ', 'a test.')
Alphanumeric Concatenate
single string. returns 'This is a test'.
Substring('How are you?', 3,5)
Alphanumeric Substring Extract part of a string.
returns 'w are'.
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Multiperiod Accounting – Deferred Expenses
Enables user to defer recognition of expenses incurred across multiple General Ledger
Periods to accrue.
• Invoice is automatically considered for multiperiod accounting if the multiperiod start
date and end date are provided either on the invoice line or invoice distribution.
• Deferred Expenses are assigned to accrual account provided until they are
recognized.
• Predefined proration formulas are
– Prorate based on number of periods
– Prorate based on number of days
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This feature in Oracle Payables is more commonly known as "Deferred Expenses“. Use Deferred
Expenses to create entries across more than one accounting period for a single accounting event.
Note:
The columns Start Date, End Date and Accrual Account are available under the column group
multiperiod accounting and are hidden by default.
The predefined multiperiod accounting rules use the proration formula based on the number of
periods.
You must customize the rules if you do not want to use the proration based on periods.
Multiperiod accounting entries are only generated after the invoice has been accounted.
The end date cannot be changed to a date that is earlier than the GL Date of the last multiperiod entry.

Multiperiod Accounting
21
Multiperiod accounting enables you to create accounting entries across more than one accounting
period, for a single accounting event using SLA. The functionality is primarily used to allocate prepaid
expense across multiple accounting periods.
You can:
• Determine how to distribute the amount across accounting periods.
• Specify a prepaid expense or deferral account.
• Preview Multiperiod journal entries before creating and posting final entries:
- Submit the Create Multiperiod Accounting process in Draft mode.
- Review the Multiperiod journal entries in the Create Multiperiod Accounting

Execution Report.

Implementation Steps
22
Other than seeded calculation methods, user can define a custom formula determining how to
distribute the entered amount across accounting periods. If required, you can use the Multiperiod
predefined sources. For example:
• Multiperiod Original Entered Amount
• Multiperiod Recognized Entered Amount
• Last Multiperiod Accounting Date
• Number of Days in Current Accounting Period
Define a non-multiperiod journal line rule for the deferral entry specifying the Multiperiod Class. This
rule is used to post the fee amount to the deferral account.
Important: If user want to use his own class other than seeded classes, initially define Multiperiod
classes using the Manage Subledger Accounting Lookups task.
Define a Multiperiod journal line rule for the recognition entry:
• Enable the Multiperiod option and assign the same Multiperiod Class.
• Assign the custom formula to the Entered Amount accounting attribute.
• Assign relevant sources to the Multiperiod Start Date and Multiperiod End Date accounting
attributes.

Assign both journal line rules to the same journal entry rule set with:
• A deferral account rule assigned to the non-multiperiod journal line rule.
• A revenue or expense account rule assigned to the Multiperiod journal line rule.
Schedule the Create Multiperiod Accounting process to run after the Create Accounting process so
that recognition journal entries are properly booked each period.

Multiperiod Accounting Example: Annual Rent Paid
in Single Installment
For annual rent paid in a single installment for leased accommodations from 01-JAN-
2016 to 31-DEC-2016, the rent expense must be booked:
• Initial Journal Entry for annual rent paid as Accrual (Prepaid Expense):
Entered DR (USD) Entered CR (USD)
Accrual (Prepaid Expense) 6000.00
Liability 6000.00
• Monthly Journal Entry for rent expense to split over the period of the rent:
Entered DR (USD) Entered CR (USD)

Recognition (Rent Expense) 500.00
Accrual (Prepaid Expense) 500.00
24
The subledger multiperiod accounting and user-defined formula features provide the ability to meet
and comply with accounting requirements, such as the FASB 91 for allocating annual rent paid in
advance over the period. This requirement of deferred recognition of expense is met by defining the
recognition of expense amounts with user-defined formulas.
Example:
• Annual rent was paid with the following information:
- Payment Date: 01-Jan-2016
- Annual Rent Expense Paid: USD 6000.00
- Monthly Rent: USD 500Rent duration: 12 months
• The advance paid rent must be split over the period of rent. Each portion must be recognized
as expense in the corresponding accounting periods, between Jan-2016 and Dec-2016. The
amounts in each period would depend on the proration formula used.

Using Multiperiod Subledger Accounting Rules
Accounting Hub users can define subledger accounting rules to create the Multiperiod
accounting entries. For example:
Journal Line Rules Account Rules Usage

Unearned Fee Income Unearned Fee Income Account Journal line rule for the deferral entry.
 Side = Credit Used to generate a credit line to the unearned fee
 Multiperiod Option = No
income account.
 Multiperiod Class = Loan Fee
The Entered Amount accounting attribute is

mapped to a source that provides the fee
amount.
Loan Fee Income Loan Fee Income Account Journal line rule for the recognition entry.
 Side = Credit Used by the Create Multiperiod Accounting
 Multiperiod Option = Yes
process to generate future entries with prorate
amounts, such as the CR 50.00 (USD) in the
 Multiperiod Class = Loan fee
example above.
 Multiperiod Start Date = Origination date
 Multiperiod End Date = Maturity date
The Entered Amount accounting attribute is

mapped to a formula to prorate the fee amount.
25
Define a custom formula to calculate the total entered amount to be recognized from the Multiperiod
start date until the end of current accounting period. Assign the formula to the Entered Amount
accounting attribute of the Loan Fee Income journal line rule.
The Create Multiperiod Accounting process calculates entered amount for the Multiperiod entries as:
Entered Amount = Amount Returned by Custom Formula - Multiperiod Recognized Entered Amount
• The Multiperiod Recognized Entered Amount is calculated and stored in the Accounting Hub
data model as the total amount recognized for the transaction in prior periods.
• The approach handles any rounding differences in prorated entered currency amounts.

Sample Custom Formula
Based on the formula below, the entered amount for the Multiperiod journal would be
calculated as follows:
Number of Periods Since Multiperiod Recognized Amount Returned from Multiperiod Journal Entered
Accounting Date Multiperiod Start Date Entered Amount (A) Custom Formula (B) Amount (B-A)
31-Jul-16 1 0.00 300.00*1/6=50.00 50.00
31-Aug-16 2 0.00+50.00=50.00 300.00*2/6=100.00 100.00-50.00=50.00
30-Sep-16 3 50.00+50.00=100.00 300.00*3/6=150.00 150.00-100.00=50.00
31-Oct-16 4 100.00+50.00=150.00 300.00*4/6=200.00 200.00-150.00=50.00
30-Nov-16 5 150.00+50.00=200.00 300.00*5/6=250.00 250.00-200.00=50.00
31-Dec-16 6 200.00+50.00=250.00 300.00*6/6=300.00 300.00-250.00=50.00
26
This sample custom formula definition can be used to prorate the loan fee amount.
Prorate by Number of Periods
To prorate the entered amount evenly across each period:
"Fee Amount" * NumberofGLPeriod ("Origination Date", "Last Day of Current Accounting Period") /
NumberofGLPeriod ("Origination Date", "Maturity Date")
Where the:
• Fee Amount, Origination Date and Maturity Date are standard application sources
(Application: Loans).
• Last Day of Current Accounting Period is a system source (Application: Subledger

Accounting).
• NumberofGLPeriod is a predefined Date function.
Note: The Create Multiperiod Accounting process calculates the:
• Amount Returned from Custom Formula (B)
• Multiperiod Journal Entered Amount (B-A)

Prerequisites
Provide date format sources to store the Multiperiod start and end dates in transaction
objects.
For the event class that supports Multiperiod accounting, assign the above sources to
the accounting attributes:
• Multiperiod Start Date
• Multiperiod End Date
Define the Multiperiod class in the subledger accounting lookup. The Multiperiod class
is used to identify the journal line for which the amount is prorated across multiple
accounting periods
Note: The prerequisites are predefined by the development team.
27
Accounted amounts for Multiperiod journals are calculated by the Create Multiperiod Accounting
process prorating proportionally to the entered amount. Rounding error differences are included in the
prorated amount.
Multiperiod transaction data must be available in transaction objects until the last Multiperiod entry
has been accounted in final status.

The Create Multiperiod Accounting Execution Report
When you submit the Create Multiperiod Accounting process, the Create Multiperiod
Accounting Execution Report is submitted automatically if the Create Multiperiod
Accounting process completes with a status of:
• Success
• Warning
The report displays entries created by the Create Multiperiod Accounting process.
28
You can preview multiperiod journal entries before creating and posting final entries:
• Submit the Create Multiperiod Accounting process in Draft mode.
• Review the multiperiod journal entries in the Create Multiperiod Accounting Execution Report.
The Create Multiperiod Accounting Execution Report can be recreated as needed using the following
criteria:
• Submit the Create Multiperiod Accounting process.
• Use the same request identifier of the wanted Create Multiperiod Accounting process run
previously by the same user, provided that no other Create Multiperiod Accounting process
was run with the same criteria.

Mapping Sets Overview
29
Mapping sets are used by account rules to provide an efficient way to derive segment values or
account combination values (output) from one or more source transaction or reference attribute
values (input). Using such input and output mappings is simpler than using complex conditions on
account rules.
For example, a mapping set could derive values for a single segment, such as the cost center from the
source system’s product descriptions. Or a full account combination, such as the Accounts Receivable
account from the customer.
With mapping sets you can:
• Use up to 10 transaction or reference attributes as inputs into a mapping.
• Define a default output value to use when actual input values do not match the mappings.
• Use wildcards for multiple input mapping sets to indicate that the value of a particular input
should be ignored for certain mappings.
• Enter the mappings directly on the user interface or use the spreadsheet available in the
Export option, and then import. The spreadsheet method enables:
- Exporting a template to create new mappings.
- Exporting all mappings already created to add or edit the current mappings.
• Reuse on more than one account rule.

Creating Mapping Sets
Mapping sets require the following:

• Name and Short Name
• Output Type
• Subledger Application
• Input Sources
• Chart of Accounts or Value Set
• Mapping Input and Output Values
30
When creating a mapping set the following is required:
• Name and Short Name: Give your mapping sets a meaningful name because it is available in
a list of values on an account rule. The Short Name is used as a code in the table and cannot
have any spaces and must be uppercase.
• Output Type: You can choose Segment, Account Combination or Value Set. The output type
determines what the other elements required. For example, Segment requires a Chart of
Accounts segment to be identified such as Cost Center.
• Subledger Application: Mapping sets are unique to each subledger application in order to
know which input sources to make available. This is scoped at the start of the new mapping
set.
• Input Sources: You must choose based on the subledger application and event class the
source for the values to be used in the input section. Use up to 10 sources as inputs into a
mapping.
• Chart of Accounts or Value Set: The output type determines what is required.
- Segment Output Type: Chart of Accounts name and segment are required.
- Account Combination: Chart of Accounts is required.
- Value Set: Value set name is required. When this is done, the mapping set can be
reused across any chart of accounts that uses that value set.

• Mapping Input and Output Values: You can enter the mappings directly on the user
interface or use the spreadsheet available in the Export option, and then import. With input
and output values you can:
- Map the input source values (Note: No list of values is available) to the output values
(Note: a list of values is available)
- Define a default output value to use when actual input values do not match the
mappings.
- Use wildcards for multiple input mapping sets to indicate that the value of a
particular input should be ignored for certain mappings.

Account Rules Overview
Account rules are ultimately used on Journal Entry Rule Sets to derive the accounts for
the debits and credits of an event class.
Account rules have three main elements:
• Rule Type
• Value Type
• Conditions
32
Account rules are the most critical elements of an accounting method because it derives the accounts
for the debits and credits of an event class.
Multiple account rules are used on an accounting rule set; at least one for the debit and one for the
credit.
You can specify the conditions under which the account rules apply. Using these capabilities, you can
develop complex rules for defining accounts under different circumstances to meet your specific
requirements.
The three elements of an account rule are detailed in subsequent slides.

Rule Types
Account rules must be one of three types:

• Account Rules by Account
• Account Rules by Segment
• Account Rules by Value Sets
33
The rule types are similar to the mapping set output type. If using a mapping set on the account rule,
the account rule must use the same rule type as the mapping set output type.
Account Rules by Account
• Define account rules by account to determine the entire account combination. If using a
mapping set on the account rule, the mapping set must also be defined with the Account
Combination output type.
Account Rules by Segment
• Define segment rules to derive a specific segment of the general ledger account. If using a
mapping set on the account rule, the mapping set must also be defined with the Segment
output type. Segment-specific rules take precedence over the account rule by account.
Account Rules by Value Sets
• Define account rules based upon value sets rather than chart of accounts. This enables you to
share the same rule between more than one chart of accounts if the segments in these charts
of accounts share the same value set. If using a mapping set on the account rule, the
mapping set must also be defined with the Value Set output type.

Value Types
Account rules have five Value Types:

• Account Rule
• Constant
• Mapping Set
• Source
• Formula
34
Value types determine where or how the system finds the account combination value, segment value,
or value set value. The choices are:
• Account Rules: Use an existing account rule. This is useful if using a condition. If the
condition is not met you can use an existing account rule as the 2nd priority.
• Constant: Use a specific value for the whole combination value, segment value, or value set
value. For example, you need to use a specific liability account for the Invoice event class. You
can have the constant achieve this.
• Mapping Sets: Use to associate specific source values with segment values.
• Source: Use a source where an account combination or segment value exists in the source
table. For example, an external Billing system might have the revenue account on the invoice
it creates. So the source could be the revenue account column of the staging table.
• Formula: Use a user-defined formula for more complex rules.

Account Rules Best Practices
Define an account rule once and use it multiple times:

• Define a source or constant-based account combination rule.
• If possible, use an account combination rule rather than building segment by
segment.
35

Conditions
Conditions are used to refine the details of the results of the journal created by the
accounting method.
The Create Accounting process evaluates conditions based on the priority of the rule
detail. When the condition is met, the rule is applied.
The following can have a condition:
• Account Rule
• Description Rule
• Journal Line Rule
36
Conditions can help refine the details needed on the results of the journal generated from the
accounting method during the creating accounting process. You can use sources to create these
conditions.
For example, you might want a specific account number generated for billings dated this year over
next year. The account rule condition could achieve this. When using a condition you must have at
least 2 priority lines on the rule. Priority 1 would be for this year and priority 2 for next year. The Create
Accounting process evaluates conditions based on the priority of the rule detail. When the condition is
met, the rule detail is applied.
• Journal Line Rules
- Journal line rule conditions determine whether a journal line rule and its associated
account rules and description rules are used to create the subledger journal entry
line.
• Account Rules
- Determine the accounts for subledger journal entry lines.
• Description Rules
- Determine both the content and sequence in which the elements of the description
appear.

Conditions
Constant values that are used in any Conditions section must not contain the following
characters:
“ , & | ( ) ‘
37
For example, in the condition "Project Type" = ABC (123), the constant value following the equal sign,
ABC (123), contains restricted characters ( ), which enclose 123 and are invalid.

Practice 13-1 Overview: Creating Three Account Rules

• Creating three account rules.
• Adding a condition.
38

Description Rules
Use description rules to define the elements of a description that appear on the
subledger journal entry at the header and/or the line level.
• The definition determines both the content and the sequence in which the elements
of the description appear.
• Assign conditions to determine that the description is selected for display if a
condition is satisfied. The conditions are associated with priorities like account rules.
• Descriptions are transferred to the General Ledger only if the General Ledger Journal
Entry Summarization option is set to either:
– Group by general ledger period
– Group by general ledger date
39
• A description rule can be defined with combinations of source and literal values. If sources are
used in the rule, the accounting event class associated with the source determines in which
subledger journal entry rule set the description rule can be selected and used.
• You can build descriptions using any available source from the application.
• For example, you want to see Supplier Name and Transaction Type on the Header of the
subledger journal. The following are description details that would be entered, using literals
and sources:
- Literal = Supplier:, Source = Supplier Name
- Literal = , (Comma)
- Literal = Transaction:, Source = Transaction Type
• The result on the Journal would be, “Supplier: Advantage Corp, Transaction: Invoice.”
• Descriptions can be transferred to the General Ledger based on the General Ledger Journal
Entry Summarization Options.
- If the value is Group by GL Date or Group by Accounting Period, each line

description for each journal entry transferred to GL in the same group is displayed
and visible.

- If the value is Summarize by GL Date or Summarize by Accounting Period and if all
lines can be summarized, each line description is not displayed.
- In both cases, when drilling down to subledger, all descriptions are still available and
displayed.

Practice 13-2 Overview: Creating a Description Rule
This practice covers creating a description rule for Payables.
41

Supporting References
• Supporting references are used to store additional source information about a

subledger journal entry either at the line or header level.
• Supporting references can calculate or maintain a balance based on a transactional
data source transferred through subledger accounting.
• Supporting reference balances are not transferred to the General Ledger.
42
Supporting references can be defined using either of these options (located on tabs):
• With Balances
- Facilitates reconciliation back to the subledgers and source systems by tagging

journal entries with transaction and reference attributes.
- Creates a report on balances by dimensions not captured in the chart of accounts.
- Enriches Oracle Business Intelligence Applications reporting on subledger journals.
- Maintains balances that can be carried forward into the next fiscal year or start over
each fiscal year. For example, you can maintain a balance of revenue each year by
account manager.
• Without Balances aids in slicing and dicing data of a journal.
Note: Supporting reference balances are not transferred to the General Ledger and are accessible only
in Subledger Accounting screens or Oracle Transactional BI reports and analysis. Oracle Limits the
number of supporting references with balances defined to thirty. You can consider adding more
source assignments to predefined supporting references, rather than creating a new one. Supporting
references without balances has no limit to the number of supporting references.

Journal Line Rules
The journal line rule determines how each debit and credit entry is created. It defines:
• Accounting class.
• Side as debit, credit, gain, or loss.
• Sources that drive the values on the entry, such as amount. Accounting attributes link
sources to specific journal entry line values such as the accounted amount.
• Advanced setup features, such as business flows and summarization options.
43
Characteristics of journal line rules are as follows:
• Are defined within the context of accounting event classes.
• Are used in a subledger journal entry rule sets that have the same event class.
• Can contain conditions that determine when they are used to create a line.
To create a journal line rule, select values for options such as:
• Side (Debit, Credit, Gain, or Loss): For example, to create a journal line rule to capture
revenue, you could create a credit line rule.
• Merge Matching Lines: To summarize or not to summarize subledger journal entry lines
within each subledger entry. This setting does not affect the journal in the General Ledger. It
affects the detail seen in Subledger Accounting from the drilldown. The choices are:
- No: No summarization of lines.
- All: Lines are merged only if they share the same account combination, description,
supporting reference values, and accounting class. This merges debits and credits
together.
- Debit or Credit: Merges only the Debits together for the same account combination
and merges only the Credits together.

• Accounting Class: To classify journal entry lines. For example, a line used to record the
collection of cash would typically have an accounting class of Asset.
• Conditions: Used to restrict the use of a journal line rule by controlling when a particular
journal line rule is used by the Create Accounting process. For example, generate a freight
expense line if freight charges exist. Or generate a tax line if tax is associated with a
transaction. The journal line is created only if the conditions evaluate to true.
Advanced Options
• Rounding Class: Groups lines together to determine if rounding is necessary.
• Link Journal Lines: Whether or not to copy a line description from another journal line.
• Business Flows: If a business flow is used the Create Accounting process does not use an
account rule to derive the account for the debit or credit. The choices for a business flow are:
- Same Entry: Tells the Create Accounting process to use an account already derived
in the same journal.
- Prior Entry: Tells the Create Accounting process to use an account from a
dependent or prior journal. For example, you usually want the Payables payment
liability account to use the same liability account as the Payables invoice that it paid.
So, the prior entry for the payment debit line is the invoice credit line account.
Accounting Attribute Assignments: When creating a journal line rule, accounting attribute
assignments are automatically established based on the default accounting attribute assignments for
that journal line rule's accounting event class. You can override this default mapping of standard
sources to accounting attributes. The list of values for the source override includes all sources
assigned to the accounting attribute for the event class associated with the journal line rule. For
example, an accounting attribute can be amount, GL date, currency, and so on.
Note: Refer to the Oracle Financials Cloud: Implementing Subledger Accounting guide for more
information on Journal Line Rule advanced options.

Practice 13-3 Overview: Creating Two Journal Line
Rules
This practice covers creating two journal line rules.
45

Journal Entry Rule Sets
Each subledger application has a unique journal entry rule set that contains the rules
for creating journals. It contains:
• Event Class and Type.
• Journal Line Rules.
• Account Rules.
• Descriptions (Optional).
• Supporting References (Optional).
46
A subledger journal entry rule set is a collection of rules that generates a complete journal entry for an
accounting event. Each subledger application has its own journal entry rule set definitions that join all
the other accounting rules together. Each event class and type combination must have at least one
debit and one credit line defined. Each debit and credit line must contain:
• A journal line rule.
• An account rule or rules.
Each line can optionally contain:
• A description rule.
• A supporting reference.

Creating Journal Entry Rule Sets
Journal Entry Rule Sets define the:

• Journal Entry Rule Set Header
• Journal Header
• Journal Lines
47
Before defining the Journal Header and Lines, the journal entry rule set header must be defined. It
contains:
• Name and Short Name.
• Event Class
• Event Type
• Chart of Accounts: This is required only if any account rules to be used in the journal entry
rule set have been defined with a chart of accounts. The two chart of accounts must be the
same.
The Journal Entry Header contains:
• Accounting Date: How to derive the effective date of the journal. The choices are:
- Journal Entry Creation Date: The date the journal is created by the Create
Accounting process.
- Accounting Event Date: The date the journal is transferred to the Accounting
Events table.
- Transaction Date: The date of the transaction in the external subledger application.
• Description Rule (Optional): If you defined a description rule, you may add it here or at the
line level.

The Journal Entry Lines contain:
• Line Type: Gain, Loss, Gain or Loss, Credit, or Debit.
• Journal Line Rule: The journal lines rules side must match the line type chosen.
• Accounting Class: Defaults from the journal line rule.
• Account Combination Rule and/or Segment Rules: You include both types on the line. For
example, you can put an account combination rule on the revenue or credit line to derive the
complete combination and then put a segment rule on Cost Center to replace the
combination rule’s cost center value with different values. If the rules are defined with
sources, all sources must have been assigned to the same event class that is associated with
the journal entry rule set. A supporting reference can be used only on a journal entry rule set
if it is defined with a source from the event class of that journal entry rule set.
• Line Description Rule (Optional)
Supporting references: Each journal line can have a supporting reference or multiple supporting
references.

Practice 13-4 Overview: Creating a Journal Entry Rule
Set
This practice covers creating a journal entry rule set.
49

Accounting Methods
Accounting Methods are required for subledger financial transactions to be

transferred to the General Ledger. You can:
• Modify a predefined accounting method (with restrictions).
• Duplicate an existing or predefined accounting method and then modify it.
• Create a new accounting method.
50
In order for an accounting entries to occur, an Accounting Method must be configured and attached to
a Primary and/or Secondary Ledger. The ways to configure an accounting method are:
• Modify one of the accounting methods that Oracle predefines. You are restricted to
modifying any details only for a newly registered non-Oracle subledgers.
• Duplicate an existing or defined accounting method and then modify it. This is a best practice
because it ensures that the original accounting method is not corrupted.
• Create a new accounting method without duplicating an existing one. A best practice is to do
this only if you are not implementing any Oracle Subledger Applications.

Creating or Modifying Accounting Methods
When creating or modifying an accounting method, you must:

• Give it a name.
• Optionally attach a chart of accounts.
• Enable a subledger application.
• Assign Journal Entry Rule Sets by event class and event type for
each subledger application.
• Activate the journal entry rule set assignments.
• Assign the accounting method to a ledger or ledgers.
• Run the Update Subledger Accounting Options process.
51
At the time of creation or modification of an accounting method you must:
• Give it a name or new name: Naming conventions are important and must reflect the nature
of the accounting method. For example, if creating an accounting method for a secondary
ledger using GAAP rules you might name it: Standard Accrual SL US.
• Optionally attach a Chart of Accounts: If the Journal Entry Rule Set used is defined with a
chart of accounts then you must attach the same chart of accounts to the accounting
method.
• Enable a Subledger Application: All of the subledger applications are displayed on the page
as tabs. Enable the subledger application tab you need to configure.
• Assign Journal Entry Rule Sets: For each event class, event type combination assign a
journal entry rule set. The Create Accounting process uses the rule set to create the journals.
You can assign multiple journal entry rules to an event class or type, using non overlapping
effective dates. This can be used to accommodate changes in accounting methods due to
new regulations or corporate policies.
• Activate the Journal Entry Rule Set Assignments: Click the Activate button in the journal
entry rule set assignments section. All the assigned journal entry rule set must be Active for
the accounting method to be used by the Create Accounting process. This validates the
journal entry rule set and its subcomponents. It also generates compiled code for the
accounting engine.

• Assign the new accounting method to a ledger or ledgers: When assigning an accounting
method to a ledger, you must select an accounting method that uses the same chart of
accounts, or an accounting method that does not have an assigned chart of accounts.
Accounting methods are required on both primary and secondary ledgers.
• Run the Update Subledger Accounting Options process: This process Activates the ledger
options for newly registered non-Oracle applications. Ledger options include things like using
suspense accounts upon error during the accounting process, whether to sequence subledger
journals, intercompany processing and so on.

Practice 13-5 Overview: Duplicating and Modifying an
Accounting Method
• Duplicating the Standard Accrual Method.
• Modifying the accounting method.
• Activating the journal entry rule set assignment..
• Attaching the accounting method to your secondary ledger.
53

Migrating the Accounting Configuration
• Migrate setup task lists from one instance to another for specific subledger
applications or all subledger applications.
• Use the export and import functionality in the Setup and Maintenance work area.
54
When migrating accounting rules from one instance to another, you must migrate task lists in their
entirety. The migration requirements are:
• Journal entry rule sets and accounting methods must be successfully activated. Invalid
journal entry rule sets or accounting methods causes import failure.
• Ensure that your setup data migration includes all dependent business objects from other
required setup tasks, such as Define Ledgers. The import sequencing of these dependent
business objects must be prior to accounting rules business objects.
Note: See the Introducing Functional Setup Manager lesson for additional information on the export
and import process.

The Create Accounting Process
The Create Accounting process can be scheduled to run periodically or submitted on

demand.
55
The Create Accounting process is an Enterprise Scheduler Service (ESS) process. It can be submitted as
a request from the Scheduled Processes Monitor to create journal entries for a batch of events. It can
be submitted dynamically (on demand) or scheduled to run periodically. The process is submitted
separately for each subledger or source system. Following are the input parameters that determine the
execution mode and the selection criteria for events:
• Subledger Application: Source system for which the Create Accounting process is being
executed.
• Ledger: Ledger name for which the Create Accounting process is being executed.
• Process Category: Selecting a process category indicates that all associated accounting event
classes and their accounting event types are selected for processing.
• End Date: End date puts a filter on the selection of events. Only events having event date on
or before the end date are selected for accounting. Default value is current system date. If the
process is scheduled to execute periodically, after the initial process, the End Date for each
subsequent scheduled process is incremental.
• Accounting Mode:
- Draft: Creates the journal in Subledger Accounting only. You can view the journal in
Subledger Accounting but not in General Ledger. This mode is useful for testing new
or modified journal entry rule sets.
- Final: The default value that creates journals in Final status in Subledger Accounting
which are eligible to be transferred to General Ledger.

• Process Events: Adds other filter criteria for the Create Accounting process to select events:
- All: Process all events. Default is All
- Errors: Process only those events that have previously been processed in error.
- Invalid Accounts: Process only those events that have previously been processed in
error. Replace any invalid accounts with the suspense account.
• Report Style: Users can choose to decide on the details of the execution report. The report
can be printed in Summary, Detail, or No report. Default value is Summary.
• Transfer to General Ledger: Indicates whether the Create Accounting process should submit
the Transfer to GL process; Yes, No. Default value is Yes. Only journals in Final status are
eligible to be transferred.
• Post in General Ledger: Indicates if users, who have been granted the posting privilege, want
to submit General Ledger posting; Yes or No. Default value is No. If No is selected, the journal
can be reviewed in General Ledger and then posted either manually or through AutoPost.
• Journal Batch: Batch name used by Transfer to GL to decide on the batch name for the batch
created in General Ledger. When a value for the batch name is not provided, journal import
defaults are used. This is a free text field.
• Include User Transaction Identifiers: Default value is No.

Manual Features of Subledger Accounting
In Subledger Accounting, you can also use these two manual features:
• Manual Subledger Journal Entries
• Account Override on a Subledger Journal Entry
57
Oracle Subledger Accounting (SLA) also provides two manual features:
• Manual Subledger Journal Entries: This is useful for creating adjustments that cannot or do
not have a transaction associated with it.
- Use the Create Subledger Journal Entry task.
- These journal entries are processed through the Create Accounting process and
then transferred and posted to the Oracle General Ledger.
- The transferred journals have the a subledger name as the source of the journals.
• Account Override on a Subledger Journal Entry: If you don’t want to use the manual
subledger journal entry feature to make adjustments, you can use the account override
feature on a journal created through the Create Accounting process using the final mode.
This feature:
- Ensures proper accounting and expedites error correction by editing accounts

directly on a completed subledger journal entry.
- Is available from the Review Subledger Journals task and the Manage Journals task.
- Provides an audit trail by keeping the original entry visible. A reason for the
adjustment is also recorded.
- Does not adjust the original source transaction.

Advanced Features of Subledger Accounting
The advanced features include:

• Subledger Accounting Profile Options
• Accrual Reversals
58
The advanced features of Subledger Accounting are:
• Subledger Accounting Profile Options: Set values for each profile option to specify how
Oracle Subledger Accounting (SLA) controls access to and processes data.
• Accrual Reversals: The Create Accounting process generates an entry that reverses the
accrual entry.

Subledger Accounting Profile Options
Profile Option Profile Display Name Profile Description

Control whether transaction data
XLA_DIAGNOSTIC_MODE Diagnostics Enabled used in accounting generation
should be gathered for diagnostics.
Control whether subledger journal
XLA_DISABLE_GLLEZL Journal Import Disabled entries are imported to the general
ledger.
Specify whether the target for
transfer and post subledger journal
XLA_ENABLE_TRANSFER_TO_EBS_GL Enable Transfer to Oracle EBS GL
entries is Oracle E-Business Suite
General Ledger.
Specify whether the target for
Enable Transfer to Oracle transfer and post subledger journal
XLA_ENABLE_TRANSFER_TO_PSFT_GL
PeopleSoft GL entries is Oracle PeopleSoft General
Ledger.
59

Subledger Accounting Profile Options
Profile Option Profile Display Name Profile Description

Set the interval in seconds for online
Online Accounting Request Polling
XLA_OTE_OLA_POLLING_INTERVAL accounting engine to check for
Interval
incoming accounting requests.
Number of Online Accounting Set the number of processes for
XLA_OTE_OLA_PROCS
Processes online accounting.
Set the number of seconds online
Online Accounting Processing accounting engine attempts to
XLA_OTE_OLA_TIMEOUT_LIMIT
Timeout Limit process a transaction before timing
out.
Zero Amount Journal Lines
XLA_SHOW_ZERO_AMT_JRNL Show zero amount journal lines.
Displayed
60

Accrual Reversals Flow
61
Accrual Reversal Process Steps
1. Assign a date source to the Accrual Reversal Accounting Date Source accounting attribute
from the Manage Accounting Attributes task. Use this attribute to schedule the automatic
reversal of a journal entry. Assign any standard date source or one of the following
application sources to the Accrual Reversal Accounting Date Source accounting attribute:
- Next Day: The accounting date of the accrual reversal is the next day following the
accounting date of the accrual entry.
- First Day of Next Accounting Period: The accounting date of the accrual reversal
entry is the first day of the following accounting period.
- Last Day of Next Accounting Period: The accounting date of the accrual reversal
entry is the last day of the following accounting period.
- Note: You can override the Accrual Reversal Accounting Date Source accounting
attribute values on the journal entry rule set if multiple sources have been assigned to
the accounting attribute.
2. Create an accounting event in the subledger application.

3. Submit the Create Accounting process. The Create Accounting process creates the accrual
journal entry as well as the accrual reversal journal entry. The process creates the accrual
reversal entry to negate the impact of the accrual entry. The Manage Subledger Accounting
Options, Reversal Method option enables entries to appear as debit and credit signs reversed
or to have negative amounts. The status of the accrual reversal journal entry is based upon
both the:
- Accounting period status of the accrual reversal journal entry accounting date.
- End Date specified in the Create Accounting process parameters.
4. Submit the Create Accrual Reversal Accounting process to complete accrual reversals in
future accounting periods as the periods are opened.
5. View accrual reversal accounting entries.

Online Accounting Messages
Click here to see the error details.
63
If online accounting fails for a subledger transaction, warning and error messages display in the
Accounting Lines window. To access the Accounting Lines screen, click on View Accounting. This
feature eliminates the need to run the Create Accounting process from the Scheduled Processes page
to see the error details.

Accounting Lines Window
The Accounting Lines window displays a number of detail-rich error messages.
Journal Level Errors
Line Level Errors
Expanded Line Details
64
Journal level errors display in the Message section. For example, errors due to period status.
Line level errors contain a red exclamation point icon next to the line number. For example, an error
due to a disabled account. Expand the corresponding line details to see more details about the error.
The same detail-rich accounting messages are also displayed also in the Review Journal Entries page
for all invalid subledger journal entries, including those created by running the Create Accounting
process, not just through online accounting.
Note: You can export the accounting lines with the detailed message text into a spreadsheet from
within the Accounting Lines page.
For additional information, refer to Manage Subledgers: Overview (Oracle Financials Cloud Using
Subledger Accounting).

Summary

• Explain the role of accounting methods in the Create Accounting process.
• Understand the key features of accounting methods.
• Configure and manage accounting methods.
• Discuss the Create Accounting process.
• Understand manual journal entries and adjustments.
• View the created journal entries.
• Explain the advanced features of Subledger accounting
65

14
Configuring Oracle Cash Management

Objectives

• Understand the key features of Cash Management.
• Define banks, branches, and accounts using the Rapid Implementation process.
• Configure Bank Statement Processing and Reconciliation.
• Describe the advanced features of Cash Management.

Cash Management: Overview
Cash management integrates with several Oracle Cloud Applications. You can Import bank statements
in to Cash Management and reconcile either manually or automatically. Following are the applications
and transaction types used during the reconciliation process:
• Oracle Receivables: Receipts
• Oracle Payables and Payments: Payments
• Oracle Payroll: Payroll payments
All the above applications transfer to the Oracle General Ledger using the Create Accounting process.
Cash Management transfers miscellaneous cash transactions such as bank charges, interest, and fees
to the General Ledger.
Bank Statements can be reconciled directly from GL Journal Entries.

Set Up and Maintain Banks, Branches, and Bank
Accounts
Banks, branches, and accounts fit together on the premise of the Bank Account model. Banks and
branches are in the Trading Community model. The Trading Community model also includes
customers, suppliers, legal entities, and employees.
The bank account setup pages enable you to define and keep track of all bank accounts in one place
and explicitly grant account access to multiple business units, functions, and users.
This eliminates the redundant duplicate bank account setup under different business units when these
business units share the same bank account.
Oracle recommends that you use the Rapid Implementation Spreadsheet task to create your banks,
branches, and accounts if you have a large number of banks, branches, and bank accounts to create.
Otherwise use the Manage Banks, Manage Branches, and Manage Accounting tasks from the
Functional Setup Manager to create and maintain banks, branches, and bank accounts.
Bank accounts are defined in Oracle Cash Management. Each bank can have multiple branches and
each branch can have multiple accounts.
When you enable a bank account for use with Payables, you can associate the account with multiple
payment documents.
When you set up your suppliers, you can also set up supplier bank accounts.

Manage and Maintain Banks
Required information for bank setup:

• Country
• Bank Name
Creating a bank is the first step in the bank account creation. You can create a new bank from an
existing party. If a party with the same name for the same country is found after the bank name is
entered, a message asks whether you want to use that party to create the bank. The option is available
only after the existing party has been found with the same name and country.
Create, edit, or update bank information:
• Country: Some country-specific requirements may exist for setting up a bank.
• Bank Name: Must be unique within a country.
• Addresses (Optional)
• Contacts (Optional)

Manage and Maintain Branches
Required information for branch setup:

• Bank Name
• Branch Name
After you have created your bank, you create a branch or branches associated with the bank. The
matching option is also available when you are creating branches. To create a new branch without
using the matching option, manually enter the information required. You can define other branch-
related attributes on the page. If you do not use the matching option when an existing party is found, a
branch with the same party name is created.
Create, edit, or update branch information:
• Bank: The bank associated with this branch.
• Branch Name: Must be unique within a bank.
Optional Details:
• Alternate Branch Name
• Routing Transit Number
• Description
• BIC Code
• Branch Number Type
• Bank Branch Type

• EDI ID Number
• EFT Number
• EDI Location
• RFC Identifier
• Addresses
• Contacts

Manage and Maintain Bank Accounts
Four areas are associated with defining an account:

• General Information
• Control of the Account
• Security Access to the Account
• Business Unit Assignment
When the bank and branch are created, you can proceed to the bank account setup. Select the bank
branch you want to associate with your bank account. Four areas are associated with defining the
account: general information, control of the account, security access to the account, and business unit
assignment. If this bank account is for Payables or Receivables, the Business Unit Access needs to be
added first for the business units to use this bank account.
The Header section provides:
• The Account Name: Due to the sensitivity of bank account numbers, the bank account name
is often used to identify a particular bank account and must be unique across the system.
Oracle recommends that you use defining attributes such as account use, bank, and currency
in the bank account name.
• Account Number: Issued by the bank.
• Currency: Usually the currency of the ledger and owning legal entity.
• Legal Entity Name: The owning legal entity of the bank account. The legal entity must have a
primary ledger associated with it before it shows up in the legal entity list of values.
• Account Use: Select Payables, Payroll, Receivables, or a combination of these.

General Tab
The General tab provides:

• GL Accounts
• Additional Information
• Contacts
• Payment Documents
The General tab provides:
• GL account information: Consider assigning a unique GL cash account and cash clearing to
each bank account. This facilitates book to bank reconciliation. If you are using bank
statement reconciliation, all subledger cash transactions initially account to the cash clearing
account. When the bank statement reconciliation process is complete, the cash transaction is
then moved from the cash clearing account to the cash account.
• Additional information: Provides information such as Alternate Account Name, Account

Holder, Alternate Account Holder, EFT Number, Agency Location Code. You can also select
whether the account is Active, can use multiple currencies, and is a netting account.
• Contacts: Used to record who can be contacted by phone or email.
• Payment Documents: Used during the Payment Process Request process to create a check.
See the next slide for more details.
Note: If the customer wants to use Bank Account only for Payroll then GL Accounts can be given at
General tab. Incase customer wants to use the bank account for Payables or Receivables then the
GL Accounts has to be given at Business Unit Access tab.

Payment Documents
Used during the Payment Process Request process to create a check. Payment
documents include:
• Payment Document Name
• Paper Stock Type
• First Available and Last Available Document Number
• Format
10
Every bank account that is to print checks must have a payment document defined. The definition
includes:
• Payment Document Name: Consider using a name that reflects the type of payment, for
example BofA Printed Check.
• Paper Stock Type: The choices are
- Blank Stock: Indicates that the check stock provided by the bank does not has
neither the check number nor the formatting.
- Numbered Stock: These are preprinted checks. The format for this type fills in the
check and the numbers must be synchronized with the system’s numbering.
- Number of Setup Documents: This is useful if you are using Numbered Stock and
need to run a few test documents to ensure that the format fits the preprinted
check.
- Format: Indicates the BI Publisher template to be used for generating the check.
- First Available Document Number: This is required for blank stock and numbered
stock. This keeps the documents in synchronization with the system numbering.
- Last Available Document Number: Indicates the last number of the available check
stock and is mandatory for numbered stock.

Control Tab
Cash Management Controls:

• Reconciliation
• Bank Statement Processing
• Bank Statement Transaction Creation Rules
• Cash Positioning and Forecasting
• Payables Controls
11
The control tab provides control information for Cash Management and for Payables.
Assign the following items for Cash Management Controls:
• Reconciliation:
- Manual Reconciliation Tolerance Rule
- Bank Exchange Rate Type
- Automatic Reconciliation Rule Set
- Reconciliation Start Date
- Reversal Processing Method
• Bank Statement Processing:
- Parsing Rule Set
- Bank Statement Transaction Creation Rules
• Cash Positioning and Forecasting:
- Target Balance
- Transaction Calendar

Assign the following items for Payables Controls:
• Pooled Account: If you use Automatic Offsets and you want to associate multiple legal entities
with this bank account, then enable this option. When you enable the Automatic Offsets
Payables option, Payables creates one offsetting liability distribution for each invoice
distribution. If you pay an invoice from a pooled bank account, then when Payables accounts for
the invoice payment, Payables creates one corresponding cash accounting entry for each
liability distribution.
- In addition, Payables builds the cash account based on the cash account defined for
the bank account and the account segments of the liability lines.
- If you do not use a pooled account, then when the payment is accounted, a single
accounting entry is created for the cash account, using the cash account that is
defined for the bank account without modifying any account segments.
• Minimum/Maximum Payment: This refers to the smallest and largest payment amounts that
you allow in a pay run. When you initiate a pay run using the bank account, Payables uses the
bank account’s maximum payment as a default. You can override this default.
• Allow Zero Payments: If you allow zero-amount payments from this bank account, enable this
option.
• Maximum Outlay: The largest amount outlay that you allow for a pay run for this bank account.
If the total outlay of a pay run exceeds the maximum outlay for the pay run, Payables displays a
warning, but enables you to continue processing the pay run. The maximum outlay for a bank
account is supplied by default from the Payables Options window. When you initiate a pay run
using the bank account, Payables uses the bank account’s Maximum Outlay as a default. You
can override this default.

Security Tab
Further secure bank accounts by:

• Users
• Roles
13
You can further secure the bank account so that it can be used only by certain users and roles.
The default value for secure bank account by users and roles is No. In Payables and Receivables, even
if the secure bank account by users and roles is no, you must have proper access to the bank account.
If the secure bank account by users and roles is set to Yes, you must be named or you must carry a role
that is named expressly on the bank account to use it.

Business Unit Access Tab
One or more business units must be granted access to the bank account before it can
be used in:
• Payables
• Receivables
14
Payables and Receivables account access is secured by the business unit. In addition to the
appropriate application use or uses being selected, one or more business units must be granted access
before the bank account can be used by Payables and Receivables. Only the business units that use
the same ledger as the owning legal entity of the bank account can be assigned access.
Note: Business Unit is required to be added only if the bank account will be used by Payables or
Receivables. If the customer wants to use Bank Account only for Payroll then GL Accounts can be given
at General tab.

Configuring Cash Management Rapid
Implementation
• Create Banks, Branches, and Accounts in Spreadsheet.
• Upload Banks, Branches, and Accounts.
15
The Define Financials Configuration for Rapid Implementation task list provides the required and most
frequently used setup tasks for implementation scenarios observed in practice. The primary
mechanism for rapid implementation is to create and upload Banks, Branches, and Accounts setup
using a spreadsheet upload.
Note: Use the standard Set Up Banks, Branches, and Accounts list for the ongoing maintenance and
for those configurations that cannot be set up using the rapid implementation approach.
Prepare your bank, branch, and account information to enter into the spreadsheet template.
• Bank information requires the country, name, and number.
• Branch information requires name, number, and BIC code.
• Account information requires name, number, currency, and legal entity.
• After you finish preparing the data in the spreadsheet, click the Generate Banks, Branches,
and Accounts File button. Save the generated XML file.
Upload the XML file into Cloud.

Bank Statement Processing Overview
Before reconciling a bank statement, you must first process the bank statement into
Cash Management by:
• Loading and importing electronic bank statements.
• Using the Parse Rule Set to transform information on the bank statement into
attributes used for reconciliation.
You can then match bank statement lines to transactions:
• Manually
• Automatically
16
Manage bank statements and validate them against cash account balances in the general ledger and
subledgers to maintain an accurate picture of the organization's cash position. Tasks include:
• Processing electronic bank statements.
• Reporting on bank account balances.
• Recording first presentment items like bank fees and charges to the general ledger.
• Reconciling bank statements to payments paid and received.
• Defining parse rule sets to transform data during the bank statement import process.
Cash Management supports the following protocols:
• Bank Administration Institute (BAI2)
• Society for Worldwide Interbank Financial Telecommunication (SWIFT MT940)
• Electronic Data Interchange for Administration, Commerce, and Transportation and Financial
Statement of Account (EDIFACT FINSTA)
• International Standard Organization (ISO20022)
• Import non-standard bank statement formats via spreadsheet.

Key Setup Tasks for Bank Statement Processing
For Bank Statement Processing, create and assign:

• Cash Transaction Type Mapping for Payables, Receivables, and Payroll
• Transaction Codes
• Code Map Groups
• Bank Statement Formats
• Parsing Rule Set
• Transaction Creation Rules
17
For bank statement processing to occur, you must first create a Cash Transaction Type Mapping for
Payables, Receivables and Payroll. Then set up or edit predefined Transaction Codes using the
mapped transaction types. Transaction codes are then used to create Code Map Groups and Code
Map Groups are used to create Bank Statement Formats.
When a bank statement comes through the interface the Parsing Rule Set is used to transform data
from the bank statement file.
Finally, if any external transactions exist such as bank fees, the Transaction Creation Rule creates a
transaction that can be reconciled and accounted.

Manage Cash Transaction Type Mapping
The transaction type mapping enables you to associate a Cash Management

transaction type with a payment or receipt method or a Payroll payment type.
Create this association by mapping Cash Management Transaction Types to:
• Payables Payment Methods
• Receivables receipt methods
• Payroll Payment Types
18
Mapping payment, receipt method, or Payroll payment types to Cash Management transaction types
can be helpful for bank statement reconciliation.
When a transaction code is created, a transaction type needs to be associated with it. A bank
statement line that has the transaction code has a corresponding transaction type.
If a system transaction payment, receipt method, or Payroll payment type is mapped to the transaction
type, the transaction type matching criteria can be used during autoreconciliation.
Payables and Receivables Payment Method Mapping:
• Identify the type, transaction type, and method.
• To map payable payment methods to cash transaction types, use disbursement type.
• To map Receivables receipt methods to cash transaction types, use Receipt type.

Cash Management Setups for Automatic
Reconciliation Overview
19
Before you can perform automatic bank statement reconciliation you must complete the following
setups. Note: You must have the Cash Manager role to perform the Cash Management setups. The
setups include:
• Banks, Branches, and Accounts
• Transaction Codes: Modify existing delivered transaction codes or create new transactions
codes as required. Transaction codes must match your bank’s transactions codes.
• Parse Rule Sets: Parsing rules are used to parse inbound addenda and other fields into more
granular constituent fields. A parsing rule set is associated to a bank account and used as
reference data for the parsing batch job or concurrent program.
• Bank Statement Transaction Creation Rules: Used to identify an unreconciled or external

bank statement line or lines and create an account for a transaction. For example, bank fees
and interest.
• Cash Transaction Type Mapping: Based on the payment method, identify the transaction
types for Payables and Receivables and provide a description.
• Bank Statement Reconciliation Tolerance Rules: Tolerance rules include date, amount and
percentage options. Manual reconciliation can have a tolerance rule assigned to a bank
account. Automatic reconciliation can have a tolerance rule applied if the matching rule
matches on the date, amount or both.

• Bank Statement Reconciliation Matching Rules: Flexible matching rules determine how to
match Bank Statement Lines and system transactions.
• Banks Statement Matching Rule Set: Bank statement reconciliation rule sets are a group of
matching rules and tolerance rules. They are assigned to a bank account and used to
reconcile bank statement lines with transactions.
• Define Subledger Accounting Rules: You can modify predefined accounting rule setups for
accounting-enabled events by creating user-defined rules for the external entry transactions.

Bank Statement Transaction Codes
Transaction Codes are used on:

• Parse Rule Sets
• Bank Statement Transaction Creation Rules
• Bank Statements.
21
Bank statement transaction codes are the internal codes that are used on a bank statement line to
identify the type of transaction being reported.
Cash Management maintains a single set of these codes and transform externally reported transaction
codes from other formats into this single normalized set.
Each imported bank statement includes bank statement transaction codes. Your bank should provide
the values needed to create the transaction codes used on the imported bank statements.
You can use the predefined transaction codes or create your own if required..
When you create the transaction code, it is available for all bank accounts without restriction.
As soon as you create or import a bank statement and assign the transaction code to a bank statement
line, the bank account appears in the Bank Account Usage panel.
Bank account usage indicates the list of bank accounts that are using a specific transaction code in any
bank statement Line.
To create a transaction code, you must provide:
• The Transaction Code: This is typically numeric.
• Description: Provide a meaningful description to clarify the transaction type. For example,
the Check transaction type can be used for a Receivables receipt and for a Payables payment.
The description helps the user choose the correct code for a Check type.

• Transaction Type:
- Automated Clearing House
- Bank Adjustment
- Check
- Electronic Funds Transfer
- Fee
- Interest
- Lockbox
- Miscellaneous
- Zero Balancing

Practice 14-1 Overview: Managing Bank Statement
Transaction Codes
This practice covers creating a transaction code for EFT Disbursements and Bank Fees.
23

Payment Code Map Groups
The types of Codes that can be created in the map groups are:
• Balance: Opening and Closing book balances.
• Transaction: Used on bank statement lines.
24
A single set of internal balance and transaction codes is maintained within the Oracle Cash
Management application. The balance codes are defined in the lookup
CE_INTERNAL_BALANCE_CODES and the transaction codes are defined through the Manage Bank
Statement Transaction Codes task. Externally reported balance and transaction codes are the ones
that appear in the data files provided by the banks. The externally reported codes can be transformed
to the internally defined codes using Oracle Payments Code Map Groups.
When setting up the Code Map Group in Payments for Balance code mapping, use
CE_BALANCE_CODE for the Field attribute of the Mappings section; for transaction code mapping,
enter CE_TRX_CODE for the Field attribute. The input value is the external code, and the output value
is the internal code. The value you enter in the Output Value field must be a valid internal code. By
mapping an input value to the output value, you are mapping the external code to the internal code.
For example, sometimes different banks may use the same external transaction code differently. Bank
of America may use BAI2 transaction code 174 to mean incoming wire transfer, but Citibank may use
the same code to mean check deposit.
In such a case, you create two code map groups. One is for Bank of America and it maps external
transaction code 174 to internal code ‘WIRE IN’. The other code map group is created for Citibank and it
maps 174 to ‘CHECK DEPOSIT’.
Oracle predefines two code map groups. One for mapping the BAI2 opening and closing booked
balances codes and the other for mapping the EDIFACT opening and closing booked balance codes to
the internal balance codes.

SWIFT940 does not require a balance code mapping because it is position-based, but a code map
group can be created to map the transaction codes to the internally defined transaction codes.
Bank statement codes that are defined as internal codes do not require a code map group. For
example, the transaction codes created for bank fee, charges, and interest don’t need a code map
group.

Code Map Group Example
Bank of America and Citibank use the same Transaction Code 174 for different types
of transactions.
Code Map Group Name Field Value Mapping
BofA BAI2 Code Map CE_TRX_CODE Input Value: 174

Output Value: WIRE IN
Citibank BAI2 Code Map CE_TRX_CODE Input Value: 174
Output Value: DEPOSIT
26

Bank Statement Formats
Bank statement formats are defined in Oracle Payments and used during the bank
statement processing job.
Format Name Code Map Group

BofA BAI2 Format BoA BAI2 Code Map
Citibank BAI2 Format Citibank BAI2 Code Map
27
The predefined formats that can be edited and used for the bank statement process job. The
predefined formats are:
• BAI2
• EDIFACT FINSTA
• ISO20022
• SWIFT MT940
For the example above, you would need to create two formats in Oracle Payments using the Manage
Formats task. Assign the two different code map groups to the two formats. You can copy all the other
values from the predefined BAI2 format.
When you submit the bank statement processing job, you can choose the corresponding format
depending on whether the bank statement is from Bank of America or Citibank. When the statements
are processed, the same 174 transaction code is mapped to different internal codes.

Parse Rule Sets
Cash Management supports parse rule sets to transform data during the bank
statement import process. They include:
• Sequence
• Transaction Code
• Source Field
• Target Field
• Rule
• Overwrite
28
Parse rules are used to move data from one field to another. The parse rule set is associated to a bank
account in the bank account setup. The parse rule set is most commonly used to parse data from the
statement line addenda field into more specific statement line fields. Each parse rule within a parse
rule set consists of the following fields:
• Sequence: Determines the order in which to process the rules.
• Transaction Code: Determines the statement line type.
• Source Field: The interface table field that contains the data to be parsed.
• Target Field: The statement line field that the data is to be parsed to.
• Rule: Contains the syntax for determining the data within the source field to be parsed.
• Overwrite: Used to control whether to overwrite existing data in a target field or skip parsing
the data.

Parse Rule Set Example
Description Source Data Rule Target Data

Extract numeric rate EST/TRX RTE 3.76 RTE (N.NN 3.76
data. USD/LIBOR CPTY:
PRU
Extract the original ?26/OCMT/GBP13949, ?26/OCMT/GBP(NNN 13949.25

amount from 25/? NN,NN)/?
Additional entry
information.
Extract the currency EST/TRX/RTE 3.76 RTE(7-9) USD

from the same source USD/LIBOR
field using positional CPTY:PRU
matching.
29
The Parse rule syntax is described here:
[LITERAL](<[MATCHING TOKEN],[START-END]>)[LITERAL]
Where
LITERAL = A string or character value represented by an identifier that should match the source data
exactly.
MATCHING TOKEN = A token (or set of tokens) which describes the data to extract. Valid tokens are:
• N = Extract a valid number
• . = Decimal position
• X = Extract an alpha numeric
• ~ = Extract everything in the source field from the parse position to either the end of the data
or up to the next literal.
• START = A position to begin extracting data, offset by the parse position. It must be a valid
numeric.
• END = A position to stop extracting data. END can be either a valid numeric or the ~ token.

Parse Rule Set Example
Description Source Data Rule Target Data

Extract the counterparty of an EST/TRX RTE 3.76 CPTY: (X~) PRU
unknown string length from USD/LIBOR CPTY: PRU
the same source field
Extract Transaction ID from CustRef # CustRef (X~).com # A.23@orlc

Customer Reference. A.23@orlc.com
(Customer Reference)
30

Bank Statement Transaction Creation Rules
External cash transactions are transactions related to cash activity that have not been
recorded within the system. The following sources of external transactions exist:
• Manual entry.
• Import.
• Balancing transactions created during reconciliation for amount variances.
31
Additional sources of external transactions include:
• Transactions created during Bank Statement Transaction Creation program
• External transactions created during Bank Account Transfer, Ad Hoc Payments and Reversal
Reconciliations.
Bank Statement Transaction Creation is a program that:
• Identifies unreconciled bank statement lines.
• Creates transactions and an account for first notice items such as bank charges, fees, or
interest.
• Reconciles the bank statement transaction.
Oracle recommends that you first run Autoreconciliation and perform any manual reconciliation on a
bank statement before running the Bank Statement Transaction Creation program to avoid creating
external transactions from bank statement lines which already have transactions recorded in the
application.
You create the rules to identify the statement lines from which to create transactions and specify some
of the attributes, including accounting options, of the created transactions.

Create a rule by entering:
• Name
• Legal Entity: When the legal entity is assigned, the Cash and Offset Accounts appear under
the Accounting check box.
• Statement Line Identification criteria: The criteria are used to identify the statement lines
from which to create transactions. This includes:
- Type: The same Transaction types as used on Transaction Codes.
- Transaction Code: You must create a transaction code for each type of external
transaction expected.
• Transaction Details:
- Type: The same Transaction types as used on Transaction Codes.
- Business Unit
- Cash Account
- Offset Account

Transaction Creation Rules
• Creating a transaction creation rule for a bank fee.
• Assigning the appropriate general ledger accounts.
33

Bank Statement Reconciliation Setups
For Reconciliation, assign the following:

• Matching Rules
• Reconciliation Tolerance Rules
• Automatic Reconciliation Rule Sets
34
Bank Statement Reconciliation is the process of matching bank statement lines with transactions to
ensure that all bank account activity is recorded within the application. You can manually match the
statement lines and transactions or set up reconciliation rules to be performed automatically.
Following are the key setups for bank statement reconciliation:
• Matching Rules: Flexible matching rules determine how to match Bank Statement Lines and
system transactions.
• Tolerance Rules: Tolerance rules include date, amount and percentage options. Manual
reconciliation can have a tolerance rule assigned to a bank account. Automatic reconciliation
can have a tolerance rule applied if the matching rule matches on the date, amount or both.
• Matching Set Rule: Bank statement reconciliation rule sets are a group of matching rules and
tolerance rules. They are assigned to a bank account and used to reconcile bank statement
lines with transactions.

Bank Statement Reconciliation Tolerance Rules
Tolerance rules enable you to specify tolerances that prevent or warn you when a
reconciliation would be a breach of a defined tolerance. Define tolerance by:
• Date
• Amount
• Percentage
35
Before creating reconciliation tolerance rules, consider the following:
• By applying tolerances you can automate the reconciliation and accounting for these types of
transactions.
• If no date or amount tolerance is defined within a rule, the date or amount tolerance requires
an exact match.
• For manual reconciliation, a tolerance rule can optionally be assigned to a bank account.
• For automatic reconciliation, a tolerance rule can be associated with a matching rule in the
Rule Set setup and can be applied if the matching rule matches on date and amount or both.
• The one exception occurs when you assign a tolerance rule that includes amount tolerances
to a match type matching rule that is not a one to one match. In this match type matching
rule that is not a one to one match, the amount tolerance is ignored and amounts must
match exactly.
Date Tolerance: Date tolerances are primarily used for checks that may be issued on one day and do
not clear the bank until days or weeks later.
• Reconciliation date tolerances are defined as day ranges. The date tolerances are to validate
that the source transaction date or dates are within a certain number of days before and after
the bank statement line date or dates.

• In manual reconciliation, if a date tolerance is specified in the tolerance rule assigned to the
bank account it applies to all matching scenarios. In the event of a date tolerance breach, a
warning message is displayed, but the user is enabled to reconcile the statement line or lines
and the transaction or transactions. If no date tolerance is assigned or specified it is required
to be an exact date match and a warning message is displayed.
• In automatic reconciliation, a tolerance rule that includes date tolerances can be associated
with a matching rule. If the matching rule matches on the date, then the date tolerance is
applied. In this scenario a date tolerance breach prevents reconciliation.
Amount Tolerance: Amount tolerances are most often used when you are reconciling foreign
currency transactions where differences may exist due to rounding or fluctuations in the exchange
rate. They can also be used if a bank includes a processing fee in the bank statement line amount.
• Reconciliation amount tolerances can only be used in one to one matching scenarios for both
manual and automatic reconciliation. No reconciliation amount tolerances are allowed in one
to many, many to one, or many to many matching scenarios. In these scenarios the amount
of the bank statement line or lines must be equal to the amount of the transaction or
transactions. Reconciliation amount tolerances can be defined as percentage or amount
ranges or both. If both percentages and amounts are applied, the application uses the most
conservative tolerance depending upon the statement line amount.
• For example, if the amount tolerance equals plus or minus $5, the percentage tolerance
equals plus or minus 1%, and the statement line amount is $100, the application first
calculates the percentage amount (1% of $100 dollars = $1). It then compares this to the $5
amount and uses the smaller amount. In this case it is $1 dollar, so to reconcile a transaction
to this line it must be between $99 and $101.
• In automatic reconciliation, a tolerance rule that includes percentage, amount, or both types
of tolerance ranges can be associated with a matching rule. But the tolerance can only be
applied if the matching rule is a one to one match type rule. In this scenario of a one to one
type match, any amount difference within tolerance is automatically created as an external
transaction in cash management.

Reconciliation Tolerance Rules
This practice covers creating a bank statement reconciliation tolerance rule.
37

Bank Statement Reconciliation Matching Rules
Matching rules enable you to determine how to match bank statement lines and
application transactions, and help achieve a higher match rate in Autoreconciliation,
minimizing the need for manual intervention.
You can select a Match Type of:
• One to One
• One to Many
• Many to One
• Many to Many
38
Create, edit, copy, and delete matching rules to be used for reconciliation. For each rule, specify:
• Matching Rule name.
• Transaction source or sources.
• Match Type:
- One to one: Match one bank statement line to one system transaction.
- One to many: Match one bank statement line to many system transactions in
summary.
- Many to one: Match many bank statement lines in summary to one system
transaction
- Many to many: Bank statement lines that do not match up with any system
transactions except for in aggregate.
• Group by attributes for bank statement or source depending upon match type.
• Matching Criteria: Includes a list of commonly used matching attributes. You can simply
check the attributes to include in their matching rule. Only group by and amount fields are
available for matching if grouping is used.

Additional Matching Criteria: Enables you to specify additional matching logic or filtering conditions
that must be true for the bank statement line or lines and transaction or transactions to be matched
successfully. Only group by and amount fields are available for matching if grouping is used. You can
select one or multiple transaction sources in a rule. Matching Type Considerations:
• If multiple sources are selected in a one to one or many to one matching rule, then the auto
reconciliation program looks for a matching transaction across the selected sources.
• If multiple sources are selected in a one to many or many to many matching rule, then the
program first finds all available transactions across the selected sources and then applies
grouping rules to the whole data pool. This means that statement lines can be reconciled to a
group that includes transactions across the different sources.
• If you want transactions included in a group to be from the same transaction source, then you
can specify Transaction Source as a grouping attribute.

Reconciliation Matching Rules
This practice covers creating a bank statement reconciliation matching rule.
40

Reconciliation Rule Sets
Reconciliation Rule Sets are:

• A group of matching rules and tolerance rules.
• Assigned to a bank account.
• Used to reconcile bank statement lines with transactions.
41
When creating reconciliation rules sets, provide the following information:
• Enter the name of the rule set.
• Provide a detailed description.
• Accept the default for sequence 1.
• Enter a matching rule. Accept the default matching type, which is based on the matching rule.
• Optionally enter a tolerance rule.
You build the rule set and the rule set detail as a parent/child relationship. Each rule set consists of
one or more matching rules that can be prioritized or sequenced. The rules should be ordered to
achieve a greater reconciliation success rate.
Oracle strongly recommends that one-to-one rules be sequenced above rules of other types. To
provide an optimum reconciliation rate, you should change the sequence number depending on how
accurately the given rule is likely to reconcile against the correct bank transactions.
For example, transactions from sources for which the bank provides you a reference ID are likely to
have a higher reconciliation rate. These rules should be placed at the top with a lower sequence
number. Conversely, transactions with no reference ID are likely to have duplicates or lower
reconciliation rates, and you should place them at the bottom with a higher sequence number.

Reconciliation Rule Sets
This practice covers creating a rule set to combine the matching and tolerance rules.
42

Practice 14-6 Overview: Assigning a Rule Set to a
Bank Account
This practice covers assigning the rule set to your bank account.
43

Defining Subledger Accounting Rules: Cash
Management Accounting Event Model
Oracle Cash Management provides a predefined accounting event class and
accounting event types.
Event Class Event Type Accounting

External Transaction Reconciled Yes
External Transactions
External Transaction Unreconciled Yes
44
You can modify predefined accounting rule setups for accounting-enabled events by creating user-
defined rules.

Reporting and Analysis
The four key reports in Cash Management are:

• Cash to General Ledger Reconciliation Report
• Bank Statement Report
• Cash in Transit Report
• Bank Statement Analysis Report
45
• Cash to General Ledger Reconciliation Report: Lists the subledger transactions that are
accounted in GL but are not reconciled in Cash Management.
• Bank Statement Report: Displays bank account balances and transaction information for
specific bank statements.
• Cash in Transit Report: Lists, for a specific bank account, all transactions that have been
remitted to the bank but have not been cleared. This report excludes all voided transactions.
It also excludes all reversed transactions that have a reversal date on or before the effective
date.
• Bank Statement Analysis Report: Displays bank statements used to analyze balances and
transaction details.

Cash Management Infolets Overview
The Cash Management Dashboard infolets provide access to the relevant pages and
functions where you can address highlighted issues.
46
Navigate to: Cash Management Infolets
As a cash manager, you can now view a concise snapshot of your cash position, cash forecast, missing
bank statements, and bank statement reconciliation status from the Cash Management infolets.

Cash Management Infolets
Infolet Name Description Icon
Provides visibility into overall cash balance across all of your

Cash Balance accounts.
Shows the number of bank accounts that are missing a bank

Missing Statements
statement.
Shows bank accounts which fail to meet their target balance.

At Risk
47
Use infolets to view information at a glance from different sources in an efficient and timely way
directly from the Welcome Springboard. You have the right information instead of just more data to
sift through.
Mobile device support is available to take your work on the go enabling you to see real time
information. Three Infolets are provided for Cash Management:
• Cash Balance: Gives you visibility into your overall cash balance across all of your accounts.
The currency in which the amount displayed is configurable and is indicated by the symbol.
All the balances used on the infolets are the last known balances reported on the bank
statements, where the last known balance is the balance code defined on the setup page.
• Missing Statements: The Missing Statements infolet shows the number of bank accounts
that are missing a bank statement. A bank account is included in the count on this infolet
when the difference between the last known bank statement date and the current date is
more than the threshold specified on the setup page.
• At Risk: You can set a target balance for each bank account to indicate the desired minimum
balance to maintain for the account. Bank accounts which fail to meet their target balance are
highlighted on the At Risk infolet. The expanded view shows the top five bank accounts in
descending order of variance highlighting the accounts which are most at risk. The blue
portion of a bar on the graph represents the current balance and the red portion represents
the deficit for the bank account. The currency used on the graph is the reporting currency
specified on the setup page.
You can drill down from any of the infolets to the Cash Balances page where you can initiate
transactions to address any issues you notice.

Cash Positioning and Forecasting: Cash Balances
On the Cash Balances landing page, you can:

• See an overview of all your bank accounts.
• View highlighted bank accounts without up-to-date statements.
• Filter bank accounts on currency, bank, legal entity, and so on.
48
Navigate to: Cash Management > Cash Balances
On the Cash Balances landing page you can review your bank accounts balances, cash projections,
forecasts, and create transactions in the Cash Balances work area.
The Cash Balances landing page provides an overview of your bank accounts and you can also review
the variance of the bank account balance compared to the target balance. Any bank accounts not
having up to date statements are highlighted. You may filter the bank accounts displayed based on
currency, bank, legal entity, last bank statement date, or balance ranges.
Any combination of filters used can be saved and are available on the Bank Account Group choice list
for querying at a later date.

Cash Position Page
• Shows the cash position for your bank accounts.

• Uses various data to determine projections.
49
Navigate to: Cash Management > Cash Balances > View Cash Position
You can view the cash position for your bank accounts for the current date on the Cash Position page.
The projections on this page take into account:
• Intraday statement data
• External cash Transactions
• Manual transactions.

5 Day Forecast Page
• You can use the information and data on the 5 Day Forecast page to assess the 5 day
forecast for your legal entities.
• This data helps you to manage liquid assets in the short term.
50
Navigate to: Cash Management > Cash Balances > Tasks panel tab > Cash Forecasting > 5 Day
Forecast
You can assess the 5-day cash forecast for your legal entities based on the bank statement balances
and transactions entered in Cash Management, Payables, Payroll, and Receivables.
Based on the projected excesses or shortfalls in cash holdings, you can then plan short term liquidity
management activities such as cash transfers or payments.

Transactions Cube
The Cash Balances work area uses a multidimensional database (Transactions cube) to
analyze:
• Bank account balances
• Bank statement lines
• Transactions affecting your cash positions
Cash Management Transaction Cube in Smart View
51
Ready to use dimensions include Bank, Legal Entity, Business Unit, Currency, Currency Type, Source of
the Transaction, Reconciliation Status of the transaction, and Flow indicator for the bank statement
line.
The Transactions cube can re-use any existing Accounting calendars on the Time dimension reducing
the setup required.
For more complex analytics requirements, you can add new dimensions to the cube at any time.
Using the flexible setup pages and cube maintenance processes you can:
• Delete the existing cube
• Add dimensions
• Extract data
• Recreate the cube
The cube maintenance processes also perform automatic updates when new bank statements are
loaded or external transactions created.
In the Transactions cube, you can perform ad hoc analysis in a spreadsheet using Oracle Hyperion
Smart View (Smart View).
Note: You cannot delete predefined dimensions.

Ready to Use Smart View Templates
• Review cash position for multiple bank accounts.

• Forecast short term cash projections for a bank account for any days/weeks/months.
Ready to Use Smart View Template Report

52
To seamlessly investigate the source of the balances displayed on the reports:
• Drill down to a page displaying the corresponding transactions.
You can exclude any of the transactions from your cash position on this page. You can insight with
extended cash forecasts for any number of days/weeks/months/years.
Manual Transactions
You can create Manual Transactions to quickly adjust cash projections by adding inflows or outflows
for transactions which are not available within the application. These transactions are saved to another
multidimensional database (Manual cube) you can view them at any time using Smart View.

Manual Transactions
• Adjust cash projections quickly.

• Save transactions to a Manual cube.
• View at any time with Smart View.
53
You can create Manual Transactions to quickly adjust cash projections by adding inflows or outflows
for transactions which are not available within the application. These transactions are saved in a
multidimensional database (Manual cube) and you can view the transactions at any time using Smart
View.
Note: Manual transactions are used only for reporting purposes and have no accounting impact.

Bank Account Transfers
Transfer funds between your bank accounts to:

• Maintain target balances.
• Meet financial obligations without overdraft.
• Deploy excess funds.
54
Navigate to: Cash Management > Cash Balances > Select a row > Transfer Funds
Bank Account Transfers generate External Cash Transactions for the:
• Provider bank account.
• Receiver bank account.
These transactions generate the accounting entries when reconciled with bank statement lines.
The transactions leverage the balancing rules provided by Oracle Intercompany to generate the
accounting distributions for both the sender and receiver bank accounts.
You can seamlessly process the transfer using the Payment Methods defined in Oracle Payables setup
pages. You can configure flexible approval rules to authorize the transfers in Oracle BPM Worklist.
To enable the Bank Account Transfer assign the duty role Cash Positioning and Forecasting
Management Duty to a user.
Bank Account Transfer Guidelines:
Depending on the legal entities associated with the bank accounts, you can generate accounting
distributions using either the Intercompany Balancing Rules or the Secondary/Clearing Company
Balancing rules.

You must configure rules for either of these type of setups:
• For transfers between bank accounts belonging to the same legal entity.
• Between bank accounts belonging to different legal entities.
To distinguish your Cash Management balancing rules from others, Oracle recommends setting up
intercompany balancing rules with:
• Source as Cash Management.
• Category as Funds Transfer.
Bank Account Transfers which are settled through Payments are always routed for approval and you
must configure at least one approval rule for such transactions.
Additional configuration for Cash Management is available on Payment Methods and Payment
Method Defaulting setup pages. Only electronic payments are supported in
Release 11.
For additional information, refer to Bank Transfers and Ad Hoc Payments in Oracle Cash Management
TOI.

Ad Hoc Payments
• Address low-volume payments not associated with an invoice or purchase order.

• Use Payment Methods and options defined in Oracle Payables setup pages.
56
Navigate to: Cash Management > Cash Balances > Select a row > Make a Payment
You can create and maintain payees who receive the payment without having to setup a supplier. You
can also define flexible approval rules to authorize these transactions in Oracle BPM Worklist.
External cash transaction generated for the Ad Hoc payment generates the required accounting when
reconciled.
To enable and create Ad Hoc payments:
• Assign the duty role Cash Positioning and Forecasting Management Duty.
Guidelines
Ad Hoc Payments settled through Payments are always routed for approval and you must configure at
least one approval rule for these transactions.
Additional configuration for Cash Management is available on the setup pages related to Payment
Methods and Payment Method Defaulting.
The initial release of Ad Hoc Payments supports only electronic payment methods.
For additional information, refer to Bank Transfers and Ad Hoc Payments in Oracle Cash Management
TOI.

Setup Options in Payments
In the Payments setup options, you can:

• Configure the setup options for payments for cash transactions.
• Specify whether you want to use a particular Payment Method for a certain type of
cash transaction.
• Configure the Payment Method Defaulting Rules for cash transactions.
57
Navigate to: Others > Setup and Maintenance > Financials > Payments > Manage Payment Method
When creating new users, assign the Payment duty role Payments Disbursement Administration Duty
to create setup options for payments.
The Cash Manager job role already has the Payments Disbursement Administration Duty role
assigned.

Intraday Bank Statement Support
Use Intraday Bank activity to provide real-time cash flow information on your cash
position pages and reports.
58
Bank statement processing programs can now:
• Handle intraday statement loads.
• Provide native support for these formats:
- ISO20022 CAMT052 V2
- SWIFT MT942, BAI2
- EDIFACT FINSTA
In the Intraday Bank Statement you can:
• Upload either incremental or cumulative intraday statements.
• Create intraday statements manually.
• Use intraday statement search.
Enabling Intraday Bank Statements
If you can currently create intraday statements you also have the required duty and privilege to create
intraday statements.

When creating new users, assign the duty role Bank Statement and Reconciliation Duty to perform
intraday bank statement processing.
Note: You cannot load or create an intraday bank statement on a date which already has an existing
prior bank statement.
For additional information, refer to the Cash Positioning and Forecasting TOI.

External Transactions Overview
External cash transactions are transactions related to cash activity that has not been
recorded within the applications.
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Navigate to: Cash Management > Bank Statements and Reconciliation > Tasks panel tab > External
Transactions > Create Transaction
The four sources of external transactions are:
• Manual Entry: Enter an external transaction directly in Cash Management.
• Import: Transactions can be created in a spreadsheet and uploaded through the import
process.
• Balancing Transactions: Transactions created during reconciliation to record amount

differences between the statement line and system transaction that may be due to bank fees,
conversion rates, or other charges.
• Bank Statement: The bank statement transaction creation program enables you to configure
rules to create transactions from unreconciled statement lines to record items such as bank
charges, interest, or other miscellaneous items.
And External transactions created during:
• Bank Account Transfer
• Ad Hoc Payments.
• Reversal Reconciliations.

Reconciling Journal Lines For Multiple Cash Account
Combinations
• Reconcile journal lines of multiple cash account combinations matching the same
natural account and other specified segment values.
• Previously, only journal lines created for the complete cash account combination
were available for reconciliation.
Enable
Option
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Navigate to: Others > Setup and Maintenance > Financials > Search: Manage Bank Accounts task
When performing bank account reconciliation, Cash Managers can manually or automatically reconcile
all journal lines entered on different account code combinations matching the same natural account
and sub-account . For example, if you set up 01-000-1110-0000-000 as your cash account, and select
Account and Sub Account as GL Cash Account Segments, you're able to manually or automatically
reconcile journal lines entered on different account code combinations matching the same natural
account 1110 and sub-account 0000.
The Cash to General Ledger Reconciliation Report is also enhanced to display journal lines and closing
balances of such cash account combinations.
Steps to Enable
1. Navigate to the Setup and Maintenance > Financials >Search: Manage Bank Accounts Task.
2. Create or edit the bank account.
3. Select Enable multiple cash account combinations for reconciliation option.
4. Select the GL Cash Account Segments you want to derive the corresponding segment values
from the bank account's cash account to retrieve multiple cash account combinations.
5. Save and close the page.

Tips
• You must have the Journal Reconciliation Enabled profile option (CE_GL_RECON_ENABLED)
set to ‘Yes' to perform manual and automatic reconciliation of bank statement lines directly
from GL Journal Lines.
• Consider using the GL Recon Start Date as a beginning date of journal reconciliation for the
bank account.
• The natural account segment is required and always selected as GL Cash Account Segment.
Review and select additional segments that qualify the bank account and you want to
consider for retrieving multiple cash account combinations.
• The closing book balance displayed in the Cash to General Ledger Reconciliation Report takes
into consideration multiple cash account combinations when this option is enabled for a bank
account.
Role Information
No new role or privilege is required to set up and use this feature.

Exclude Reversal Journal Entries from Bank
Statement Reconciliation
• Streamline the bank statement reconciliation process by excluding reversals and the
corresponding originating journal entries.
• The reversal and originating journal lines that match the bank account's cash account
code combinations are:
– Removed from the bank statement reconciliation process (both the Manual as well
as Automatic) and
– Not displayed in the Cash to General Ledger Reconciliation Report.
63
Steps to Enable
• Enable the Opt In Exclude Reversal Journal Entries from Bank Statement Reconciliation to use
this feature.
Tips and Considerations
• You must have the Journal Reconciliation Enabled profile option (CE_GL_RECON_ENABLED) set
to Yes to perform manual and automatic reconciliation of bank statement lines directly from GL
Journal Lines.
• Reversing journals saves you time and helps prevent data entry errors.
Key Resources
• For more information on Bank Statement and Reconciliation solution, refer to Oracle Financials
Cloud Using Payables Invoice to Pay, or Oracle Financials Cloud Using Receivables Credit to
Cash.
• For more information on Journal Reversals, refer to Oracle Financials Cloud Using General
Ledger.
Role Information
You don't need any new role or privilege access to set up and use this feature.

Reconcile Zero Amount System Transactions
• Reconcile zero amount transactions not reported in bank statements.

• Use the Manual Reconciliation process to reconcile zero amounts manually.
• Set up reconciliation matching rules to reconcile zero amount transactions without a
matching bank statement line using the Auto reconciliation process.
64
Zero amount system transactions include, for example:
• Zero amount payments created to net off outstanding invoices and credit memos, and
• Credit card expenses paid directly by your company.
Previously, these zero amount system transactions remained unreconciled, and required manual
reconciliation against a dummy bank statement with zero amount statement line. You can now
automatically or manually reconcile zero amount system.
Automatic Reconciliation of Zero Amount System Transactions
• Set up a new reconciliation matching rule selecting the Matching type as ‘Zero Amount’.
• Add the new reconciliation matching rule to your existing reconciliation matching rule set
assigned to your bank account.
• When automatically reconciling the zero amount system transactions, the transactions are
grouped by transaction date and transaction source selected in the matching rule.
• The zero amount system transaction date is used as cleared date of the reconciliation group.
Manual Reconciliation of Zero Amount System Transactions
• Go to the Manual Reconciliation page, and search for zero amount system transactions
created for a specific date.
• Select the zero amount system transactions you want to manually reconcile without a
matching bank statement line, and click on “Reconcile” button.
• When selecting the zero amount system transactions, all transactions need to share the same
transaction date which is also used as the cleared date for the reconciliation group and used
in accounting events.
Summary

• Understand the key features of Cash Management.
• Define banks, branches, and accounts using the Rapid Implementation process.
• Configure Bank Statement Processing and Reconciliation.
• Describe the advanced features of Cash Management.
65

15
Configuring Oracle Payables

Objectives

• Describe Payables terminology.
• Discuss the flow of default values.
• Understand the required tasks to configure Payables.
• Discuss the optional tasks to configure Payables.
• Configure email notifications.
• Set up suppliers.

Required Tasks to Configure Payables
All of the required tasks to configure Payables must be managed by Business Unit. When managing
these tasks, you are required to Scope each task to a Business Unit.
Many of the setups previously discussed are used for these configurations. These include the chart of
accounts, calendar, currency, ledger, and reference data sets. Some of the options are used as defaults
that can be overridden and others cannot be changed.
Some of the options, when activated require additional setups that are discussed in this lesson under
the Optional Tasks to Configure Payables section.

Payables Terminology
The following terms apply to Payables: • Pay Group

• Invoice Distribution • Payment Process Request
• Invoice Group • Payment Request
• Invoice Request • Self-Service Invoice
• Matching • Tolerance
• Final Matching • Withholding Tax Classification
• Invoice Distribution: The accounting information for an invoice line, such as accounting
date, amount, and account combination.
• Invoice Group: A collection of invoices that is used as a report parameter, an invoice

validation parameter, and a selection criteria for a pay run.
• Invoice Request: An invoice created through Supplier Portal that is not associated with a
purchase order and that is pending approval by the requester.
• Matching: The process of associating an invoice with a purchase order, receipt, or

consumption advice. Ensures that you pay only for goods and services that were ordered,
received, or consumed.
• Final Matching: A process that changes the status of a purchase order schedule to final
close, preventing further invoicing.
• Pay Group: A method for categorizing suppliers for payment processing.
• Payment Process Request: A grouping of installments that are processed for payment in a
batch. For each request you specify selection criteria, payment attributes, and processing
options.
• Payment Request: A request from Oracle Receivables or Oracle Expenses to disburse funds
to a payee who is not defined as a supplier. Recorded in Payables with an invoice type of
Payment Request.

• Self-Service Invoice: An invoice that a supplier enters through Supplier Portal and is
associated with a purchase order.
• Tolerance: The allowed variance between invoice, purchase order, receipt, and consumption
advice information. The invoice validation process places matching holds on invoices that
exceed the allowed variance.
• Withholding Tax Classification: A collection of one or more withholding tax codes. Used to
associate more than one withholding tax code with an invoice.

Flow of Default Values
Because many default values are defined throughout many of the configurations or setup tasks, it is
very important to understand the flow of default values.
Default values that are set at higher levels flow down to lower levels where you can override them. The
default value at the lowest level wins.
Default values reduce data entry by providing default values based on corporate or business unit
policies. This is the main reason most of the configurations are defined by Business Unit. Optional
default values should be omitted if users are frequently overriding them.
For example, a default payment term of Net 30 might be defined on the invoice options page.
However, a payment term of 2/10 Net 30 might be set at the supplier site. When an invoice is created
using that supplier site, the invoice uses 2/10 Net 30, rather than Net 30.
This lesson and subsequent lessons detail the Payables Configurations listed on the Payables Flow
above for you to gain a better understanding of the flow of default values.

Managing Procurement Agents
Set up Procurement Agents to have access to:

• Business Units
• Supplier Setups
• Access to Other Agents’ Documents
Managing Procurement Agents is required only for Payables if you are not implementing
Procurement. This is mainly needed for Payables users to have access to supplier setups. Otherwise,
Procurement Agents are created through the Procurement Offering. Procurement Agents give
Payables users access to:
• Business Units
• Supplier Actions
- Manage Suppliers
- Manage Supplier Qualifications
- Manage Approved Supplier List Entries
- Analyze Spend
• For the Supplier Qualifications action you can also give an agent access to other agents’
documents as:
- None
- View
- Full

Practice 15-1 Overview: Defining Your User as a
Procurement Agent
This practice covers the following defining your user as a procurement agent.

Managing Payment Terms
Payment terms are used to automatically create installments that determine invoice due dates and
amounts with up to three levels of discounts. You can define payment terms to create multiple
installments and multiple levels of discounts.
Payment terms consist of one or more lines, each of which creates one invoice installment. Each
payment term line and corresponding installment have a due date and up to three discount dates.
Each payment term line and corresponding installment also have due or discount amounts. When you
define payment terms, you specify either percentages or fixed amounts.
To use a payment term, you must assign it to a reference data set. You can assign payment terms to
one or more reference data sets and share them across business units.
• Predefined Reference Group: Payables Payment Terms
• Determinant Type: Business Unit

Payment Terms Due Date and Discount Dates
Payment terms due dates and discount dates are based on one of the following:
• Fixed date
• Days
• Calendar
• Day of Month
10
You can define different types of payment terms:
• Fixed Date: A specific day, month, and year for when an installment is due for payment.
• Days: A number of days added to the invoice terms date. For example, a 30 Net payment
term uses 30 days to calculate the invoice due date.
• Calendar: Assigns a due date based on a Payables calendar that is divided into periods
different than the General Ledger accounting calendar. You can assign due dates to avoid
weekends, holidays, and so on.
Note: You must define a Payables calendar before using the calendar based type.
• Day of Month: A specific day of the month when an installment is due for payment. For
example, enter 15 to schedule the payment to be due on the 15th of the month. Enter 31 to
schedule the payment to be due on the last day of the month, including months with less
than 31 days.

Day of Month Payment Term: Example
Example Day of Month Cutoff Day Months Terms Date Calculated

Ahead on Invoice Invoice Due
Date
1 15 11 0 January 10 January 15
2 15 11 0 January 12 February 15
3 15 11 1 January 12 March 15
11
When using Day of Month, you can also use following:
• Cutoff Day: The day of the month after which the installment due dates and discount dates
advance to a future month. If you do not specify a cutoff day, the current accounting month
is used to determine the due dates and discount dates.
• Months Ahead: If you enter 0 and the invoice terms date is the same as, or later than, the
cutoff day, Payables uses the day of the month in the next month to set the due date and
discount date.
See the examples above.

Defaults and Predefined Payment Terms
• During a Payables implementation, a default record is automatically created.

• The predefined term of Immediate is defaulted.
12
The first time that you save the Manage Common Options for Payables and Procurement page for a
business unit, a default record is automatically created for the Manage Invoice Options task. The
Payment Terms field on the Manage Invoice Options page is a required field and the invoice options
record is saved using the predefined payment term of Immediate.
The following payment terms are predefined and assigned to the Common set.
• Immediate: Scheduled for payment immediately or the same date as the terms date.
• 2/10 Net 30: Two percent discount deducted if paid within 10 days, remainder paid 30 days
from invoice terms date.
• Net 30: Payment due in 30 days.
• Net Monthly Account: Payment due on last day of the month following the one in which the
invoice is dated.
• End Current Month: Pay by end of current month.

Practice 15-2 Overview: Creating a Payment Term

• Setting the scope for your business unit.
• Creating a payment term with multiple discounts.
• Assigning your reference data set to the payment term.
13

Managing Common Options for Payables and
Procurement
• Define the common controls and default values for business units with the
Payables Invoicing and Procurement business functions.
• Common options are grouped into the following categories:
– Default Distributions
– Automatic Offsets
– Currency Conversion
– Expense Accruals
– Self-Billed Invoices
– Legal Entity Information
14

Default Distributions
Default distributions provide default accounts for Payables transaction processing.
15
Payables uses the distributions defined in the Common Options for Payables and Procurement for the
following account combinations unless they are specified at the supplier site assignment level, in
which case the supplier provides the default distributions on an invoice:
• Liability: Default liability distribution for an invoice.
• Prepayment: Default distribution for a prepayment invoice.
• Bill Payable (Optional): Default bill payable distribution.
Payables uses the distributions defined in the Common Options for Payables and Procurement for the
following account combinations:
• Conversion Rate Variance Gain and Conversion Rate Variance Loss: Conversion rate
variance gains or losses for inventory items or expense items that were accrued on receipt.
Variance is calculated between the invoice and either the purchase order or the receipt,
depending on how you matched the invoice.
• Discount Taken: Discounts taken on payments if you allocate discounts to a single

distribution.
• Miscellaneous (Optional): Distribution for invoice lines with a type of Miscellaneous. If you do
not specify a value, miscellaneous charges are prorated across invoice item lines.

• Freight (Optional): Freight for an invoice. You can override this distribution during invoice
entry. If you do not specify a value, freight charges are prorated across invoice item lines.
• Prepayment Tax Difference (Optional): Tax amount difference between a prepayment and
the invoices that the prepayment is applied to. These differences are usually due to changes
in tax rates between prepayment and invoice creation times. This distribution is used only if
the Applied Amount Handling option on the tax record is set to Recalculate.

Automatic Offsets
• Automatic offsets are a method for automatically balancing invoice and payment
journal entries that cross primary balancing segment values.
• You can offset by:
– Primary Balancing Segment
– All Segments, Except Natural Account
17
If you enter invoices for expenses or asset purchases for more than one primary balancing segment
value, you might want to use automatic offsets to keep your Payables transaction accounting entries
balanced. If you do not use automatic offsets, Payables creates a single liability accounting entry for
invoice transactions and a single cash type accounting entry for payment transactions and the create
accounting process then balances the journals using Intercompany balancing rules.
When you use automatic offsets, Payables automatically creates balancing accounting entries for your
transactions. The general ledger account that each offsetting accounting entry is charged to depends
on which offset segment method you use, Primary balancing segment or All segments, except natural
account.
Payables automatically allocates amounts for the following invoice accounting entries:
• Conversion rate variance gain or loss
• Liability
• Non-recoverable tax for invoices matched to a PO
• Non-recoverable tax for invoices not matched to a PO and where no tax expense account is
defined for the tax rate
• Withholding tax if you apply the withheld amount at invoice validation time

Payables allocates amounts for the following payment accounting entries:
• Cash if you use a pooled bank account
• Cash clearing if you use a pooled bank account and if you account for payments at clearing
time
• Discount
• Realized gain or loss
• Bills payable
• Withholding tax if you apply the withheld amount at payment time

Automatic Offset by Primary Balancing Segment
19
In the example above, an invoice has two invoice line distribution account combinations using 2
different balancing segment values. To build the liability account for each line, Payables uses the
invoice header liability account combination and overrides the primary balancing segment value with
the primary balancing segment value from the invoice line distribution account combination.
The resulting invoice liability account combinations produce a balanced journal entry by the primary
balancing segment value.

Automatic Offset by All Segments, Except Natural
Account
20
In the example above, an invoice has two invoice line distribution account combinations using 2
different balancing segment values and 2 different cost center values. To build the liability account for
each line, Payables uses all the segments except the natural account of each line distribution account
combination and overrides all the segment values except the natural account segment value.
The resulting invoice liability account combinations produce a balanced journal.

Currency Conversion
Currency conversion options provide default settings for converting foreign currency
invoices to the ledger currency.
You select or enter:
• Whether to require conversion rate entry.
• A conversion rate type.
• Realized gain and loss distributions.
21
The currency conversion options apply only to Payables invoices not payments. The options provide
settings for converting an invoice entered in a foreign currency to the functional or ledger currency.
You must select or enter:
• Require conversion rate entry: If enabled, Payables requires a conversion rate whenever an
invoice is entered in a currency other than the ledger currency. You cannot complete or save
the transaction until a currency rate is provided. If a default conversion rate type is also
defined on the common options, the rate is automatically provided based on the date. If daily
rates do not exist for the date and rate type then the user must provide a conversion rate. If
the conversion rate type is User, then you must always enter a conversion rate. If you do not
enable this option, after you have entered the invoices you can enter conversion rates
manually or run the Apply Missing Conversion Rates process.
• Conversion rate type: Specify the default conversion rate type to automatically provide a
conversion rate when you enter invoices. You can change the conversion rate type at invoice
entry time.
• Realized gain and loss distributions: You must specify the realized gain and loss accounts
for payments. If a conversion rate changes between the time the invoice is entered and the
time of payment, the realized gain or loss is calculated and recorded to these accounts.

Expense Accruals
Specify when to accrue for expense items:

• Period End
• Receipt
22
Payables creates journal entries called Accrued Receipts when expense items have been received but
not yet invoiced. This setting tells Payables when to create the accrual. You must choose either:
• Period end: During period close, accrual entries are created for all receipts that do not have
invoices. Accrual entries are reversed when the next period is opened.
• Receipt: During receiving, accrual entries are created. You can override this setting on the
purchase order schedule for expense destination types.
Note: Inventory items always accrue at receipt.

Self-Billed Invoices
Self-billed invoices are:

• ERS Invoices
• Debit Memos from Return to Supplier Transactions
• Invoices from Consignment Agreements
• ASBN
Self-Billing Invoicing options are:
• Gapless invoice numbering
• Buying Company Identifier
23
Self-billed invoices are:
• Evaluated Receipt Settlement (ERS) invoices that are automatically created by the Pay on
Receipt process in Oracle Receivables.
• Debit memos that are automatically created from a return to a supplier transaction in
Receiving.
• Invoices that the Create Consumption Advice process creates from consignment agreements
that enable the Pay on Use option.
• Advanced Shipment Billing Notices (ASBN): Sent from the supplier for drop shipments.
Set automatic invoice numbering options for self-billed invoices.
• Gapless invoice numbering: Enable gapless invoice number generation. This is important in
countries that require gapless numbering of documents.
• Buying Company Identifier: Enter an identifier to use as part of the automatically generated
invoice number.

Legal Entity Information
Provides extra information for the Legal Entity associated with the Payables Business
Unit.
• VAT Registration Member State
• VAT Registration Number
• Bill-to Location
24
Subledger applications, like Payables, use the legal entity model to identify the legal entity that owns
an invoice.
Legal entity information is used for:
• Tax calculations.
• Legal reporting.
• Classification - whether an invoice between two entities is an intercompany transaction.
Specify:
• VAT Registration Member State and VAT Registration Number: For business operations
carried out in a member state of the European Union. These values are used in Value Added
Tax (VAT) reporting.
• Bill-to Location: The default bill-to location for purchase orders if a bill-to location is not
already specified on a supplier site assignment.

Practice 15-3 Overview: Managing Common Options
for Payables and Procurement
• Verifying that the scope is set for your business unit.
• Reviewing default distribution combinations for your business unit.
25

Manage Invoice Options
• Invoice options control how invoices are processed for business units with the
Payables Invoicing business function.
• Invoice options are grouped into the following categories:
– Invoice Entry – Approval
– Matching – Interest
– Discount – Payment Request
– Prepayment – Self-Service Invoices
26

Change First Open Period for Payables
• You can change the first Payables period if it was originally set after the first General
Ledger period.
• For example, if the first General Ledger period was set as 01-JAN-2019 and the first
Payables period is set as 01-MAR-2019, you can now move the first payables period to
01-JAN-2019.
• Use the Change First Open Period from the Actions menu to change the first
Payables period.
Change First
Open Period
27
Navigate to: Payables > Invoices > Tasks Panel > Payables Periods > Manage Accounting Periods
This feature is automatically enabled.
Note: This option is enabled only if the first Payables period was originally set after the first period of
General Ledger. If General Ledger first period and Payables first period are the same then this option is
not visible.

Invoice Entry
The default options that can be set only in the Manage Invoice Options task are:
• Require invoice grouping • Recalculate invoice installments
• Allow document category override • Receipt Acceptance Days
• Allow adjustments to paid invoices • Accounting Date Basis
• Allow remit-to-supplier override for • Budget Date Basis
third-party payments
28
As discussed on flow of default values slide, some default options can be defined on both the Manage
Invoice Options page or on the supplier setup. The following options control the entry of invoices and
cannot be specified at the supplier level:
• Require invoice grouping: Requires you to enter a name during invoice entry to group
invoices. Can be used to make payments to all the invoices in a particular invoice group.
Invoice groups are user defined and are created dynamically at the time of entry. Subsequent
invoices can then be added to a newly created group.
• Allow document category override: Lets you override the document category that is
automatically assigned to an invoice if the Oracle General Ledger Sequencing By ledger
option is set to Ledger or Legal entity. If the Sequencing By ledger option is set to No
sequencing:
- No document category is assigned to an invoice.
- You cannot set this invoice option.
- You cannot enter a document category for an invoice.
• Allow adjustments to paid invoices: Lets you cancel or add lines to paid invoices such that
the paid amount remains the same. You can also unmatch an invoice from a purchase order
that is not final matched, and then rematch the invoice to a different purchase order. You
cannot adjust or change the accounting distributions.

• Allow remit-to supplier override for third-party payments: Lets you override the remit-to
supplier name and address on invoice installments for suppliers with third-party
relationships.
• Recalculate invoice installments: This recalculates installment information during the

invoice validation process. Installment recalculation uses the most recent applicable start date
and a more favorable payment term. The most recent start dates might be Invoice date,
Terms date, or Goods received date plus the number of receipt acceptance days. If the invoice
is matched to a purchase order, a more favorable payment term might be the purchase order
payment term rather than the invoice payment term.
• Receipt acceptance days: Specifies number of days to accept receipts. Receipt acceptance
days are added to the date goods are received when installments are recalculated.
• Accounting date basis: Sets the default accounting date that is on the resulting journal entry.
The choices are:
- Goods received or invoice date: If the invoice does not have a date for goods
received then Payables uses the invoice date as the default accounting date.
- Goods received or system date: If the invoice does not have a date for goods
received then Payables uses the system date as the default accounting date.
- Invoice date
- System date
• Budget date basis: Sets the default budget date when you create an invoice. Used with
budgetary control to determine when to encumber the budget. The choices are Accounting
date, Invoice date, or System date.

Invoice Entry
Options that can also be specified at the Supplier level:

• Hold unmatched invoices • Payment Terms
• Invoice Currency • Terms Date Basis
• Payment Currency • Pay Date Basis
• Pay Group • Duplicate Invoice check
• Payment Priority
30
You can specify default values for the following options on both the Manage Invoice Options page and
the supplier site page. If a supplier site does not have a value, the invoice option setting is used.
• Hold unmatched invoices: Applies a matching required hold during invoice validation to
invoices that are not matched to a purchase order or receipt. This option can be set on a
supplier site to Yes, No, or Default from Payables Options. This invoice option is used only
when the setting on the supplier site is set to Default from Payables Options.
• Invoice currency: This should be set to the functional currency of the associated business
unit and ledger but can be set to a non-functional currency. An invoice can be entered using a
different currency but is converted to the functional currency of the associated ledger.
• Payment currency: This should be set to the functional currency of the associated business
unit and ledger but can be set to a non-functional currency. You can pay invoices in any
currency, irrespective of the invoice currency.
• Pay group: Pay groups are defined in Manage Payables Lookups and are used by Oracle
Payments.
• Payment priority: Set a value from 1 to 99. Use this to prioritize which suppliers get paid first.
For example, if have 100 suppliers in the Standard pay group but need to only pay 50 of them
weekly. You can set those 50 with as a priority 1 and the rest as priority 2. At payment run
time, you can submit a payment process for the Standard pay group with priority 1. Only the
50 with priority 1 get paid.

• Payment terms: Set this to the most favorable payment term for the business unit. Because
payment terms are usually negotiated with each supplier, this is usually set at the supplier
site.
• Terms date basis: Payables uses this date, the payment term, and the pay date basis to
calculate when the installment is due for payment. The choices are:
- Goods received date
- Invoice date
- Invoice received date
- System date
• Pay date basis: Sets the basis for determining whether an installment is scheduled for
payment using the actual due date or the discount date. If a business unit has a policy to take
advantage of discounts, it should be set to discount date.
• Duplicate Invoice check: Enable the Duplicate Invoice Check as an additional feature to find
potential duplicate invoices on the combination of supplier, invoice type, invoice amount,
invoice currency and invoice date attributes. During invoice creation user gets alert to a
potential duplicate invoice being entered by a warning message. Following lookups need to
be created and enabled to use this feature
- Standard Lookup Type: ADD_DUPLICATE_INV_CHECK
- Lookup Code: DUPLICATE_INVOICE_CHECK
This feature only checks for standard and prepayment types of invoices, does not check the
invoice number as an attribute to identify potential duplicate invoice and does not perform a
check on auto generated invoices such as: pay on receipt, pay on use, intercompany, and debit
memo invoices.

Matching
32
When you match an invoice to a purchase order, the purchase order defaults line, schedules, and
distribution values to the invoice. The following options are set only on the Manage Invoice Options
page:
• Allow final matching: Lets you perform a final match when matching to a purchase order or
when adjusting a matched invoice distribution. Final matching permanently closes the
purchase order and you cannot perform any further matching to the purchase order. If any
subsequent matching is tried the invoices are placed on a Final Matching hold.
• Allow matching distribution override: Lets you override the invoice distribution that was
created from matching an invoice to a purchase order.
• Transfer PO distribution additional information: Lets you transfer descriptive flexfield

information from a purchase order distribution to an invoice distribution when you match an
invoice to a purchase order.
You can specify default values for the following options on both the Manage Invoice Options page and
the Supplier Site page. If the supplier site does not have a value, the invoice option setting is used. The
tolerances must first be defined in the Manage Invoice Tolerances page and are detailed later in this
lesson. If the invoice exceeds either of the tolerances, it is placed on hold.
• Quantity tolerances
• Amount tolerances

Match in Full
• Use Match in Full when the supplier sends an invoice for the full amount of the
purchase order.
Supplements the existing
functionality of matching
invoice lines to the purchase
order.
Use to create an invoice by

Match in Full matching in full to the
purchase.
Enter the purchase order

number, invoice date, and
invoice number to create the
invoice.
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You cannot use Match in Full in following cases:
• Invoice match option is receipt.
• Supplier or Purchase Order is setup for self-billing.
• Purchase order is already partially matched to an invoice.

Discount
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If you use payment terms that include discounts, these settings control what is included in the
calculation and how to allocate the discount. You can set the following options on a supplier site to
Yes, No, or Default from Payables Options: Exclude tax from calculation, Exclude freight from
calculation, and Always take discount.
• Exclude tax from calculation: Excludes tax from an invoice when the discountable amount
for an installment is calculated.
• Exclude freight from calculation: Excludes freight from an invoice when the discountable
amount for an installment is calculated.
• Discount allocation method: Specifies how to distribute discounts: All invoice lines, Tax lines
and single distribution, or Single distribution.
• Always take discount: Takes the available discount, regardless of when the invoice is paid.

Early Payment Discounts
• Pay invoices early in return for real-time discounts.

• Early Payments offered discounts on a real-time basis each day of the payment cycle.
• The earlier the payment, the greater the discount.
• Eligible discounts decrease on a sliding scale based on the supplier’s discretion.
• Variable annual percent rate (APR) with the days accelerated used to determine the
discount amount and payment amount.
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Navigate to: Others > Setup and Maintenance > Setup: Financials > Change Feature Opt In > Payables
> Edit Features: Payables
Oracle Payables Cloud now integrates with Adaptive Intelligent and supports sophisticated data
science that drives the early payment discount offers.
Example
The discount amount is calculated by using a formula that incorporates the 'days paid early' and the
variable annual percent rate (APR). This is different from the traditional static payment terms that uses
pre-negotiated discount terms.
The payment of an invoice of $10,000.00 when accelerated 15 days using the APR of 36% will have
$150.00 discount amount.
Perquisites
A license for Adaptive Intelligent is required.

Tips
• Adaptive Intelligent determines the discount rate recommendations for a supplier after
applying data science algorithms.
• Review the discount rate recommendations for the supplier using the Create Payment page.
• Review the offers and key supplier metrics using the dialogue box
• Accept, ignore, or override the rate recommendations.
• The discount is calculated based on the accepted rate.

Prepayment
Prepayment options control advanced payments to a supplier or employee and

include:
• Payment terms
• Settlement days
• Use distribution from purchase order
• Show available prepayments during invoice entry
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A prepayment is a type of invoice you enter to pay an advance payment for to a supplier or employee.
For example, you may need to pay a deposit on a lease, or you may need to pay an employee an
advance for travel expenses. You can later apply the prepayment to one or more invoices or expense
reports you receive from the supplier or employee to offset the amount paid to them.
• Payment terms: Sets the default payment terms for a prepayment. For example, it is
recommended that you use the Immediate payment terms for all prepayments.
• Settlement days: Specifies the number of days to add to the system date to calculate the
default settlement date. You can only apply a prepayment to an invoice on or after the
settlement date. This option can also be set on the supplier setup.
• Use distribution from purchase order: Builds the invoice distribution by taking the purchase
order distribution and overriding the natural account segment with the natural account
segment from the supplier site prepayment distribution or, if not defined, from the common
options prepayment distribution.
• Show available prepayments during invoice entry: Displays the number and amount of
available prepayments when you enter an invoice.

Approval
Approval options control the automated invoice approval process.

When enabled, you can choose to:
• Require validation before approval.
• Specify Accounting Preferences.
• Allow force approval.
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Payables provides configurable predefined invoice approval rules and the ability to add rules using the
Approval Management extensions (AMX) of the Oracle SOA Suite and Oracle Human Workflow. The
invoice approval process determines whether an invoice requires approval, and if so, automatically
routes the invoice to the applicable approvers who then approve or reject the invoice. Invoices cannot
be paid until they are approved.
If enabled, you can choose to:
• Require validation before approval: Sends invoices through the approval workflow only
after the invoices are checked for completeness and holds by the validation process.
• Specify Accounting Preferences: The 3 choices are:
- Account regardless of approval status
- Require accounting before approval
- Require approval before accounting
• Allow force approval: Enables approving managers to override the workflow and manually
approve invoices.
Note: For more information on managing approvals, see Appendix A.

Disable the Deletion of Attachments for Validated or
Approved Invoices
An additional option is available in the Manage Invoice Options page, to prevent
deletion of attachments for validated or approved invoices.
39
Navigate to: Others > Setup and Maintenance > Setup: Financials > General Ledger > Show: All Tasks >
Manage Invoice Options
Steps to Enable
1. On the Manage Invoice Options page open the task for the business for which this feature
needs to be enabled.
2. Enable Prevent Deletion of Invoice Attachments.
Tips
• If approval is enabled then the attachments cannot be deleted once the invoice is approved,
regardless of the validation status.
• If approval is not enabled then the attachment cannot be deleted once the invoice is
validated.
• You can add additional attachments at any time but this option only allows you to delete
them.

Interest
• Interest invoices are invoices that Payables creates automatically for overdue
invoices.
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An interest invoice is created and paid while you are paying an overdue invoice. The interest options
are:
• Create interest invoices: Enable to calculate interest on overdue invoices and create interest
invoices. To use automatic interest rate calculation, you must also define interest rates. You
can also set this option on a supplier site to Yes, No, or Default from Payables Options.
• Minimum interest amount: Enter the minimum amount of calculated interest below which
an interest invoice is not created.
• Interest allocation method: Enable the method for allocating interest expense.
- Single distribution: Use the interest expense distribution.
- All invoice lines: Use the natural account segment from the interest expense
distribution.
• Interest expense distribution: Enter the distribution combination for interest expense if the
option Interest allocation method is set to Single distribution.

Payment Request
Oracle Receivables can submit payment requests to Payables when Receivables

processes customer non-credit card refunds.
Oracle Expenses can submit payment requests for expense reports.
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Oracle Receivables and Oracle Expenses can submit requests to Payables to disburse funds to a payee
who is not defined as a supplier. When Receivables processes a customer non-credit card refund and
when Expenses processes an expense report, an invoice is created in Payables with the invoice type of
Payment Request. You can disburse the funds and manage the payment process using the
functionality that is available in Payments.
The following options default to each payment request:
• Payment terms
• Pay group
• Payment priority

One Time Payments
One Time Payment feature facilitates seamless processing of payments for

transactions from third party external systems.
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This feature allows transactions to be imported into Payables from external systems as payment
requests using a predefined FBDI template. The payees and any bank account information for
electronic payments are created automatically when transactions are imported into Payables. These
payment requests are created with distributions and validated as part of the import process. This
eliminates the need for manual intervention when importing payment requests from their external
systems. Payment requests can be approved and updated, and attachments added. Separate payment
runs can be processed for these transactions from the regular payments to suppliers.
Following are steps to process One Time Payments
• Prepare the data using the predefined FBDI template, generate CSV file and upload the file
• Import the data into Payables using the Import Payables Payment Requests scheduled
process
• Make any necessary adjustments to the payment request in Invoice work area
• Schedule or run Payment Process Request for One Time Payment to complete the payments

Self-Service Invoices
Supplier Portal lets registered suppliers create invoices, view invoices, and view
payments.
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Using the Supplier Portal, a supplier can create invoices, view existing invoices to see the status, and
view the payments. If a supplier creates an invoice that is not matched to a purchase order, the invoice
is initially recorded in Payables as an invoice request. When approved by the requester, the invoice
request becomes an invoice. Payables must validate the invoice before the payment can be processed.
The self-service invoices options include:
• Limit invoice to single purchase order: Limits an invoice to the schedules belonging to a
single purchase order. If not enabled, a supplier can create one invoice for multiple purchase
orders.
• Allow invoice backdating: Lets a supplier enter an invoice for a date in the past.
• Allow unit price change for quantity-based matches: Lets a supplier enter a unit price on
an invoice that is different from the unit price on the purchase order. Select from among the
following values: No, Price decrease only, Price increase only, or Price increase or decrease.

Practice 15-4 Overview: Managing Invoice Options

• Setting the scope for your business unit.
• Configuring invoice options for your business unit.
44

Manage Payment Options
Payment options control how payments are processed for business units with the
Payables Payment business function. They include:
• Payment Override Options
• Account for Payment Options
• Currency Conversion Options
• Bank Charges
45
The payment override options are:
• Allow payment date before the system date
• Allow override of the supplier site bank account
• Allow document category override
• Allow payee override for third-party payments
The Account for Payment settings specify when to create accounting entries for a payment.
• At payment issue: Debits the liability account and credits the cash account.
• At payment clearing: Debits the liability account and credits the cash account when the
payment clears. (You should enable this option only if Oracle Cash Management is
implemented. Otherwise payments are never accounted.)
• At payment issue and clearing: Accounts for each payment at:
- Issue time: Debits the liability account and credits the cash clearing account.
- Clearing time: Debits the cash clearing account and credits the cash account. (This
accounting is created only if Cash Management is implemented.)

Note: Realized gain or loss is calculated at all points where accounting is created.
Implementation Consideration: After you set the Account for Payment option, the change you can only
make is from account At payment issue to account At payment issue and clearing.
The Currency Conversion options are:
• Require conversion rate entry: Requires a conversion rate when you enter a payment in a
currency other than the ledger currency. If you maintain daily rates, the rate is automatically
supplied based on the date and the rate type that you enter. If daily rates do not exist for the
date and rate type, and if this option is enabled, you cannot enter or save the transaction. If
the conversion rate type is User, then you must always enter a conversion rate. You cannot
create accounting entries or pay foreign currency invoices without conversion rates. If you do
not enable this option, after you have created the payments you can enter conversion rates
manually or run the Apply Missing Conversion Rates process.
• Conversion rate type: Specifies the default conversion rate type when you create payments.
You can change the conversion rate type at payment creation time.
Bank Charges: Bank charges are the fees that a bank charges you for transferring funds from your
disbursement bank accounts to the bank accounts of your suppliers. You can configure your setup and
payment process to automatically deduct bank charges from an invoice payment. If you enable bank
charges you must create a bank charge definition in Manage Bank Charges. To enable you must select
a Bank Charge Deduction Type:
• Standard: A typical rate that a bank charges you to transfer funds from a disbursement bank
account to a supplier bank account.
• Negotiated: A rate that you and your bank agree upon for the transfer of funds.

Practice 15-5 Overview: Managing Payment Options

• Verifying that the scope is set for your business unit.
• Reviewing the default payment option settings.
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Optional Tasks to Configure Payables
48

Define Automated Invoice Processing Configuration
• Use the Payables imaging solution to automate invoice creation including invoice
lines.
• Invoices:
– Are scanned or sent by e-mail for recognition and validation.
– Appear in the Invoices work area for approval, accounting, and payment.
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Automated invoice processing is configured as an external or manual procedure outside the Setup and
Maintenance Work Area. Invoices that cannot be fully recognized due to data or image quality are
created as incomplete invoices. Users can review, correct, and complete these invoices manually.
You must sign up for the Automated Invoice Processing service. Within five days, you receive two e-
mail accounts for test and production environments.
Set up scanners to produce TIFF images with International Telegraph and Telephone Consultative
Committee (CCIT) Group IV compression at 300 dpi. And enable Adaptive Thresholding technology on
the scanners to remove background colors, gray scaling, and gradients.
If the invoice is in a:
• Printed, physical format: Scan the invoice and send it by e-mail.
• Digital format: Send it directly by e-mail.
The following file extensions are supported: *.tif, *.tiff, *.png, *.jpg, *.doc, *.docx, and *.pdf. However,
for best recognition results, the application converts other document types into the TIFF format.
The images can be in color. However, the application converts the color invoice image into a black-
and-white image because black-and-white images provide optimal optical character recognition
accuracy and a reduced image size.
After processing, the invoices appear in the invoices work area for approval, accounting, and payment
processing.

Manage Payables Calendars
Create Payables calendars for use on:

• Payment Terms
• Automatic Withholding
• Key Indicator Reporting
• Recurring Invoices
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You can create Payables calendars for use on payment terms, automatic withholding tax, key indicator
reporting, and recurring invoices that need to use a calendar different from the general ledger
accounting calendar.
When you create a calendar or add years to an existing calendar, the following attributes control how
the periods are generated:
• Calendar Types: The choices are General purpose or Payment terms. Use general purpose
for automatic withholding tax, key indicator reporting, and recurring invoices.
• Period Frequency: Determines the number of periods per year and the period name format
options. The choices are 4-4-5, 4-5-4, 5-4-4, Monthly, Other, Quarterly, and Weekly. If you
enable a Period Frequency of Other, you must define calendar periods manually.
• Periods per Year: Identifies the number of periods per year based on the period frequency
enabled.
• Start Date: Represents the first date for the calendar and is the start date for the first period.
• Period Name Format: Determines the period name. For example, if you choose the
frequency of Monthly, the format can be either MM or MMM. MM would produce a period
name beginning with numbers and MMM would be alpha. MM = 12, MMM = Dec.

Manage Tax Reporting and Withholding Tax Options
The two types of tax-related options that may be required after making payments to
certain qualifying suppliers are:
• US 1099 Income Tax Reporting
• Withholding Tax
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Set up withholding tax using Payables or Oracle Tax. Which application you use depends on your
withholding tax requirements.
Use:
• Payables withholding tax setup to meet the basic withholding tax requirements for most
countries.
• Tax for more complex tax requirements.
Payables withholding tax reports are compatible with both the Payables and Tax withholding tax
configurations. The EMEA country-specific withholding reports are compatible with the Tax
withholding tax configuration.
Withholding tax configuration in this lesson uses the Define Payables setup.

Income Tax Reporting Options
In the United States, the Internal Revenue Service (IRS) requires that you file a 1099
form on payments made to certain qualifying suppliers.
52
Income tax reporting options control combined federal and state US 1099 filing.
• Use combined filing program: Enable to produce state records for all tax regions
participating in the Combined Filing program that have qualifying payments.
• Use supplier tax region: Enable to use the income tax region on a US 1099 supplier as the
default tax region on invoice distributions.
• Income tax region: Enter the default income tax region for invoice distributions of US 1099
suppliers if you enable the Use combined filing program option and do not enable the Use
supplier tax region option.
• Include withholding distributions in income tax reports: Enable to include federal tax
withheld for US 1099 suppliers on US 1099 reports.

Withholding Tax Options
Specify withholding tax option settings and default values to control how withholding
tax is processed.
53
• Event Class: Apply withholding tax to standard invoices, including credit and debit memos, or
prepayment invoices.
• Apply Withholding: Apply withholding if the tax authority requires your company to
withhold taxes from suppliers.
• Process Transaction Taxes: Calculate withholding tax on transaction tax lines.
• Allow Manual Withholding: Create and adjust manual withholding tax lines for your
invoices.
• Regime Determination Set: Select the template that determines the tax regime to use for all
transactions belonging to this event class. The options include WHTSTCC and
WHTTAXREGIME.
• Calculation Point: Specify the time when withholding tax is applied, that is, Invoice, Payment,
or Both. The options available are controlled by the regime determination set.
• Tax Invoice Creation Point: Specify the time when a tax authority invoice is generated. The
options depend on the value in the Calculation Point field.
- If the calculation point is Invoice, you can select Blank, Invoice, or Payment as the tax
invoice creation point.
- If the calculation point is Payment, you can select Blank or Payment as the tax
invoice creation point.

• Include Discount: Determine whether a deduction of a discount is applied to taxable basis of
all taxes. Select Blank for the deduction of a discount to be applied based on the taxable basis
formula definition.
• Rounding Level: Apply rounding to calculated tax amounts once for each withholding tax
rate per invoice or to the calculated withholding tax amount on each invoice line.
Note: The setups of withholding tax are detailed later in this lesson.

Manage Payables Lookups
Lookups are used as lists of values in applications. Payables comes with many
predefined lookups.
Lookups have three configuration levels:
• User
• Extensible
• System
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Many fields in Payables have a list of values for users to select a valid or qualified value. Lookup types
provide many of those lists of values. For example, Pay Group, Invoice Type, Prepayment Types,
Status, and so on. Each lookup type has a list of lookup codes that create the actual list of values.
Lookup types are assigned one of three configuration levels:
• User: Create or modify all parameters of a lookup type.
• Extensible:
- Modify only certain aspects of the lookup type such as the dates
- Add new lookup codes
- Cannot delete the lookup type
• System:
- Cannot add or delete any aspect of the lookup type.
- Modify only its meaning.
Note: For more information, see the Manage Lookups topic in the appendix.

Manage Payables Descriptive Flexfields
• Descriptive flexfields provide optional expansion in a user interface for additional

required information.
• Modify descriptive flexfields to capture data that would not otherwise be tracked by
the application.
• Payables provides predefined descriptive flexfields that can be configured and
deployed for use.
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Descriptive flexfields are optional but provide implementers with the ability to capture data required by
an industry or business policy that wouldn’t otherwise be captured by the application.
Following is list of entities or tables in Payables that descriptive flexfields are available to be configured
and deployed:
• Aging Periods
• Aging Period Lines
• Withholding Tax Rates
• Payment Information
• Distribution Sets
• Distribution Lines
• Invoice Holds
• Invoices
• Invoice Gateway Header

• Invoice Distributions
• Invoice Lines
• Invoice Gateway Lines
• Periods for Payables Modules
• Period Type for Payables Modules
• Invoice Payments
• Tax Codes
• Payment Terms
• Payment Terms Details
Note: For more information, see the Manage Flexfields topic in the appendix.

Manage Payables Document Sequences
Use document sequences to assign voucher numbers to invoices and payments.

Use Specify Ledger Options to require sequencing for Payables.
You can set up a sequence in two ways:
• Manage Payables document sequences.
• Use the Create Chart of Accounts, Ledger, Legal Entities, and Business Unit in
Spreadsheet task.
Document sequencing can be:
• Automatic
• Manual
• Gapless
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You may get two invoices with identical invoice numbers from two different suppliers. If you assign a
voucher number to each invoice, you can locate each invoice based on its unique voucher number.
Voucher numbers provide proof of completeness. If you use sequential voucher numbers, you can
confirm that no document was lost. Furthermore, certain countries require document sequencing.
In the Specify Ledger Options page, you must enable Payables under the Enforce Document
Sequencing option.
• When set to Payables, indicates that invoices and payments require voucher numbers.
• Enforce Chronological Order on Document Date: Checks the accounting date on the invoice
header when you save an invoice. The date must be the same as, or later than, the latest
accounting date of an existing invoice with the same legal entity and sequence.
Note: The Enforce Chronological Order on Document Date option applies only when you sequence by
legal entity. option to require voucher numbers. Then you can use the Manage Payables Document
Sequences task or the Create Chart of Accounts, Ledger, Legal Entities, and Business Unit in
Spreadsheet task to setup the sequencing.
Document sequencing can be assigned by one of the following methods:
• Automatic: Document sequencing assigns a unique number to each document as it is

generated, and this unique number is stored in the database. The numbering is sequential by
date and time of creation. If you define a sequence to automatically number documents, you
can provide an initial value to begin the sequence. In absence of a user-defined value, the
default value 1 is used.

• Manual: Sequencing requires you to assign a unique number to each document before it is
generated. In manual sequencing, the numerical ordering and completeness of a transaction
is not enforced. Users can skip or omit numbers when entering the sequence value. However,
each time that a number is assigned, the application validates its uniqueness.
• Gapless: Sequencing is similar to automatic sequencing. It automatically generates a unique

number for each document, but does that only for successfully generated documents. As a
result, the sequence is maintained for all the documents that are generated, and no sequence
numbers are lost due to incomplete or failed document generation. Additionally, you can
control the gapless document sequencing by enforcing the Transaction Date Validation
option. When enabled, this option checks for the transaction date of a particular document
and assigns the sequence number accordingly, to maintain the chronological order in which
the documents are created and assigned sequence numbers. The sequence numbers and the
transaction dates are chronologically correlated to prevent any mismatch of a new document
sequence being assigned to an older document or vice-versa.

Manage Distribution Sets
• Distribution sets automatically create distributions for invoices that are not matched
to purchase orders.
• Define distribution sets either with or without percentages.
60
A Distribution sets automatically allocate accounting distributions on invoices that are not matched to
purchase orders. Distribution sets are required if using the spreadsheet entry of invoices.
For example, create a distribution set that allocates the advertising expense on an invoice to four
advertising departments. Add the distribution set to a supplier site assignment to use the set on every
invoice for that supplier site and business unit.
If you do not assign a distribution set to a supplier site, you can assign a distribution set to an invoice
during invoice entry.
Distribution sets can be defined in one of two ways:
• With Percentages: Use a 100 percent distribution set when the percentage of expenses to
allocate is known. For example, define a fully allocated distribution set for a rent invoice by
assigning 30 percent of the invoice amount to the facilities department, 45 percent to the
sales department, and 25 percent to the administration department.
• With No Percentages: Use a 0 percent distribution set when the percentage of expenses to
allocate is not known. For example, define a distribution set with no amounts allocated to the
sales facility expense account and the administration facility expense account. You can then
enter amounts manually for the distributions during invoice entry depending on variables
such as the monthly head count for each department.

Practice 15-6 Overview: Managing Distribution Sets
This practice covers creating a distribution set for miscellaneous expenses.
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Manage Invoice Tolerances
• Invoice tolerances are the variances that you allow between invoice information and
information from purchase orders, receipts, and consumption advice documents.
• Invoice tolerances need to be set up if you need to enable tolerances in the Manage
Invoice Options page.
• Tolerances can be:
– Amount based.
– Quantity based.
• Invoices are placed on hold if variances exceed the tolerance.
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If you need to enable tolerances in the Manage Invoice Options page then you must setup the
tolerances that are used on that page.
If variances exceed specified tolerances, the invoice validation process places the invoice on hold. For
example, if the billed quantity for an item exceeds the tolerance for quantity, the validation process
applies a hold on the invoice, preventing payment until the hold is released.
You can define percentage or amount limits for:
• Amount based:
- Order Percentage
- Maximum Ordered
- Received Percentage
- Maximum Received
- Conversion Rate Amount
- Total Amount

• Quantity based:
- Order Percentage
- Maximum Ordered
- Received Percentage
- Maximum Received
- Price Percentage
- Conversion Rate Amount
- Schedule Amount
- Total Amount
- Consumed Percentage
- Maximum Consumed
Note: A percentage tolerance of zero indicates that no variance is allowed. An active tolerance without
a tolerance limit value indicates that unlimited variance is allowed.

Manage Invoice Holds and Releases
• Payables predefines holds for the invoice validation process.

• You can also define holds and releases that you apply manually or through workflow
to an invoice.
64
Payables predefines holds that the invoice validation process uses. Some predefined holds can be
released manually, others require that you fix the exception before the hold can be released. For
example, if the sum of the distributions on an invoice does not equal the invoice line amount, a
Distribution variance hold is placed on the invoice. You cannot release this type of hold manually.
Instead, you must correct the exception by adjusting the distribution amounts and validating the
invoice again.
You can also define holds and releases that you apply manually or through workflow to an invoice.
To enable the holds workflow, set the Allow Holds Resolution Routing option for the hold. The
workflow is then initiated when:
• Invoice validation places a hold.
• You manually place a hold on the Create or Edit Invoice pages.
• You void a payment and specify to place the invoice on hold.
• You submit the Import Payables Invoices process and specify to place a hold on all imported
invoices.
You can also enable the Consolidated Workflow Notification for Similar Matched Holds in the Payables
feature to acknowledge or release multiple holds when similar matching holds are applied on an
invoice.

List of Predetermined Holds
• There is a list of predetermined holds for grouping and generating a consolidated hold notification.
• The holds are grouped together and a consolidated notification is generated for each group.

Manage Aging Periods
Aging periods define day ranges and column headings for the Payables Invoice Aging
report.
66
Navigate to: Others > Setup and Maintenance > Financials > Payables > Show: All tasks > Manage
Aging Periods > Monthly Aging Periods.
This screenshot shows an aging period called Monthly Aging Periods.
The first column, which is called 1 Month Overdue, is defined to report invoices due for payment up
through 30 days prior to the day you submit the report. For example, if you run the report on March 3,
the 1 Month Overdue column includes an invoice due on March 3, as well as an invoice due in
February.
The second column, which is called 2 Months Overdue, is defined to report invoices due for payment
31 through 60 days prior to the day you submit the report. For example, if you run the report on March
3, the 2 Months Overdue column includes an invoice due on January 11.

Define Payables Tax and Withholding
The Define Payables Tax and Withholding task list includes setups for US 1099 income
tax reporting and withholding tax. The task list includes:
• Manage Tax Regions
• Manage Reporting Entities
• Manage Tax Codes
• Manage Withholding Tax Classifications
• Manage Withholding Certificates
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Manage Tax Regions
• Use tax regions for US 1099 electronic media combined filing reporting.
• Define tax regions with reporting limit amounts and methods.
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Navigate to: Others > Setup and Maintenance > Financials > Payables > Show: All tasks > Manage Tax
Regions.
Set reporting limit methods to one of the following:
• Same as federal: Uses the federal reporting limit instead of the region reporting limit
amount.
• Compare individually: Compares the reporting limit amount to the sum of payments for
each US 1099 miscellaneous income tax type. For example, the reporting limit for region X is
600 USD. If you make a total of two 400 USD payments to a supplier in region X, and classify
each payment as a different 1099 miscellaneous type, Payables does not report the supplier
to region X because neither individual payment type exceeded the region X reporting limit. In
this example, Payables reports the supplier only to the federal tax authorities.
• Compare sum: Compares the reporting limit amount to the sum of payments for all US 1099
miscellaneous income tax types. For example, the reporting limit for region X is 600 USD. If
you make a total of two 400 USD payments to a supplier in region X, and classify each
payment as a different 1099 miscellaneous income tax type, Payables reports this supplier to
the region X tax authority because the sum of the payments exceeds the region X reporting
limit. In this example, Payables reports the supplier to both federal and state tax authorities.

Manage Reporting Entities
A reporting entity is an organization that has a unique tax identification number (TIN).
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Navigate to: Others > Setup and Maintenance > Financials > Payables > Show: All tasks > Manage
Reporting Entities.
Reporting entities are used for United States (US) 1099 reporting. US 1099 reports accumulate the
totals for all primary balancing segment values that are assigned to a reporting entity to derive the
total amount paid.
Assign one or more primary balancing segment values to each reporting entity.
For example, an enterprise defines a reporting entity called Headquarters, which comprises Company
1, Company 2, and Company 3. Each company is represented by a primary balancing segment value.
When you submit the US 1099 report, Headquarters is entered as the reporting entity. The US 1099
Report prints the accumulated payments for companies 1, 2, and 3, and sums up the paid invoice
distributions that have these company balancing segment values in their accounts.
Related Reports
• US 1096 Report
• US 1099 Report
• US 1099 Invoice Exceptions Report
• US 1099 Supplier Exceptions Report
• US 1099 Payments Report
• US 1099 Electronic Media Report

Additional Withholding Tax Setups
The following Withholding Tax setups are covered in the Configuring Oracle Tax
lesson:
• Managing Withholding Tax Codes
• Using Rate Types
• Managing Tax Classifications
• Managing Withholding Certificates
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Manage Interest Rates
Define the rates for calculating and paying interest on overdue invoices.
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If create interest invoices is enabled in Manage Invoice Options, you must define interest rates. Interest
is calculated using the interest rate in effect on the day after the invoice is due. You can add, change,
or delete a rate at any time. When a rate is not defined, no interest is calculated and no interest invoice
is created.

Manage Bank Charges
Configure your setup to have payment process requests deduct bank charges from
supplier payments.
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If you enable bank charges on the payment options you must configure a definition that details which
information to use to process the deduction:
• Legal Entity
• Currency
• Settlement Priority: Normal or Express.
• Transferring and Receiving Banks
• Bank Charge Amounts

Suppliers Overview
Creating suppliers is a procurement process. Following are two ways to create a

supplier:
• The Supplier Registration Process.
• A Procurement Agent creates a supplier.
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The act of creating suppliers in Cloud Applications is a Procurement Application process. If an

organization does not implement Procurement, Payables users need to be set up as Procurement
Agents to create suppliers. Following are two ways to create suppliers:
• The Supplier Registration process: Used by external companies (and internal users on their
behalf) to submit their registration request to become a supplier of the buying organization.
Regardless of how a supplier is introduced, the buying organization reviews the registration
request using a collaborative review process and determines whether it wants to consider this
company as a new source of supply. The outcome of the review is either approved or
rejected. If approved it automatically starts a process to create a supplier record from the
registration.
• A Procurement Agent Creates a Suppler: If not going through the Supplier Registration
Process, a supplier can be entered directly from the Supplier work area.

Data Roles for Supplier Setup and Maintenance
Following are two data roles for supplier setup and maintenance:
• Supplier Administrator
• Supplier Manager
74
Following are the details of what functions a user can perform if he or she is assigned a data role:
• Supplier Administrator:
- Manage Suppliers: View and edit existing suppliers.
- Register Suppliers: Register an external company to be approved as a supplier.
- Manage Supplier Registration Requests: Contribute to the registration process.
- Import Suppliers
- Merge Suppliers
• Supplier Manager: Can perform all the Supplier Administrator functions plus create a supplier.
Reminder: Before a user can create a supplier even if they have the Supplier Manager role, they must
also be defined as a Procurement Agent.

The Trading Community Model
75
Suppliers are part of the Trading Community Model. They are global entities and are not created
within a business unit or within any other organizational context. However, the supplier sites are
assigned to business units and can be assigned to more than one business unit.
The Trading Community Model allows the creation of one entity or party being used for multiple
purposes in the Cloud applications.
The graphic above illustrates that the IBM Corporation entity can be created as both a supplier and a
customer. The customer ship to site address can be used as the purchasing site purpose and the
customer bill to site can be used as the pay site purpose.
The Trading Community Model ensures the integrity of your master tables.

Supplier Model
76
The graphic above illustrates all the different information that can be part of the supplier record. This
lesson covers the required information needed to create invoices and make payments.

Profile Tab
77
The Supplier Profile tab includes:
• General Information:
- Supplier Name and Number
- Tax Organization Type, for example Corporation. Individual, Foreign Corporation,

and so on.
- Business Relationship: See the next slide for more information.
- Parent Supplier
The Supplier Profile tab includes the following subtabs:
• Organization: Used to capture identification information such as an alias, the DUNS number,
customer number, and so on. Also used to capture regional information, a corporate profile,
financial profile, and merge history.
• Business Classifications: Business classifications support the tracking of supplier

certifications that are important to companies for different reasons, such as for supplier
diversity programs.

• Products and Services
• Transaction Tax: This determines whether to automatically calculate tax for this party’s
transactions. See the Configuring Tax for Payables lesson for more information.
• Income Tax: This determines whether Federal income tax is to be calculated.
• Payments: This determines the default payment method, bank accounts, and other payment
attributes. Bank account information is used for paying supplier invoices by electronic funds
transfer (EFT).

Supplier Business Relationship Status
Suppliers are identified based on two types of business relationship status:

• Prospective
• Spend Authorized
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Navigate to: Procurement > Suppliers > Tasks panel tab > Manage Suppliers.
• Prospective: Enables the supplier to participate in sourcing negotiations and supplier

qualifications, but does not enable the supplier to be available for ordering and invoicing.
• Spend Authorized: Indicates that the supplier is ready for ordering and invoicing. A supplier
can be initially set up as a spend authorized supplier, or if a supplier is a prospective suppler a
request can be initiated for a supplier to become spend authorized in one of the following
ways:
- User requests prospective supplier to be promoted to spend authorized from the

supplier record.
- Prospective supplier is awarded negotiation.
- A supplier is automatically created from an approved registration request if the

supplier has the initial intention of becoming a spend authorized supplier.

Addresses Tab
80
Supplier addresses are eventually used to create supplier sites. The setups of the TCA determine
whether the address is validated and complete.
The Address tab has the following subtabs:
• Sites: You can assign business units to a site from this tab or do the same on the Sites tab. A
site requires a Site Purpose. You can choose one or all of the following: Sourcing Only,
Purchasing, Procurement Card, Pay, and Primary Pay.
• Transaction Tax: These settings are the same as the Prolife tab settings. Site-level settings
override Profile-level settings.
• Contacts: Used to capture name, job title, email, and user account for the supplier portal.
• Payments: These settings are the same as the Prolife tab settings. Site level settings override
Profile level settings.

Sites Tab
81
Sites are created for a procurement business unit. A site can be assigned to more than one
procurement business unit. A procurement business unit represents a specific purchasing or sourcing
organization that is responsible for establishing and maintaining supplier relationships. The site,
therefore, allows a specific procurement business unit to set terms, controls, and policies which govern
how the procure to pay transactions are executed between its client business units and the supplier.
Many of these site attributes are optional, and need to be set only when there is need to deviate from a
supplier profile level policy. For example, the supplier might require more restrictive receipt and
invoice tolerances.
The subtabs on the Sites page include:
• General: Users can provide additional identifier information including customer number,
which is the internal number the supplier uses to identify the buying organization, alternate
site name, and a tax reporting indicator.
• Purchasing: Users can define purchasing terms for this site including communication details,
self-billing information, freight, consigned inventory, and hold controls.
• Receiving: Provide information relating to receiving controls such as over-receipt tolerance,

early receipt tolerance, receipt routing, and so on.
• Invoicing: See a subsequent slide for more details.
• Payments: See a subsequent slide for more details.
• qualifications for the supplier.

• Site Assignments: See a subsequent slide for more details.
• Qualifications: Users can view any assessments done on the supplier and a list of
qualifications for the supplier.

Invoicing
The invoicing tab defines:

• Controls
• Payment Hold Controls
• Terms
• Third-Party Payment Relationships
83
The invoicing tab of the supplier site determines:
• Controls:
- Invoice Currency: If a currency is defined, this overrides the business unit’s

functional currency.
- Invoice Amount Limit: If an invoice is entered with an amount greater than the
limit, the invoice is automatically placed on hold.
- Invoice Match Option: The choices are consumption advice, order, or receipt.
- Match Approval Level: The choices are 2 way, 3 way, or 4 way.
- Quantity Tolerances: If an invoice is matched with a quantity that exceeds the

tolerance, the invoice is automatically placed on hold.
- Amount Tolerances: If an invoice is matched with an amount that exceeds the

tolerance, the invoice is automatically placed on hold.
- Payment Currency: If a currency is defined here, this overrides the business unit’s
functional currency.
- Payment Priority: Used to prioritize the payment suppliers within the same pay
group.
- Pay Group: Can be used at payment time to select which suppliers to pay in a
specific payment run. Examples are Standard, Utilities, and Employees.

• Payment Hold Controls:
- Hold All Invoices: If you are in dispute with your supplier, you can place a hold on
all the invoices. If you select yes, you can also provide a payment hold reason.
- Hold Unmatched Invoices: The choices are defaults from Payables options, yes and
no.
- Hold Unvalidated Invoices: The choices are yes and no.
• Terms:
- Payment Terms: Used with the terms date basis and pay date basis to create the
payment installments.
- Terms Date Basis: Payables uses this date, the payment term, and the pay date
basis to calculate when the installment is due for payment. The choices are goods
received date, invoice date, invoice received date, or system date.
- Pay Date Basis: The choices are discount or due.
- Bank Charge Deduction Type: The choices are default from Payables Options,
none, standard , and negotiated.
- Always Take Discount: Takes the available discount, regardless of when the invoice
is paid.
- Exclude Freight from Discount: Subtracts freight from an invoice when the
discountable amount for an installment is calculated.
- Exclude Tax from Discount: Subtracts tax from an invoice when the discountable
amount for an installment is calculated.
- Create Interest Invoices: Calculates interest on overdue invoices and automatically

creates interest invoices. The choices are default from Payable options, yes and no.
• Third-Party Payment Relationships: A payment that you make to a supplier on behalf of

another supplier.

Payments
The payments tab defines:

• Payment Methods
• Bank Accounts
• Payment Attributes
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The payments tab of the supplier site determines:
• Payment Methods: The choices are check, electronic, electronic – SEPA, outsourced check,
wire, and user defined.
• Bank Accounts: Define a supplier bank account if you are using the electronic payment
method.
- For countries where the IBAN is used according to SWIFT (Society for Worldwide
Interbank Financial Telecommunication) guidelines, you can now create an external
bank account by entering only the IBAN instead of both the bank account number
and the IBAN.
- When you save the external bank account, the bank account number automatically
derives from the IBAN according to the structure prescribed by SWIFT and populates
the Account Number field.
• Payment Attributes: If you are using the electronic payment method, you can provide:
- Payment Delivery: Information such as a delivery channel, bank instructions 1 and

2, bank instruction details, settlement priority, payment test messages 1, 2, and 3,
and service level.
- Payment Specifications: You can select to pay each document alone and provide
who is the bank charge bearer, a payment reason, and a payment reason comment.
- Separate Remittance Advice Delivery: You can provide a delivery method of email,
fax, or printed.

Site Assignments
• Controls which Client BU’s can transact with the site.

• Define the Bill-to BU associated with the Client BU.
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Navigate to: Procurement > Suppliers > Tasks panel tab > Manage Suppliers > Sites > Site
Assignments.
Every supplier site must have an active assignment to create transactions against the site, such as
purchase orders or invoices. In other words, if a site assignment does not exist or is inactive, you
cannot create transactions for that supplier site.
Site assignments control which Client BU’s can transact with the site. In addition, the Bill-to BU
associated with the Client BU is defined.
Bill-to BU represents the organization that assumes the liability for the purchases made on behalf of
the Client BU. In most cases, the Client BU and the Bill-to BU are the same.
Nonetheless, you can set up a different Bill-to BU for a specific client, if required. If so, you may want
to specify the Liability Distribution account, Prepayment Distribution account, Bill Payable distribution
account, and Distribution Set that the Bill-to BU uses for transaction accounting. This relationship
could possible create intercompany accounting.
The premise of the site assignment model is to leverage the centralized procurement organization,
which negotiates terms and sets policy controls.
These terms and controls established for a supplier site are used by the Client BU as a result of being
assigned to the site. Without the site assignment model, each Client BU would be forced to establish its
own relationship with the supplier. The service provider relationship between the Client BU and Bill-to
BU is defined in the business unit setup.

Contacts Tab
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Contacts can be set up at either the Supplier Profile level or the site level. Contacts set up at the
Supplier Profile level represent the supplier and all the sites. Site level contacts represent only that
particular address.
Use contacts to capture name, job title, email, and user account for the supplier portal.

Practice 15-7 Overview: Creating a Supplier

• Creating a supplier.
• Creating an address and site.
• Creating a site assignment.
88

Summary

• Describe Payables terminology.
• Discuss the flow of default values.
• Understand the required tasks to configure Payables.
• Discuss the optional tasks to configure Payables.
• Configure email notifications.
• Set up suppliers.
89

16
Configuring Oracle Payments for Payables

Objectives

• Manage payment system connectivity.
• Manage payment methods.
• Define payment method defaulting rules.
• Define payment codes.
• Understand payment process profiles.
• Explain disbursement system options.
• Understand and submit a payment process request.
• Manage Payments Approvals.
• Understand Customer and Supplier Balance Netting.
2

Practice 16-1 Overview: Creating Banks, Branches,
and Accounts
• In this practice, you will be creating a bank, a branch, and bank account.
Note: This practice is needed to run a payment process request. This course covers
this setup in another lesson.

Practice 16-2 Overview: Creating a Payment
Document for a Bank Account
• Creating a Payment Document for a Bank Account.
• Assigning a payment format.
Note: This practice is needed to run a payment process request. This course covers
this setup in another lesson.

Overview of Oracle Payments
Payments is an Oracle Cloud Application that serves as a disbursement and funds

capture engine for other Oracle Cloud Applications.
As the central payment engine, Payments:
• Processes invoice payments from Oracle Payables.
• Settles receipts in Oracle Receivables against credit cards and bank account transfers.
• Connects with external organizations like payment systems and financial institutions
for processing.
• Enables you to centralize the payment process across business units, currencies, and
geographical regions.

Overview of Disbursements for Payments
• The Payments disbursements process includes selected disbursement setups of

Payments. Disbursements is the process of paying funds owed by your company to
creditors, such as suppliers who have provided goods or services.
• A payment can take:
– An electronic form, such as EFT.
– A printed form, such as a check.

The Disbursements Process
The disbursements process flow is as follows:
• Invoices are entered.
- A payment method is selected or provided on the invoice.
- The invoice is validated.
• Invoices are selected for payment as a payment process request.
• Invoices are built into payments and validations are applied.
• Payments are built into payment files and validations are applied.
- Bank instructions are added to the payment files.
• Payment files are formatted.
• If the payment files are printed, they are sent to a printer.
• If the payment files are electronic, they are transmitted to a payment system or bank.
• Various reports can be generated for payments transmitted electronically, such as:
- Separate remittance advice
- Payment File Register

Key Decision and Best Practice for Payment
Processing
• Key Decision: How much of the payment process should I automate?
• Best Practice: Any combination of manual and automated steps can be used.
– Payments should not be completely automated or completely manual.
– The best practice is to automate everything and use quick payment for urgent
payments.
Advantages of straight through processing:
• Fewer touch points require less effort.
• Exceptions are handled outside the payment process, whereas good payments are not held
up by the few exceptions.
Advantages of tight manual control:
• Enables manual review and confirmation of payments in process.
• Enables steps to be manually initiated to accommodate specific timing needs.

Key Decision and Best Practices for Payment
Selection Criteria
Key Decision: What invoice selection criteria should I use?
Broad invoice selection criteria:
• Creates as few payment process requests as possible.
• Recommended for a Centralized or Service Provider Processing model.
• Payment process templates can be fewer and more generic.
Payments can then derive the payment process profile automatically per payment, instead of forcing
all payments in a payment process request to have the same payment process profile.

Configuring Payment System Connectivity: Overview
The three main components are:

• Disbursement payment file formats.
• Transmission configurations.
• Payment systems.
10
Successful transmission of a payment file, a positive pay file, or other type of content, requires
coordination between sender (outbound) and receiver (inbound). The sender must format the
message according to a payment system so that the receiver can understand it and process it
correctly.

Prerequisites for Configuring Payment System
Connectivity
You must define the following in the Setup and Maintenance work area within the
Financials offering:
• Legal entities.
• Business units.
• Internal (disbursement) bank accounts.
• Oracle BI Publisher templates.
11
For information about the Define Legal Entities for Financials task list, see the lesson titled “Overview
of Common Applications Configuration” in this course.
For information about the Define Business Units task list, see the lesson titled “Configuring Business
Units and Reference Data Sets” in this course.
For information about setting up disbursement banks accounts, see the lesson titled “Configuring
Oracle Cash Management.”
For information about setting up Oracle BI Publisher templates, visit:

http://docs.oracle.com/cd/E25054_01/bi.1111/e13881/toc.htm.

Disbursement Payment File Formats
• Banks, payment systems, and countries have electronic formatting requirements for
payment files and settlement batches.
• Each format in Payments is attached to one Oracle BI Publisher template.
• Each format creates an outbound message.
12
The outbound message created by the disbursement payment file format is data file on which an
Oracle Business Intelligence Publisher (Oracle BI Publisher) template is used. The template contains
prescribed formatting attributes such as data location and must meet the requirements of financial
institutions and countries. Formats enable payment systems or financial institutions to understand
transactional messages.
A format is applied to the data in a data extract and the result is a formatted file, such as a payment
file, positive pay file, or other output. Validations can be associated with formats and are used to
ensure valid transaction data.
To set up Oracle BI Publisher templates, see the guide titled Oracle Cloud Middleware Report
Designer's Guide for Oracle Business Intelligence Publisher, which you can view at

Key Decision and Best Practices for Using Formats
• Key Decision: What formats should I use?

• Best Practice: Determine which payment formats your payment system or financial
institution supports.
• Consider standards-based payment formats that can be used with multiple banks:
– EDIFACT formats, such as PAYMUL, MT100, and MT103
– NACHA formats, such as Generic, CCD, PPD
– ISO20020 format
13

Key Decision and Best Practices for Using Formats
Key Decision: How do I modify templates?

Best Practice: Modify predefined payment formats using
Oracle BI Publisher.
• An XML extract provides Payments data.
• Use .rtf templates to create or modify layouts for checks and reports.
– Download .rtf files from Oracle BI Publisher and save locally.
– Modify the template.
– Upload the modified template using the Oracle BI Publisher under user-defined
report.
14
For a detailed discussion of tailoring formats to your needs, see Working with Payments Formats:
Article ID 1413989.1 on Oracle Support (http://oracle.support.com).

Practice 16-3 Overview: Creating a Disbursement
Payment File Format
This practice covers creating a Disbursement Payment File Format.
15

Transmission Configuration Concepts
The following concepts apply to payments transmission:

• Transmission Protocol
• Transmission Configuration
• Tunneling Configuration
16
If your company wants to transmit payments to a payment system or bank, you must set up
transmission configurations. Transmission values tell the system how to transmit a message.
• Transmission Protocol: Defines the method of transmission. Examples include File Transfer
Protocol and HTTP Put.
• Transmission Configuration: Transmission details such as FTP Server IP Address, Account

User Name and Password, and remote directory which must be associated with one
transmission protocol.
• Tunneling Configuration: A type of transmission configuration that helps transmit data

through a transmission servlet that can securely connect to your payment system without
exposing internal data.

Key Decision and Best Practices for Using
Transmission Protocols
Key Decision: Which transmission protocols should I use for payment processing?
Best Practice:
• Find out what your payment system or financial institution supports.
• Favor transmission protocols that are predefined in Payments.
17

Practice 16-4 Overview: Creating the Transmission
Configuration
• Selecting the Protocol for the Transmission Configuration.
• Creating the Transmission Configuration.
18

Managing Payment Systems
The purpose of setting up payment systems is to process and transmit payment files.
You must include the following:
• Processing model
• Bank name
• Transmission servlet base URL
• Disbursement type
• Disbursement payment file format
• Transmission protocol
• Payment system account
19
If your company needs to transmit electronic disbursement payments to financial institutions, you
must set up a payment system. The set ups include:
• Processing Model: The choices are:
- Processor: A service provider that interacts directly with banks.
- Gateway: A service provider that acts as an intermediary between your company

and a payment processor.
• Bank Name: The name of the financial institution that receives the electronic payment
instruction.
• Transmission Servlet Base URL: The URL used for the transmission.
• Disbursement Type: Select electronic funds transfer and positive pay.
• Disbursement Payment File Format: The file format previously defined in this lesson.
• Transmission Protocol: The protocol previously defined in this lesson.
• Payment System Account: Used to capture your relationship with the financial institution. It
captures specific identification information required by your bank in payment messages. For
example, the financial institution may require a submitter ID and submitter password to be
included in any message You must set up these values to avoid payment file rejections by
your bank.

Practice 16-5 Overview: Creating a Payment System

• Creating a payment system.
• Creating a payment system account.
20

Defining Disbursements
The Define Disbursements activity enables implementers to configure the

disbursement of funds, such as:
• Managing payment methods.
• Managing payment method defaulting rules.
• Managing payment codes.
• Managing payment process profiles.
• Managing disbursement system options.
21

Prerequisites for Defining Disbursements
Define the following prerequisites in the Setup and Maintenance work area within the
• Define legal entities.
• Define business units.
• Define internal bank accounts of the deploying company.
• Define payment system.
• Define formats.
• Define transmission configuration.
• Set up Oracle Business Intelligence Publisher templates.
22
For information about the Define Legal Entities for Financials task list, see the lesson titled “Overview
of Common Applications Configuration” in this course.
For information about the Define Business Units task list, see the lesson titled “Configuring Business
Units, Reference Data Sets” in this course.
For information about the Set Up Banks, Branches, and Accounts task list, see the lesson titled
“Configuring Oracle Cash Management” in Oracle Financials Cloud: Financials Implementation, Part II.
To define payment systems, see the section titled “Setting Up Payment Systems” in this lesson. You
have already completed this setup.
To define formats, see the section titled “Setting Up Formats” in this lesson. You have already
completed this setup.
To define transmission configurations, see the section titled “Setting Up Transmission Configurations”
in this lesson. You have already completed this setup.
To set up Oracle Business Intelligence Publisher templates, see the guide titled Oracle Cloud
Middleware Report Designer's Guide for Oracle Business Intelligence Publisher, which you can view at

Disbursement Payment Methods
• Setting up disbursement payment methods is optional because Payments predefines

many payment methods.
A disbursement payment method is a method of payment that your company uses to
pay a supplier, customer, or employee.
The payment method can be:
• Electronic, such as EFT or wire.
• Printed, such as a check.
23
Payments predefines the following Disbursement Payment Methods:
• Check
• Electronic
• Electronic – SEPA
• Outsourced
• Wire
The purpose of creating disbursement payment methods is to define granular usage rules to limit the
use of disbursement payment methods to specific business units, legal entities, and other attributes
and to assign validations for validating the invoices, payments, and payment files.
The level of granularity that you need for your disbursement payment methods is a factor to consider
before you define them.
The least granular payment methods are the predefined payment methods. With this approach, you
can associate each payment method with many payment process profiles and payment formats. This
approach requires less knowledge from source product users, such as invoice entry clerks, but may
involve more work later in the payment process.
Alternatively, you can define more granular payment methods. An example of a very granular
payment method is Italian EFT, to which you might add a validation that is specific to Italy. With a more
granular setup, validations are run early during invoice entry and errors can be fixed more quickly.

Creating Usage Rules for Payment Methods
Usage rules specify when a disbursement payment method is available for use.
You can limit the use of a payment method based on the following transaction
conditions:
• Business Units
• Legal Entities
• Payment Process Transaction Types
24
By default, payment methods are available on all payment process transactions.
Usage rules specify when a disbursement payment method is available for use by source products on
documents payable. By creating usage rules, you enable or disable payment methods for each source
product integrated with Oracle Payments. You can provide different usage rules for different source
products and change whether and when the payment method is available.
In the Usage Rules tab on the Create Payment Method page, you decide whether to assign the
payment method to one of the following:
• All payees.
• Specific business units, legal entities, and payment process transaction types for Oracle
Payables.
• Specific business units, legal entities, and payment process transaction types for Oracle
Receivables.
• Specific payment process transaction types for Oracle Cash Management.

Using Validations
• Validations are rules that ensure that transactions are valid before they are printed or
submitted electronically to payment systems. Validations ensure that disbursement
transactions, such as invoices, payments, and payment files, meet specific conditions
before they can be paid.
• You can assign validations to:
– Payment methods.
– Payment formats.
• A validation can be performed at the invoice level, payment level, or payment file
level.
25
In payment processing, ensure that payment files sent to payment systems and financial institutions
are valid and correctly formatted. If this is not done, the payment process is slowed, which results in
additional time and cost due to problem resolution. Oracle Payments helps you achieve straight-
through processing by ensuring that payment-related details are valid.
Payments always validates as early as possible for a given object and setup. Document payable
validations that are associated with payment methods are enforced earlier in the process than those
associated with formats. If you want validation failures to be handled by the same person who is
entering the invoice, you can associate the validation with the payment method. This is ideal for
business processes in which each person has full ownership of the items entered. However, if you want
focused invoice entry while validation failures are handled centrally by a specialist or a more
knowledgeable user, you can associate the validation with the format.

Using Validations
This table shows the objects you can validate and when validations are performed for
the applicable setup.
Object Payment Method–Driven Payment File Format–Driven

Validations are Enforced Validations are Enforced
When… When…
The invoice is saved in the source The invoice installment is selected
Document Payable
product. for payment.
The payment is created by building The payment is created by building
Payment related documents payable related documents payable
together. together.
Payment File Not applicable. The payment is created.
26
Add comprehensive validations for any transaction attribute to ensure that you catch errors before
they are sent to the bank.
• Layer them on top of predefined validations when formats or regulations change.
• Use them to create entirely new validations for your own formats.
Associate validations with a payment method so that documents payable are validated during invoice
entry.
• Provides immediate feedback.
• Resolves errors and makes payments quickly.
• Requires knowledgeable invoice entry personnel.
• Requires a larger number of payment methods with different, associated validations.
Validate after the payment process request submission if the validation is associated with a format.
• Enables a specialized payment process manager to resolve errors.
• Enables fewer payment methods.
• Requires less knowledgeable invoice entry personnel.

Creating or Assigning Validations to Payment
Methods
Validations can be associated with a payment method. They catch errors during data
entry on documents payable. When creating a disbursement payment method in
Payments, you create or assign validations on the Validations tab of the Create
Payment Method page.
You can:
• Select from a library of predefined validations.
• Create user-defined validations for this payment method.
27
Payments provides a library of predefined validations. You can associate these predefined validations
with any payment method or payment file format you create.
Predefined validations are groups of individual validations that work together for a specific purpose.
Many of the predefined validations are country-specific.
You cannot modify predefined validations, although some have parameters you can set to define
specific values.

Creating User-Defined Validations
User-defined validations are basic validations that correspond to simple operations.

They can be used as components to build more complex validations.
A user-defined validation specifies the object to which the validation applies:
• Document payable
• Payment
• Payment file
28
For example, user-defined validations enable you to validate the following conditions:
• Length of a value: Payment Detail must be fewer than 60 characters for your bank-specific
payment file format.
• Whether a field is populated: Remit-to bank account is required when payment method is
Electronic.
• Whether content of a field is allowed: Currency must be USD when using your domestic
payment file form.

Manage Payment Method Defaulting Rules
A payment method defaulting rule determines which payment method needs to be

defaulted on Payables invoices. Defaulting rules have:
• Priorities
• Defaulting conditions
29
Oracle Payments applies the payment method defaulting rules in the prioritized order you specify
based on the defined conditions.
The conditions include:
• Business Units
• First Party Legal Entities
• Payment Process Transaction Types
• Currency
• Payee Location
If the first rule is a match, Payments provides that rule's corresponding payment method on the
invoice. Suppose you specify that the payment method for all documents processed by Payables is
first, Check, and second, EFT. If the conditions for payment method Check match the conditions on the
invoice, then payment method Check is provided on the invoice.
If the conditions for payment method Check do not match the invoice, then Payments determines
whether the conditions for payment method EFT match. If the conditions for payment method EFT
match the conditions on the invoice, then payment method EFT is provided on the invoice.
Note: If the supplier, address, or supplier site has a default payment method selected, the invoice
defaults with the supplier defined payment method.

Practice 16-6 Overview: Creating a Payment Method

• Creating a payment method.
• Creating usage rules.
30

Manage Payment Codes
• Payments enables you to specify payment codes that are required by financial
institutions.
• Payment codes provide details to banks or payment systems about transaction
handling, bank charges, or payment reasons.
• Payments provides many predefined types of payment codes, which include:
– Bank instruction codes.
– Delivery channel codes.
– Payment reason codes.
– Service level.
– Local instrument.
31
Setting up payment codes are optional. During invoice entry, the user can select an applicable
payment code or it is provided by default from the applicable supplier or supplier site. Following are
the predefined payment codes:
• Bank Instruction Codes: Bank instruction codes are values that contain information or
instructions that need to be passed to a bank or financial institution at the payment file level.
• Delivery Channel Codes: Delivery channel codes are instructions that tell the bank how to
make the payment to the payee. A default delivery channel value can be set on the supplier or
supplier site. A value is provided by default on the invoice in Oracle Payables.
• Payment Reason Codes: Payment reason codes are generally country-specific identifiers
provided by a country's government or central bank. These codes provide the payment
system or bank with additional details about the reason for the payment for regulatory
reporting purposes.
• Service Level: A service level code represents an agreement between you and the bank or
financial institution that specifies the level of payment services it provides.
• Local Instrument: A local instrument code is a payment instrument, such as credit card or
bank account, that is unique to a geographical area.

Manage Payment Process Profiles
32
A payment process profile is a required setup that is assigned to payment process requests. It
manages documents payable, payments, and payment files during the payment process. Payment
process profiles include several types of information, such as specifications for payment file
formatting and transmission. The payment method and other invoice attributes drive the assignment
of a payment process profile to each document payable, and the payment process profile drives every
subsequent step of the payment process.
The payment process profile ties together the following setups:
• Transmission configuration
• Payment system
• Payment system accounts
Payment process profiles also:
• Control usage of the payment process profile.
• Specify payment formatting, printing, and transmission behavior.
• Control creation of payments and payment files.
• Automate report generation.

Prerequisites for Defining Payment Process Profiles
Mandatory prerequisite setups in the Setup and Maintenance work area within the
• Configure Payment System Connectivity
– Manage Formats.
– Manage Transmission Configurations.
– Manage Payment Systems.
— Set up payment system accounts.
• Define Disbursements
– Manage Payment Methods.
33

Payment Process Profile Concepts
The following terms are associated with Payment Process Profiles:

• Documents Payable • Payment File Register
• Payment Process Request • Positive Pay
• Separate Remittance Advice • Regulatory Report
• Payment • Payment Document
• Payment File
34
• Document payable: A transaction, such as an invoice, that is selected for payment.
• Payment process request: A job submitted to for processing a batch payments.
• Separate remittance advice: A notice sent to an external payee that lists the invoices your
company has paid to the external payee's bank account.
• Payment: A transfer of funds to a supplier, customer for refunds, or employee for expense
reimbursement.
• Payment file: The payment file is transmitted to a bank for further processing and payment
or printed as a check run.
• Payment file register: An internal report for keeping a register of payments generated.
• Positive pay: A document sent by your company to its payment system or bank that lists
payments made by check.
• Payment document: Check stock with the format and serial number assigned by your
disbursement bank account.

Creating a Payment Process Profile
A Payment Process Profile includes:

• Usage Rules
• Payment System
• Payment
• Payment File
• Grouping
• Reporting
• Additional Information
35
A payment process profile has header information and the seven tabs. The header defines:
• Name and Code
• Description
• From Date and To Date
• Payment File Format
• Processing Type: This determines what type of file is be transmitted.
- Electronic: A payment file is transmitted.
- Printed: A positive pay file is transmitted.
• Default Payment Document (Optional)
• Payment Confirmation Point: When the payment file is formatted, When the payment file is
transmitted, or Manual confirmation only.

Usage Rules Tab
A payment process profile can be created generically for use with all payments. By
creating usage rules, you can limit the use of a payment process profile based on the
following transaction conditions:
• Payment Method
• Disbursement Bank Account
• Business Unit
• Currency
36
When you set up a payment process profile, you specify the values on a transaction that are
compatible with it. You can specify whether the payment process profile can be used on a document
payable (invoice) based on its payment method, disbursement bank account, business unit, or
currency.
For example, if the payment format associated with the payment process profile allows only a specific
currency, then enter that currency in the usage rules so that the payment process profile can be used
only on documents payable with the appropriate currency.
The payment process profile that is applied to a document payable depends, in part, on the usage
rules specified on the Usage Rules tab of the Create Payment Process Profile page.
When you submit a payment process request, Payments compares the attributes of each transaction
to the payment process profile provided on the Submit Payment Process Request page.
Any transactions whose attributes are in conflict with that payment process profile's usage rules fails
validation.
• If no payment process profile has been selected, Payments compares the attributes of each
transaction to all existing payment process profiles to determine whether one payment
process profile is available for which the usage rules are a match with the transaction
attributes.
• If a match does not occur, a company specific implementation or user intervention may be
needed to determine the appropriate payment process profile to use.

Payment System Tab
A payment system is:

• Required for electronic payment processing.
• Optional for printed payment processing.
37
If the payment process profile is used for electronic payment processing, you select a payment system
and enter details that enable the application to electronically transmit files to that payment system
within the context of a payment system account.
You can also select Automatically transmit payment file after formatting to facilitate straight through
processing.
If the payment process profile is used for printed payment processing, a payment system is not
required for payment file handling, but you can optionally select a payment system and transmission
details so that the system can electronically transmit positive pay files to your bank.

Payment Tab
The Payment tab controls:

• Document grouping.
• Document limits.
38
The Payment tab controls options for documents payables become payments. It controls:
• Document Grouping: Specify document grouping options to define rules that are used to
group documents payable into payments when this payment process profile is used. For
example, if you select the due date, only payments with the same due date is grouped into a
single payment. Documents can be grouped by:
- Unique remittance identifier
- Remittance message
- Due date
- Bank charge bearer
- Payment reason
- Settlement Priority
- Delivery channel
- Ultimate Debtor
• Document Limits: Enumerates the maximum documents per payment.

Payment File Tab
The Payment File tab specifies:

• File formats, payment file prefix, directory, and extension.
• Payment grouping rules.
• Payment limits.
• Payment sorting.
• Bank instructions.
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The payment file tab specifies information about the electronic payment file that is transmitted to the
bank. It determines:
• Payment File Accompanying Letter Format
• Outbound Payment File Directory
• Outbound Payment File Prefix
• Outbound Payment File Extension
The payment file tab also controls:
• Payment Grouping Rules: Specify how payment files are created when this payment process
profile is used. For example, if you select Payment Date, only payments that have the same
payment dates are grouped into a single payment file. Payments can be grouped by:
- Business Unit
- First party legal entity
- Payment currency
- Payment date
- Payment function

- Payment reason
- Disbursement bank account
- Payment process request
- Bills payable
- RFC identifier
• Payment Limits: You can limit payments by:
- Currency
- Number of Payments
- Conversion Type
• Payment Sorting: When you specify sort order, payments within a payment file are ordered
as specified. Sort order also determines the ordering of payments in the payment file register.
You can specify up to 3 sort orders.
• Bank Instructions: The formatting process maps the information you want included in all
payment files to payment file positions according to the payment file format specification.
You can include:
- 2 Bank Instructions
- Bank Instruction Details
- 2 Payment Text Messages

Payment File Tab
The Payment File tab also specifies:

• Batch booking.
• Overrides.
• Periodic sequences in format.
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• Batch Booking: Select Yes if you want to use this feature.
• Overrides: Decide whether you want this payment process profile to contain one or multiple
service level and delivery channel combinations. If you enable an override option, the
payment file contains the service level and delivery channel combination you select, rather
than those specified in supplier setup. If you do not enable any override options, the payment
file can contain multiple combinations.
• Periodic Sequences in Format: If your payment system or bank requires sequencing of the
payments or payment files you transmit, you must specify the numbering sequence in the
payment format that is used to make the payment. You must include:
- Sequence Identifier: Enter the same value that you entered in the payment format
for the Define Sequence field for payment files.
- Reset Sequence Value: Specify the value at which the sequence should restart
when the sequence is reset.
- Last Used Number: Sequence number that was actually used in the last payment
file.

Grouping Tab
The Grouping tab is used to create multiple groups of payments for:

• ISO SEPA payment files.
• ISO CGI payment files.
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Specify the grouping parameters to create multiple groups of payments within an ISO SEPA or ISO CGI
payment file when this payment process profile is used. The transaction grouping rules can be based
on:
• Payment Date
• Disbursement Bank Account
• Ultimate Debtor
• Charge Bearer
• Service Level and Delivery Channel
• Category Purpose
• Settlement Priority

Reporting Tab
The Reporting tab holds the formats and other options for various reports like:
• The Payment File Register.
• The Positive Pay File.
• The Separate Remittance Advice.
• Regulatory Reporting.
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You specify the formats for the generation of payment reports for:
• The Payment File Register: A report that is created for each payment file. The register lists
details of each payment that is contained in that payment file. You can select the format with
or with out detail and whether to automatically submit when payment is confirmed.
• The Positive Pay File: After payment documents are recorded as printed, a positive pay file
can be generated if you set up this optional feature. Positive pay prevents fraud by sending
your bank a list of payments made by check. You must specify:
- Format
- File Prefix, Extension, and Directory.
- Whether to automatically transmit file.
• The Separate Remittance Advice: Separate Remittance Advice is a report, which is an

optional feature initiated by the first party payer sent to a payee, that lists the documents
payable paid as part of each payment. You must specify:
- Conditions: Whether to create the report for All payments, Number of payments, or
Payments detail length.
- Delivery Method: Select either email, fax, or printed.
- The Format and whether to automatically submit when payment is confirmed and
whether to allow multiple copies for payment file.

- The Format and whether to automatically submit when payment is confirmed and
whether to allow multiple copies for payment file.
• Regulatory Reporting: You must select either:
- No Reporting
- Report directly to central bank
- Reporting made by bank

Managing Disbursement System Options
Disbursement System Options provide default values for submitting payment process
requests. They can be set at two levels:
• Enterprise
• Business unit
45
To help drive consistency and save time, Payments can provide default values that automatically
populates certain fields on the payment process request. They can be set at two levels:
• Enterprise: These are system wide settings and apply to all Business Units. You can set the
following default options:
- System Settings: Set the payment method default basis, the separate remittance
advice from email, and separate remittance advice subject.
- Validation Failure Results: Set the default for both the documents and the
payments.
- Payment Review: Whether to stop the process to review the proposed payments
after creation.
- Payment Process Request Status Report Format: Define the format and whether
to automatically submit at payment process request completion.
- Payment Files: Whether to save the payment files in the database.
• Business Unit: Business Unit defaults override the enterprise level defaults. They include:
- Setting the payment method default basis, the separate remittance advice from
email, and separate remittance advice subject.
- Default payment specifications for Payee’s bank bearer charge format and whether
to pay each document alone.

Practice 16-7 Overview: Creating a Payment Process
Profile
This practice covers creating a payment process profile.
46

Payment Document and Reference Numbers
• Payments enables you to generate payment document numbers and payment

reference numbers for:
– Checks
– Electronic payments
• You can meet a region or country-specific requirement if the required number of
digits for payment reference numbers is different from the number of digits in the
Payments-generated payment reference numbers.
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When Payments processes a payment process request, it generates a unique number, known as a
payment reference number, which identifies each payment. The payment reference number starts
with 1 and increments for every payment.
For checks you can choose:
• Blank Stock: It indicates that the check stock provided by the bank does not have the check
number.
• Numbered Stock: These are preprinted checks. The format for this type fills in the check and
the numbers must be synchronized with the system’s numbering.
If you do not enable numbering for electronic payments, then the application-generated payment
reference numbers are stamped on electronic payments and passed to Oracle Payables as the
reference numbers.
If you do enable payment document numbering for electronic payments, then payment document
numbers, as well as payment reference numbers, are generated for electronic payments. The payment
document numbers are then passed to Payables as the reference numbers.

Payment Process Requests
• A payment process request is a batch process submitted for the selection of invoices,
grouping of invoices into payments, and grouping of payments into a payment file.
• You can submit a payment process request on the Submit Payment Process Request
page. You can also create a template on the Create Payment Process Request
Template page and schedule the template to submit the payment process request
later.
• For each payment process request, you can specify:
– Selection criteria
– Payment attributes
– Processing options
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When your organization submits a pay run, it is done through a payment process request. A best
practice is to set up templates for the most common or recurring type payments. For instance, you
might set up a template for each business unit and for each payment method. In other words, have a
template for the electronic payment method and another one for check method payments. If a
template is not available for a particular pay run, the pay run can also be dynamically created.

Selection Criteria Tab
49
Navigate to: Payables > Payments > Tasks pane > Submit Payment Process Request > Selection
Criteria tab.
Selection Criteria: This tab determines which installments are selected for payment. It can include one
or a combination of the following:
• Pay through date: Latest due date for an installment.
• Pay from date: Earliest due date for an installment.
• From and To Payment Priority: Lowest and highest payment priority assigned to an
installment.
• Date Basis: Basis for the date that affects installment selection and whether to take a
discount.
• Include zero amount invoices: Include invoices that have a zero amount due.
• Pay groups: Invoice categorization for payment. The default setting includes all pay groups,
but you can specify one or more pay groups.
• Currencies: Currencies for invoices and payments. The default setting includes all currencies,
but you can specify either one or more invoice currencies, or one or more payment
currencies.

• Business units: Business units for invoices and payments. The default setting includes all
business units. If you specify:
- A payment business unit, the selection process finds installments for the invoice
business units that the payment business unit services.
- An invoice business unit, the selection process finds installments for that invoice
business unit.
• Legal entities: Legal entity associated with an invoice. The default setting includes all legal
entities, but you can specify one or more legal entities.
• Sources: The sources used to separate one time payments which were created as payment
sources such as Insurance Refunds, Student Refunds.
• Supplier type: Supplier classification, such as tax authority or contractor.
• Payment method: Method of payment for an installment.
• Invoice conversion rate type: Type of rate that converts the invoice currency to the ledger
currency.
• Supplier or party: Supplier or party on an invoice.
• Invoice group: User-defined name assigned to one or more invoices.

Payment and Processing Options Tab
51
Navigate to: Payables > Payments > Tasks pane > Submit Payment Process Request > Payment and
Processing Options tab.
Payment Attributes
• Payment Date: The effective date of the payment.
• Disbursement Bank Account: The internal bank account that is used for the payment.
• Payment Document: Limits the payment processing to one type of document, either printed
or electronic.
• Payment Process Profile: A setup entity that drives processing behavior for each payment.
• Payment Conversion Rate Type: If processing a payment in a currency other than the
functional currency, the conversion rate type is used to convert the payment to the functional
currency.
• Settlement Priority Override: Overrides the payment process profile’s settlement priority.
• Bank Charge Bearer Override: The party that agrees to assume the liability for bank charges
assessed on a transaction, which can be overridden by another party.
• Starting Voucher Number: If using voucher numbers, you can enter the starting number for
the payment.

• Cross-Currency Rate Type: The conversion rate type that is used to convert the invoice
currency to the payment currency.
Note: These attributes don’t affect installment selection.
Navigate to: Payables > Payments > Tasks pane > Submit Payment Process Request >Payment and
Processing Options tab.
The processing options for a payment process request determine the level of automation for that
request. For example, you can set options that submit the request through to completion without
stopping, or you can stop the request to review selected installments. The processing options are:
• Apply credits up to zero amount payment: Applies credits and creates a zero amount
payment if the sum of the selected installments is negative after the installments are grouped
for payment.
• Review installments: Stops the payment process request after selecting the installments.
You can:
- Review installments
- Add or remove installments
- Edit payment and discount amounts
- Specify user conversion rates
- Calculate withholding and interest
• Review proposed payments: Stops the payment process request after grouping installments
into payments and before building the payments.
• Create payment files immediately: Creates payment files for the submitted request instead
of waiting to combine payments from other requests into payment files.
• Validation failure handling for documents: Specifies processing instructions for handling
document validation failures.
• Validation failure handling for payments: Specifies processing instructions for handling
payment validation failures.
• First Approver: A specific user can be selected as the first approver for payment approval by
overriding the configured rules for payment approvals.

Streamlined Payment Processing
• During the payment process request, the installments selection process confirms that
the business unit, currency, and payment method of the installment matches the
usage rules defined on the payment process profile.
• Similar matching occurs between the business unit and currency of the installment
and the internal bank account.
• An Installment is not selected if it does not match the configuration of the payment
process profile or the internal bank account.
53
Matching during the installments selection process prevents later installment rejections during the
build payment process due to a mismatch of installment attributes with the payment process profile or
the internal bank account.
Enable from the Setup Manager Feature Opt In page.

Positive Pay File Additional features
• Transmit positive pay files using the transmission configuration setup at the payment
process profile.
• Use the Transmit File parameter from the Create Positive Pay File process.
• Requires a valid payment system account and transmission configuration attached to
the payment process profile.
54
Navigate to: Payables > Payments > Tasks panel tab > Create Positive Pay File
You can also use dynamic attributes to name the positive pay files that are transmitted.
The transmitted files use the dynamic attributes specified in the transmission configuration that is
attached to the payment process profile.
Additional Tips
There is no change to the existing process of automatically transmitting positive pay files when
processing payment process requests.
To transmit positive pay files generated using the Create Positive Pay File process:
• You must have a valid payment system account and transmission configuration specified in
the Payment System tab of the payment process profile.
• The positive pay file is only transmitted when the Transmit File choice list in the Create
Positive Pay File process is set to Yes.
• The dynamic naming attributes specified in the Transmission Configuration are only used to
name the transmitted positive pay files.

• The dynamic attributes available for use are REQUEST ID, DATE, and TIME.
- Request ID refers to the process ID of the Create Positive Pay file process.
- Date is displayed in YYYYMMDD format and time is displayed in HHMMSS format.

For example, if you specify dynamic naming for the transmitted file as
&REQUESTID_&DATE_&TIME, then for a process ID of 123456 run on January 20,
2019 at 09:10:45, the file name of the transmitted file is 123456_20190120_091045.
• The static naming attributes specified in the Reporting tab of the payment process profile
continue to be used to name the generated positive pay files.

Update Payment Requests when Creating or Ending
Employee Bank Account
You can now automatically apply a payment request to a newly created bank account
Similarly, when you inactivate a bank account, you can automatically replace the
account with an alternative.
56
When you create a new bank account in the Expenses work area, you can now automatically apply the
new account to any payment requests that are not already associated with a bank account.
Steps to Enable

Practice 16-8 Overview: Submitting a Payment
Process Request
• Submitting a payment process request.
• Confirming generation of electronic payment numbering.
57

Payment Approval: Overview
58
Oracle Payments introduces Payment Approval. You enable the Payment Approval feature on the
Manage Disbursement System Options pages. Payment Approval enables you to:
• Enforce control over funds available by sending payments to approvers for review before
final payments are made to suppliers or employees.
• Define an approval policy for payments created through a payment process request.
• Stop the payment process request at the Review Proposed Payments stage, and enable
approvers to optionally remove payments directly from the payment process request to
prioritized payments for the best use of funds available.
• Approve or reject payments from the payment process request from the payments page or
directly from emails. You can also perform other approval actions from payment approval
worklist notifications.

Implementation Overview: Setups
Setup for payments approval is performed from Setup and Maintenance using the
following tasks:
• Manage Disbursement System Options.
• Manage Task Configurations for Financials which accesses the Business Process
Management (BPM) Worklist application.
59
The following predefined job roles grant access to the setups:
• Financial Application Administrator
• Accounts Payable Supervisor
• Business Process Human Taskflow Administration Duty

Feature Impact Guidelines
Automatically Included with Any (Optional)

Feature Name
Available Shipped Job Roles Setup Needed
Enable payment
Yes Yes Yes
approvals
Configure approval
Yes Yes Yes
rules
Initiate approvals for
payment process Yes Yes No
requests
Send approval
Yes Yes No
notification
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Three of the features are automatically available after upgrade.
Features “Enable Payment Approvals” and “Configuration of approval rules” have setups associated
with it.
All features can be accessed through existing shipped job roles.

Enabling Payment Approval
From the Manage Disbursement System

Options, click on Enable payment approval
to enforce approvals for payment process
requests.
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Navigate to: Others > Setup and Maintenance > Financials > Payments > Manage Disbursement
System Options page.
The Approval process is enabled at the payment process requests level and not at the individual
payments level.
When the payment approvals option is enabled, all payment process requests go through the payment
approvals process. When the payment approvals process is not enabled, you must define automatic
approval rules for payments.

Configuring Payment Approval Rules
Configure payment approval rules by

selecting:
• Task: PaymentApproval
• Participant: Payment Approval Serial
Participant
• Rule: Enter rule name and provide IF
and THEN details
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Navigation: Others > Setup and Maintenance > Tasks Pane > Search: Define Approval Management for
Financials > Manage Task Configurations for Financials.
The Payment Approval features enables you to configure payment approval policy in Business Process
Management User Interface.
The payment approval policy defines:
• When to initiate the payment approval process.
• Criteria for triggering the payment approval process, such as bank account, or pay group.
• A list of approvers who review payments and make final payment decisions.
Approval rules can be configured to route the approval notification in sequential mode, but not in
parallel mode

Payment Approval Rules: Example
63
Navigate to: Others > Setup and Maintenance > Tasks Pane > Search: Define Approval Management
for Financials > Manage Task Configurations for Financials link > Edit icon > PaymentApproval
(11.1.12.0.0) task > Assignees tab.
Your business wants to route all payments that are more than 5,000 USD to approvers. You can
associate the pay group called “Morethan5k” with invoices greater than 5,000 USD.
The rule above routes all payments to the user “finuser2” when a payment process request processes
invoices with pay group equal to “Morethan5K”.

Initiating Approval for Payment Process Requests
When a Payment Process Request reaches the Payment validation stage, the status
changes to Payments approval initiated.
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Navigate to: Payables > Payments > Tasks pane > Manage Payment Process Requests.
The payment process request is a straight through process and user intervention is not required
unless you want to stop and review the payments.
When a payment process request is submitted with the payment approval option enabled, the
payment approval process is automatically triggered after the payment process request reaches the
Review Proposed Payments stage.
After the payment approval process is triggered, the status of the payment process request is set to
Payments approval initiated.

Payment Approval Worklist Notifications
Workflow:
• Generates and routes approval notifications to approvers.
• Sends approvers worklist notifications, as well as email notifications for review.
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Navigate to: BPM Worklist > Select a Payment Process Request link.
Payment approval workflow evaluates all the payment approval rules and generates the worklist and
email approval notifications. Approval notifications are routed to the approvers so they can review the
payment process request details.
Approval notifications contain individual payment details in the form of attachments.

Payment Approval Worklist Notifications
Enables approvers to approve, reject, withdraw approval, or terminate the payment

process request from the Review Proposed Payment page.
66
Navigate to: BPM Worklist > Select a Payment Process Request link.
Approvers review payment details and make a decision to approve or reject the payment process
request. Approvers can only approve or reject an entire payment file within a payment process request
and not individual payments within a payment file.

Removing Payments During the Approval Process
• Reviewers can remove individual

payments.
• Reviewers cannot remove invoices.
67
Navigate to: Payables > Payments > Tasks pane > Manage Payment Process Requests > Review
Proposed Payments.
When the payment approval process is in progress, removing payments from a payment process
request are allowed only for active approvers.
Approvers can select individual payments from the payment process request and click the Remove
button to remove payments if required and approve remaining payments.

Withdrawing an Approval or Terminating the
Payment Process
The Withdraw Approval action is available only to the:
• Submitter
• Approver
The Terminate Payment Process action is available to any user.
68
Navigate to: Payables > Payments > Tasks pane > Manage Payment Process Requests > Review
Proposed Payments.
The Withdraw Approval action is enabled only when the payment process request status is in
Payments approval initiated. This action is performed by the submitter or approver of the payment
process request.
If required, any user can select the Terminate Payment Process action.

Customer and Supplier Balance Netting Overview
You can access the Customer and Supplier Balance Netting pages from the Payables
landing page and the Accounts Receivable work area. Use the Customer and Supplier
Balance Netting feature to:
• Enable the automatic netting of Payables and Receivables transactions within a
business enterprise.
• Issue Payables payments and Receivables receipts for the netted amounts.
• Control how a group of trading partners who is both your supplier and your customer
net Payables and Receivables transactions.
• Automatically create the Payables payments and Receivables receipts required to
clear a selected number of Payables and Receivables transactions.
69
You can define netting agreements that incorporate the netting business rules such as transaction
selection criteria, to support your payment practices. The netting process:
• Automatically creates the Payables payments and Receivables receipts required to clear a
selected number of Payables and Receivables transactions.
• Uses the Oracle Payments work area and the Oracle Accounts Receivable work area.
• Helps you to quickly settle both AP and AR transactions for your trading partners who are
both a customer and supplier.
• Permits the settlement information to be automatically emailed to your trading partner.
• Provides an internal netting report and listing to track of the details of the settlement such as
trading partners, invoices, transactions, and settlement date.
• Enables you to create a netting agreement for each group of trading partners that agrees to
net transactions. Netting agreements include the business rules that define the types of
transactions that may be selected for netting, and which suppliers and customers can be
netted.
- Use netting groups to allow the Netting Manager to optionally create settlements for
multiple agreements at the same time.
- Implement netting groups to group together similar business related agreements for
settlements.

Customer and Supplier Balance Netting Settlement
Features
• Streamline payments with your trading
partners.
• Settle payments quickly.
• Control types of invoices to net and
frequency of settlement.
• Reduce risk of late payments.
• Notify your customers of netted
transactions immediately by email.
• Settle large volumes of invoices and
transactions.
70
The netting functionality helps you to quickly settle payments and receipts with your trading partners,
without the need to create physical payments.
• If your third-party is both your customer and your supplier, and you send and receive many
invoices to each other, then netting enables you to quickly net off the invoices and
transactions. Additionally, you can create multiple settlements for each invoice currency that
you send or receive with your third-party.
• The netting agreement enables you to combine multiple customers and suppliers that
represent your trading partner, so you can more easily manage the netting of invoices across
different sites.
• The agreement can also filter in or out certain types of invoices or transactions to be netted,
based on your business requirements.
• The process allows the netting manage to review a proposed settlement prior to completion.
This enables you to fine tune the settlement, such as removing or adding other transactions,
or forcing certain invoices to be netted.
• After completion, the process automatically emails your trading partner details of all invoices
that were netted.
• The payments and receipts are created as part of the process and can easily be identified as
those that are settled via the netting process.

Generate Netting Settlements
Use the Generate Netting Settlements process to create netting settlements for a Legal
Entity or Business Unit.
• Use the Manage Netting Settlements page to create netting settlements for a legal
entity.
• Use the Generate Netting Settlements process to create netting settlements for all
legal entities belonging to a business unit.
• You can also schedule the process to run at a time that is convenient for your
business.
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Navigator to: Tools -> Schedule Processes -> Generate Netting Settlements
• The Netting feature enables the automatic netting of Oracle Payables and Oracle
Receivables transactions within a Legal Entity.
• Your Payables Manager, Receivables Manager or Netting Manager can define a netting
agreement that incorporates the netting business rules and transaction criteria needed to
support your netting practices.
• The netting process automatically creates the Payables payments and Receivables receipts
required to clear a selected number of Payables and Receivables transactions.
Steps to Enable
Refer to the Customer and Supplier Balance Netting Topical Essay for detailed implementation
guidance:
https://cloud.oracle.com/en_US/opc/financials-cloud/implementationresources
Tips
• Determine if you want to run the process for your Business Unit or your Legal Entity.
• If you opt to run by business unit, all Legal Entities linked to your Business Unit are eligible for
selection.
• If you want to Settle Without Review, all the settlements are settled automatically, without the
option to fine tune your settlements in the spreadsheet.

Role Information
The Generate Netting Settlements job is automatically available if you completed the Netting Security
Setup Steps described in the Customer and Supplier Balance Netting Topical Essay.

Customer and Supplier Balance Netting: Manage
Netting Settlements in a Spreadsheet
Use the Manage Netting Settlements in a Spreadsheet feature to process settlements
that are in progress.
For Settlements that are in Selected or Selected, no transactions status you can
download them to a spreadsheet and process them as follows:
• Selected: Review, delete, or mark them to be settled.
• Selected, no transactions: Delete them from the spreadsheet.
The spreadsheet lets you delete or settle a netting settlement.
After all changes are complete, you can save and submit the settlements for
processing.
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Navigate to: Payables > Payments > Task List > Customer and Supplier Balance Netting > Manage
Netting Settlements > Select Settlement > Actions > Download Settlement to Spreadsheet > Click
Payables tab
Navigate to: Receivables > Accounts Receivable > Task List > Customer and Supplier Balance Netting >
Manage Netting Settlements > Select Settlement > Actions > Download Settlement to Spreadsheet >
Click Receivables tab
TIPS
Use the Manage Netting Settlements page to search for the types of settlements that you wish to
process. For example :
• Settlements that belong to a Legal Entity
• Settlements that are in Selected or Selected, no transaction status
• Settlements that have the same Settlement Name
Key Resources
Customer and Supplier Balance Netting Topical Essay:

https://cloud.oracle.com/opc/saas/datasheets/netting-topical-essay.pdf
Role Information
The Manage Netting Settlements in a Spreadsheet is automatically made available to you if you have
already completed the Netting Security Setup Steps.

Importing Netting Agreements
Using the Netting Agreement Import process you can:
Netting Agreement Process
Create Import
Netting Completed
Agreements Netting Agreements
in a Agreement into the
Spreadsheet Process Application
74
Importing Netting Agreements
Netting Agreements can also be imported using the Import Netting Agreements FBDI spreadsheet.
1. Download the Import Netting Agreements FBDI spreadsheet.
2. Enter the agreements in the spreadsheet, following the guidance in the notes.
3. Create the zip file
4. Use ‘File Import’ to import the zip file (choose fin/payables/import account)
5. Run ‘Load Interface File for Import’ process (choose ‘Import Netting Agreements’ for the
‘Import Process’). When the process completes, the netting agreements from the spreadsheet
are uploaded into the netting interface tables.
6. Run ‘Import Netting Agreements’ process. You can optionally select a range of Legal Entities,
and/or a range for the ‘Netting Agreement’ name. To import all agreements in the interface
tables, you can leave the parameters as is.
Key Resources
Refer to the Customer and Supplier Balance Netting Topical Essay for detailed implementation
guidance:
https://cloud.oracle.com/en_US/opc/financials-cloud/implementationresources

Customer and Supplier Balance Netting Example
• Valencia Farming is both your Number of Payables Receivables

customer and supplier. Invoices
Number of Invoices 247 434
• You have an agreement to net
Invoice Amounts for $287,682 $261,408
transactions. Valencia Farming
• You owe Valencia Farming $287,682 Amount Netted $261,408 $261,408
across 247 invoices in Payables.
Number of Invoices 227 434
• Valencia Farming owes you $261,658 Netted
across 434 invoices in Receivables. Number of invoices 20 0
left to pay
Total amount $26,274 $0
outstanding
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Valencia Farming Example
In this example, Valencia farming is both your supplier since they sell you fresh fruit and your
customer because you sell them machinery.
• Over a period of 6 months, Valencia farming has sent you 247 invoices that total just over 287
thousand dollars. Similarly, over the last 6 months, you sent them 434 invoices totaling just
over 261 thousand dollars for machinery parts.
• Instead of all 681 transactions being paid separately, you have set up an agreement with
Valencia Farming to net transactions every 6 months, with any outstanding balance to be
paid separately as a one off payment, or to be netted in a future netting settlement.
• Your netting manager runs the netting process. Since the total that you owe them is more
than the total that they owe you, all of the receivables transactions are marked as paid by
netting. You are also able to mark 227 payables invoices as netted, since they total the same
amount on the receivables side.
• Therefore 661 transactions are automatically settled, and you send Valencia Farming an email
with the details of all transactions that have been netted.
• You are now left with only 20 invoices in payables left to pay Valencia Farming, which total
$26,274. You can opt to either pay these separately, or leave them as unpaid for a future
netting settlement.

Netting Features Specific Setups
Feature Description
Security: Assigning the Assign the Netting Role to only those users who
Netting Role create Netting Agreements and Netting Settlements.
Netting Payment Method Set up a netting payment method to identify the

payables invoices that are netted.
Netting Document Sequencing Set up a Document Sequence Category and

Setup Document Sequence.
76
Security: Assigning the Netting Role
Navigate to: Others > Setup and Maintenance > Setup: Financials > Users and Security > Manage Users
To successfully complete Netting, the Netting Manager running the process must have access to:
• Business units that own the transactions.
• Necessary roles required to create payments and in particular receipts.
Assign the Netting Duty Role Customer and Supplier Balance Netting only to those users who create
Netting Agreements and Netting Settlements. Those same users must also be assigned access to the
Payables and Receivables roles, and have data access to all business units that you intend to use in the
Netting process.
Netting Payment Method Setup
Navigate to: Others > Setup and Maintenance > Setup: Financials > Payments > Manage Payment
Methods
A netting payment method can be set up to identify the payables invoices that are netted. Ensure you
enter NETTING for the Code.
For Usage Rules: Check Automatically assign payment method to all payees.
For Payables: Check Enable for use in Payables.
Table: AP_CHECKS_ALL

Manage Document Sequences
Navigation to: Others > Setup and Maintenance > Setup: Financials > Payables > Show All Tasks >
Manage Payables Document Sequences
Assign a document sequence to the category:
• Applications: Payables
• Module: Payables
• Type: Gapless
• Department Type: Legal entity

Netting Features Specific Setups
Feature Description
Netting Bank Account Setup A netting bank account is a fictitious account and must
be assigned to netting agreements.
Netting Receipt Class and Receivables includes a predefined receipt method for
Receipt Method Setup netting:ORA_AP/AR Netting. This is required to
process receipts that are created in a settlement.
Receivables System Options Two setup tasks in Receivables affect the Netting
Setup process:
• Enables the payment of unrelated transactions to
net for multiple customers in a settlement.
• Control Transactions Types in receivables to
include for netting
78
Netting Bank Account Setup
Navigate to: Others > Setup and Maintenance > Setup: Financials > Customer Billing > Manage Bank
Accounts
To enable a Netting bank account, select the Netting account field on the Bank Account setup for your
legal entity.
• Check the Netting account in the General tab on the Create Bank Account user interface.
• For Netting settlements that are for multiple currencies. For example, if you create a
settlement that Nets within each currency, check the Multicurrency Account checkbox in the
General Tab.
• Assign the Business Units to the Bank Account in the Business Units Access tab. The Bank
Account must also have access to the Business Units that you want to include as part of your
netting process.
• Edit the Business Unit and assign the NETTING Payment Method.
Netting Receipt Class and Receipt Method Setup
Navigate to: Others > Setup and Maintenance > Setup: Financials > Customer Payments > Manage
Receipt Class and Methods

To use the receipt method for netting: ORA_AP/AR Netting:
• Navigate to Manage Receipt Classes and Methods in Setup and Maintenance.
• Search for the Receipt Method equals ORA_AP/AR Netting.
• Assign your Business Unit and Account that is setup in the Netting Bank Account Setup
section in the Feature Specific Setup.
Receivables System Options Setup
Navigate to: Others > Setup and Maintenance > Setup: Financials > Receivables > Manage Receivables
System Options
Navigate to: Others > Setup and Maintenance > Setup: Financials > Customer Billing > Manage
Transaction Types
There are two setup tasks in Receivables that affect the Netting process. To process the cash receipts
within receivables, you must allow the payment of unrelated transactions if you want to net for
multiple customers in a settlement.
Additionally, you can fine tune the types of transactions to be eligible for netting.
Manage Transaction Types
Setup Transaction Types to control which types of transactions in receivables to include for netting.
• In some cases, you must exclude certain types of transactions from the agreement between
the deploying entity and the trading partner, for example, Credit Memos. Similarly, the
Netting Agreement can only cover the transactions related to a specific division or business
purpose.
• Receivables transactions are eligible for netting if the transaction types are associated to the
agreement.
• Only transactions for transaction types that are assigned to the netting agreement are eligible
for netting. This enables you to exclude certain transaction types from the netting selection
process.

Netting Agreement Setup Options
Feature Navigation
Netting Group Setup Implement Netting Groups to group together

similar business related agreements for
settlements.
Pay Group Setup Helps control the types of payables transactions to

select when building a netting settlement.
Netting Letter: Email Subject The Netting Letter and Netting Reversal Letter
can be emailed directly to the third-party.
Netting Group Setup
Navigate to: Others > Setup and Maintenance > Setup: Financials > Application Extension > Manage
Standard Lookups
Netting groups enable the Netting Manager to create settlements for multiple agreements
simultaneously:
• If you want to net for different types of trading partners or industries, enter the Netting group
that can be associated to an agreement.
• If you want to net for only the agreements that are for the petroleum trading partners group
for example, you can signify this choice when creating a settlement. The netting process
ignores netting for the other agreements that aren’t assigned to the petroleum netting group.
Oracle uses a predefined a lookup type for this purpose : ORA_JE_NET_GROUP.
• Navigate to Manage Standard Lookups in Setup and Maintenance.
• Search for the Lookup Type equals ORA_JE_NET_GROUP.
• Add a Lookup Code, Start Date, and Meaning for the netting group.
• Add as many netting groups as you want, to differentiate between the netting agreement
types.

Pay Group Setup
Navigate to: Others > Setup and Maintenance > Setup: Financials > Payables > Manage Payables
Lookups
The Netting Groups control the types of agreements to settle, while the Pay Group functionality can
help control the types of payables transactions to select when building a netting settlement.
If for example, you know which transactions are eligible for netting when the transactions are entered
(manually, spreadsheet import), the payables invoices can be created with a predefined Pay Group that
you can assign to your agreement. Add lookup codes to the PAY GROUP lookup type for this purpose.
• Navigate to Manage Payables Lookups in Setup and Maintenance.
• Search for the PAY GROUP lookup type.
• Add a lookup code for your Netting pay group.
The netting agreement can then control the payables invoices to select based on the pay group. This is
an optional setup task. If you do not use Pay Groups to filter the payables invoices eligible for netting,
then the settlement process selects all the invoices that meet the criteria, regardless of which pay
group is assigned to an invoice. To default a Pay Group for invoices for a specific customer, enter the
Pay Group at the supplier level.
Netting Letter – Email Subject Setup
Navigate to: Others > Setup and Maintenance > Setup: Financials > Application Extension > Manage
Standard Lookups
You can email the Netting Letter and Netting Reversal Letter to the third-party. To set the Email
subject text:
• Navigate to Manage Standard Lookups in Setup and Maintenance.
• Search for the ORA_JE_NET_LETTER lookup type.
• Enter the Email subject in the Meaning field of the ORA_JE_SUBJECT lookup code.
The settlement number is automatically appended to the Netting Email Subject.

Netting Agreements Setup
A netting agreement:
• Controls how a group of trading
partners net Payables and
Receivables transactions.
• Includes business rules that
define the types of transactions
that may be selected for netting.
• Is created for each group of trading
partners that agrees to net
transactions.
• Determines which suppliers and
customers can be netted.
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Navigate to: Payables > Payments > Task List > Customer and Supplier Balance Netting > Manage
Netting Agreements
Navigate to: Receivables > Accounts Receivable > Task List > Customer and Supplier Balance Netting >
Manage Netting Agreements
Access the Netting Agreement user interface from the Payments work area in Payables.
Access the Netting Agreement user interface from the Accounts Receivable work area in Receivables.
Searching Agreements
In the Search area, you can find agreements that you previously created. By default, the search selects
only active agreements that have not been end dated. However, you can change this in the Active
Netting Agreement field.

Summary

• Manage payment system connectivity.
• Manage payment methods.
• Define payment method defaulting rules.
• Define payment codes.
• Understand payment process profiles.
• Explain disbursement system options.
• Understand and submit a payment process request.
• Manage Payments Approvals.
• Understand Customer and Supplier Balance Netting.
83

17
Configuring Oracle Receivables and Billing

Objectives

• Understand key concepts in Oracle Receivables.
• Understand how the Rapid Implementation spreadsheet creates setups for
Receivables.
• Understand required setups for Receivables.
• Explain the optional setups for Receivables.
• Configure customer billing.
• Understand the customer model.
• Discuss customer profile classes.
• Create a customer.

Credit to Cash
Oracle Receivables provides a streamlined and user-friendly interface for Receivables professionals
both to create invoices and other transactions and to manage the entire cycle of billing customers and
processing customer payments.
This lesson describes the setups required to enable transaction, receipt, revenue, and credit
management processing for a new business unit in Oracle Receivables.

Configuring Receivables Using Rapid Implementation
The following Receivables required tasks are completed during the General Ledger
Rapid Implementation workbook upload process:
• Set Receivables System Options.
• Define AutoAccounting Rules.
• Define Receivables Activities.
• Define Remit-to Address.
• Define Statement Cycles.
The following tasks also appear in the Define Receivables Configuration for Rapid Implementation task
list, but are not required to enable Receivables for transactions and receipts:
• Manage Standard Memo Lines
• Manage Funds Capture Payment Methods
• Manage Funds Capture Process Files
• Manage Internal Payees
• Manage Payment Systems
• Manage Lockbox
• Manage Transmission Formats for Lockbox
• Define Approval Limits
• Upload Customer Data

The Rapid GL Implementation Workbook: Natural
Accounts Spreadsheet
By using the Natural Accounts spreadsheet in the Rapid Implementation for General Ledger workbook,
much of the accounting required to setup Receivables is automatically created after the upload.
You must use the detailed Account Type values to enable the system to populate the required account
combinations for many of the required setup tasks. Each Account Type relates to a specific account
setup field.
Note: The account combinations must exist in the combinations table.

Completing Your Setup
After you upload the GL Rapid Implementation Spreadsheet, perform these tasks to
complete your Receivables setup:
• Review the automatically created setups.
• Manually perform the remaining required setups.
• Perform any optional tasks.
• Open an accounting period.
Even though the Rapid Implementation spreadsheet configured some of the tasks, you must also
perform these steps to complete your Receivables setup:
• Open and review the setup objects that were created automatically:
- Receivables System Options: Review and update the default settings to meet your
needs.
- AutoAccounting Rules: Creates accounts for transactions. Review your

AutoAccounting structure.
- Remit-to Address: Verify that the address of the default legal entity appears as the
remit-to address.
- Receivables Activities: Creates accounts for activities that are not transactions or
payments. Verify the account assignments for the Earned Discounts, Unearned
Discounts, and Adjustments activities.
- Statement Cycles: Creates the statement cycle dates for each business unit using the
three predefined statement cycles of Quarterly, Monthly, and Weekly.
• Manually perform the remaining required setups: Create a receipt method that creates
accounts for payments and assign a remittance bank account; define approval limits for your
users; create or upload your customer data.

• Perform any optional tasks that your company may require, such as transaction types,
transaction sources, standard memo lines, and so on.
• Open an accounting period. After your setup is complete, you must open an accounting
period before you can create transactions and generate accounting.

Managing the Receivables System Options
The system options are divided into two main tabs:

• Billing and Revenue • Cash Processing
– General Information – General Information
– Accounting – Application Exception Rule
– Transactions – Accounting
– Transaction Delivery Using Email – Automatic Receipts
– Statement Delivery Using Email – Bills Receivable
– Late Charges
– Customers
– AutoInvoice
– Tuning Segments
One of the setups that the GL Rapid Implementation spreadsheet upload creates is the Receivables
System Options. You need to review what was created and if necessary edit these options.

Billing and Revenue General Information Options
The required fields include:

• Split Amount
• Days in Days Sales Outstanding Calculation
• Application Rule Set
• Discount Basis
The General section of the Billing and Revenue tab includes:
• Split Amount: Used to determine the number of invoices over and under this amount, as well
as the total amounts remaining.
• Days in Days Sales Outstanding Calculation: Used when calculating your conventional days
sales outstanding.
• Sales Credit Percent Limit: Enter a value in this field to limit the percentage of revenue plus
nonrevenue sales credit that a salesperson can have on any transaction line.
• Note: If you do not enter a value in the Sales Credit Percent Limit field, then no sales credit
limit validation is performed during revenue accounting.
• Require Salesperson: Enable this option to require that you enter salespersons when entering
transactions.
• Note: If you intend to use revenue accounting, you must enable the Require Salesperson
system option. Revenue accounting requires that you assign sales credits to all transactions
that can be adjusted for either revenue or sales credits.
• Print Remit-to Address: Option to print your remit-to address on customer statements.
• Print Home Country: Option to print your home country on customer statements that refer to
addresses in that country. Enabling this option is required to run the Create Customer
Statements program.
• Default Country

• Application Rule Set: Determines how to reduce the balance of line, tax, freight, and late
charge amounts on a transaction when a receipt or credit memo is applied. Receivables uses
the Application rule set assigned to the transaction type of the open debit item to process
payment applications. If no Application rule set is assigned to the transaction type, then
Receivables uses the Application rule set assigned to System Options.
• Discount Basis: Default discount basis for all payment terms. You can update this value on
individual payment terms. The discount basis determines what transaction amounts
Receivables uses to calculate discounts for payment terms.
• Allow Unearned Discounts: Enables discounts to be taken after the discount period passes.
You define discount periods when defining your payment terms. Important: The Receivables
System Options record is the only place that determines whether you can accept unearned
discounts for the given business unit.
• Discount on Partial Payment: Enables discounts if a customer does not pay in full. If this
option is enabled, you can still choose not to allow discounts on partial payments at the
transaction level when defining payment terms.
• Allow any Business Unit to Process Receipts
• Exception Rule Adjustment Activity
• Exception Rule Adjustment Reason
• Credit Card Receipt Method
• Credit Card Remittance Bank Account
• Credit Card Receipt Business Unit
• Bank Account Receipt Method
• Bank Account Remittance Bank Account
• Bank Account Receipt Business Unit

Billing and Revenue Accounting Options

• Tax Account
• Cross-Currency Rounding Account
• Realized Gains Account
• Realized Losses Account
• Header Rounding Account
• Days per Posting Cycle
The Accounting section on the Billing and Revenue tab includes:
• Tax Account
• Unallocated Revenue Account
• Cross-Currency Rounding Account
• Realized Gains Account
• Realized Losses Account
• Automatic Journal Import
• Header Level Rounding: Enable the Use header level rounding option and assign a Header
Rounding account to maintain rounding differences when converting foreign currency
transactions to the ledger currency. If you enable the Use header level rounding option,
Receivables displays a rounding distribution line for all transactions, regardless of currency. If
the transaction is in the ledger currency, then the amount of this line is zero.
Important: You cannot disable this option after you enable it and save your system options.
• Days per Posting Cycle: Enable this option to post transactions in smaller groups. This
ensures that you do not run out of rollback space during posting. For example, if your
accounting period is 30 days and you set this value to 30, the posting program uses only one
cycle. If your accounting period is 30 days and you set this value to 17, the posting program
uses two cycles. Best practice is to set this field to a value that is less than the number of days
in your accounting period.

Billing and Revenue Transactions Options

• Tax Invoice Printing Options
• Document Number Generation Level
• Tax Invoice Printing Options: The choices are:
- European Tax Format: Does not itemize tax information for each line, but does print
tax rates as the last column of invoice lines. Prints freight items last. At the end of
the invoice, the Tax Summary by Tax Name section includes a summary of taxable
amounts and tax charged for each tax rate code.
- Itemize and Sum: Itemizes tax information for each invoice line. At the end of the
invoice, the Tax Summary by Tax Name section includes a summary of the tax
charged for each tax rate code. At the end of the invoice, Receivables prints the
invoice subtotal, tax, shipping, and invoice total.
- Itemize Taxes: Itemizes tax information for each invoice line.
- Itemize with Recap: Itemizes tax information for each invoice line. At the end of the
invoice, the Tax Summary by Tax Name section includes a summary of the tax
charged for each tax rate code.
- Recap: Does not itemize tax information for each line. At the end of the invoice, the
Tax Summary by Tax Name section includes a summary of the tax charged for each
tax rate code.
- Summarize by Tax Name: Does not itemize tax information for each line. At the end
of the invoice, the Tax Summary by Tax Name section includes a summary of the tax
charged for each printed tax name and rate.

- Sum Taxes: Does not itemize tax information for each line. At the end of the invoice,
the Tax Summary by Tax Name section includes a summary of the tax charged for
each tax rate code. At the end of the invoice, Receivables prints the invoice subtotal,
tax, shipping, and invoice total.
- Total Tax Only: Displays only the total tax amount at the bottom of the document.
• Document Number Generation Level: The choices are:
- When Saved
- When Completed
- None
• Item Validation Organization: The Master Organization for Items defined in the Item Master
tables.
• Allow Change to Printed Transactions: Enable this option to allow updates to printed
transactions. This option also determines whether you can update a customer address when
printed, posted, or applied transactions are assigned to that address. Important: You cannot
update a transaction if it has activity against it, regardless of how you set this option.
Examples of activity include payments, credit memos, adjustments, accounting, and inclusion
of the transaction on a balance forward bill.
• Allow Transaction Deletion: Enable this option to allow a transaction to be deleted from
Receivables after it has been saved. If you do not enable this option, all Receivables users are
prevented from deleting transactions. Important: If an installation is legally required to use
document sequences with gapless numbering for transactions, then you should not enable
this option.

Billing and Revenue Transaction Delivery Using
Email Options
You can set Receivables system options to send transactions as a PDF file to the designated email
addresses of customer accounts and sites. Enter the appropriate settings in the Transaction Delivery
Using Email section of Billing and Revenue System Options:
• From Email: Email address of your enterprise.
• From Name: Name of your enterprise.
• Reply-to Email: Email address that your customers can send an email to.
• Note: You must enter an email address in either the From Email field or the Reply-to Email
field. All other fields are optional.
• Email Subject: Text of the email subject line.
• Include Business Unit in Email Subject: Option to include the name of your business unit in
the subject line.
• Include Transaction Number in Email Subject: Option to include the transaction number in
the subject line.
• Email Body: Text of the email message that accompanies transactions.
Note: Set up the customer account and site profile for each relevant customer.

Billing and Revenue Late Charges Options
If enabled, provide:
• Average Daily Balance Calculation Basis
• Average Daily Balance Calculation Period
• Interest Invoice Transaction Type
• Debit Memo Charge Transaction type
• Interest Charge Activity
• Penalty Charge Activity
• Late Charge Transaction Source
During your late charges setup, you must decide how to record and present late charges to your
customers.
You can record and present late charges as one of three documents:
• Adjustments
• Debit Memos
• Interest Invoices
You must complete the entire setup for late charges. In addition, you must complete specific steps for
the document that you intend to use.
Note: Because interest invoices and debit memos are considered to be regular transactions, tax may
be calculated on these transaction amounts.

Processing Interest Invoice Late Charges by Legal
Entity
Generates a separate late charge interest invoice

for each legal entity associated with the active
ledger of the business unit of the overdue
transaction.
.
Create Late Charges process
performs these operations:
Replaces the balancing segment value of the
receivable and revenue account code combinations
of the late charge interest invoice with the
balancing segment value assigned to the legal
entity of the overdue transaction.
Note: If multiple balancing segment values are assigned to the legal entity of the overdue transaction,
then the Create Late Charges Batch process does not replace the balancing segment value of the
receivable and revenue account code combinations.
The receivable and revenue accounts are retained that you defined in the Interest Invoice transaction
type and assigned to Receivables System Options for the applicable business unit.

Enabling Processing of Late Charges by Legal Entity
To set up for interest invoice late charges by legal entity, you must:
• Complete the setups for recording late charges as interest invoices.
• Create a lookup code to enable the replacement of the legal entity balancing segment
value.
Navigate to: Others > Setup: Financials > Receivables > Manage Receivables Lookup
Setting Up for Interest Invoice Late Charges by Legal Entity
To create a lookup code for the replacement of the legal entity balancing segment value:
1. Navigate to the Manage Receivables Lookups page.
2. Search for the AR_FEATURES lookup type.
Note: If the lookup type AR_FEATURES doesn't exist, create this lookup type in the Manage
Standard Lookups page.
3. Select the AR_FEATURES lookup type and click the Plus (+) icon to create a new row for
entering the lookup code.
4. In the Lookup Code field, enter AR_LATE_CHARGE_BSV_OPTION.
5. Check the Enabled box to activate the replacement of the legal entity balancing segment
value.
6. In the Start Date field, enter the date that this lookup code becomes active.
7. Complete the other lookup code fields according to your business requirements.
8. Save your work.
When the AR_LATE_CHARGE_BSV_OPTION lookup code is activated:
• A run of the Create Late Charges process replaces the balancing segment value of the
receivable and revenue accounts defined in the interest invoice transaction type assigned to
the Interest Invoice Transaction Type field in the Late Charges section of Billing and Revenue
Receivables System Options for all legal entities of overdue transactions that don't have
multiple balancing segment values.

Note: If any legal entity has multiple balancing segment values assigned, then the Create Late Charges
process doesn't replace the balancing segment value of the receivable and revenue account code
combinations but instead retains the default values.

Billing and Revenue Customers Options
Determines:
• Grouping Rule
• Create Reciprocal Customer
The customer’s section determines:
• Grouping Rule: Used by AutoInvoice to group revenue and credit transactions into invoices,
debit memos, and credit memos. Grouping rules specify attributes that must be identical for
lines to appear on the same transaction. Oracle predefines a default grouping rule.
• Create Reciprocal Customer: If enabled the system allows the creation of reciprocal
relationship between customers. Reciprocal customers are enabled to pay each other’s bills.

Billing and Revenue AutoInvoice Options
• Purge Interface Tables option

• Maximum Memory in Bytes field
• Log File Message Level field
• Accounting Dates Out of Order
Use the AutoInvoice section of the Billing and Revenue tab of the Receivables System Options pages to
set these system options:
• Purge Interface Tables: If enabled, the system automatically purges the AutoInvoice Interface
tables after import of records successfully transferred to Receivables. Do not enable this
option if you want to purge the table manually.
• Maximum Memory in Bytes field: Amount of memory to allocate to AutoInvoice for validation.
The default is 65535 bytes. For best results, enter a value that is the maximum number of
records that you import—rounded to an even number—multiplied by 1024.
• Log File Message Level field: Enter a value from 0 to 5 to indicate the amount of detail to
display in the AutoInvoice log file. For day-to-day business needs and to improve
performance, set the level to 0. If you experience errors while running AutoInvoice, you can
set the output to a higher level to review more detailed information in the log about the
errors.
• Accounting Dates Out of Order: If the accounting dates are out of order choose whether to
reject or adjust the transactions.

Billing and Revenue Tuning Segments Option
To increase the performance of AutoInvoice for the MTL_SYSTEM_ITEMS table.
If you want to increase the performance of AutoInvoice and indices already exist for the
MTL_SYSTEM_ITEMS table, use the value that you specified for your index as your System Items
Flexfield tuning segment. If you defined a concatenated index, use the first column of your
concatenated index.
If no indices exist for the MTL_SYSTEM_ITEMS table, enter the segment with the most distinct values
for your System Items Flexfield tuning segment.

Cash Processing General Information Options
For receipt processing, you can include:

• AutoCash Rule Set
• Match Receipts By
• AutoMatch Rule Set
• Days to AutoApply a Receipt
• Chargeback Due Date
• AutoCash Rule Set: Default rule for applying receipts to transactions when no transaction
reference is available for the receipt. Receivables looks for the AutoCash rule set defined in
the profile either at the site or customer level to apply the receipt. If no AutoCash rule set is
assigned to a profile, then Receivables applies the receipt using the AutoCash rule set
assigned to System Options and the number of discount grace days defined in the site or
customer profile. The discount grace days value is used when a discount is available on the
payment terms and the number of discount days has expired.
• Match Receipts By (4): Set up to 4 levels of what the system matches the receipts by. The
choices are:
- Balance Forward Billing Number
- Contract Number
- Transaction Number
- Purchase Order
- Sales Order
- Shipping Reference
• AutoMatch Rule Set: Used with AutoApply to evaluate the references belonging to
transactions and the receipts applied to them. Setting up AutoMatch is discussed in more
detail later in the course. It is required for SmartReceipts. The settings in the AutoMatch rule
set provide these recommendations:

- Use AutoApply: AutoApply matches customers to receipts with incomplete customer
information, and matches transactions to receipts and either applies receipts
automatically or presents transaction recommendations for receipt application to
you for manual processing. Enable this option to use AutoApply to process receipts
entered manually, uploaded by spreadsheet, and created through lockbox. It is
required for SmartReceipts.
Important: If you do not enable AutoApply, and if you do not set up an AutoCash
Rule Set to indicate how to apply receipts, all receipts that you create are left
unapplied.
- Days to AutoApply a Receipt field: Enter in this field the number of days that
AutoApply attempts to apply a receipt to a transaction. This is often used for
customers that pay for transactions before they are created.
- Require Billing Location for receipts: Enable this option to require that a bill-to site
be associated with a receipt. If enabled, Receivables does not create receipts that do
not have a bill-to site. If you enable this option, you should also enable the Require
Billing Location option in the lockbox. Note: Use this option for customers without
statement sites. If you do not enable this option, and you have receipts for
customers without statement sites or a bill-to site, the unapplied amount of the
receipt does not appear on any statements for this customer.
- Allow Payment of Unrelated Transactions: Enables a customer to pay another

customer’s invoice. A relationship must exist between the two customers.
• From and To Write-Off Limit per Receipt: Sets the range for write-offs.
• Minimum Refund Amount: Set a limit to refunds to prevent system generated small amount
refunds.
• Chargeback Due Date: Enter in this field the default due date to use when creating a
chargeback. Use chargebacks to create a new debit item for a customer when closing an
existing debit item. For example, a customer sends a payment of $75 for a $100 invoice. You
apply the receipt to the invoice, and create a chargeback for the balance due. Select the
default due date to use when creating a chargeback:
- Current Date: The system date.
- Deposit Date: The receipt deposit date.
- Open Invoice Due Date: The due date of the invoice or debit memo.
- Receipt Date: The date that the receipt was entered.
• Allow Payment Deletion: Enables a user to delete and payment. If gapless numbering is
required this setting should not be enabled.

Cash Processing Application Exception Rule Options
This includes:
• Application Exception Rule Set
• Exception Rule Write-Off Activity
• Exception Rule Refund Payment Method
Application Exception Rules Set: Used to manage remaining amounts after AutoApply processing. The
AutoApply process uses the details of the Receipt Application Exception Rules either to process
overpayment and underpayment events automatically or to present them for user review.
Exception Rule Write-Off Activity: The receivables write-off activity that provides the General Ledger
account.
Exception Rule Refund Payment Method: If the exception generates a refund, this payment method is
included with the payment request created for payables.

Cash Processing Accounting Options
Use the Accounting section of Cash Processing Receivables System Options to specify accounts for
conversion rate activities and rounding errors:
• Realized Gains Account: Records gains on foreign currency conversion rate fluctuations
between the time the transaction is entered and the time the receipt is applied.
• Realized Losses Account: Records losses on foreign currency conversion rate fluctuations
between the time the transaction is entered and the time the receipt is applied.
• Cross-Currency Rate Type: The default rate type for daily rates used in the currency
conversion calculation.
• Cross Currency Rounding Account: Records any rounding error amounts created during a
cross-currency receipt application.

Other Cash Processing Options
Automatic Receipts: If using automatic receipts these options improve performance:

• Receipt Confirmation Threshold Amount
• Invoice per Commit
• Receipts per Commit
Bills Receivable: If enabled, include:
• Bills Receivable Transaction Source
• Allow Factoring of Bills Receivable Without Recourse
Automatic Receipts Options
• Receipt Confirmation Threshold Amount: An automatic receipt batch with a total amount
below the value you enter does not require confirmation.
• Invoice and Receipts per Commit: Enter values large enough to avoid intermediate saves in
the program. You should use values that can handle your largest automatic receipt and
remittance batches.
To help determine the values to use, refer to the end of the log file of your largest automatic receipt
batch and remittance batch to see the number of receipts marked for the batch. Assign these values as
Invoices per Commit and Receipts per Commit.
You should reduce only these numbers if you run out of rollback segments.
Bills Receivable Options
• You must enable this option to use bills receivable.
• Bills Receivable Transaction Source: Optionally select a default bills receivable transaction
source. The selected transaction source appears by default on all bills receivable transactions.
• Allow factoring of bills receivable without recourse option: Enable this option to create
factored bills receivable remittances without recourse. Set up bills receivable transaction
sources before setting this option.

Rapid Implementation and Receivables System
Options
The tables on the next three slides indicate the settings and values created by the
Rapid Implementation spreadsheet upload.
• All options not included in these tables are not enabled.
• All fields not included in these tables contain no values.

System Options Values Created by Rapid
Implementation
System Option Value
Split Amount field 2500
Discount Basis field Invoice Amount
Days in Days Sales Outstanding Calculation field 30
Print remit-to address option Enabled

Print home country option Enabled
Tax Account field Liability - Tax Payable default account for the business
unit
Automatic journal import option Enabled

Days per Posting Cycle field 15

Implementation
System Option Value
Tax Invoice Printing Options field Total Tax Only
Document Number Generation Level field When Completed
Grouping Rule field DEFAULT
Purge Interface Tables option Enabled
Maximum Memory in Bytes field 3145728
Log File Message Level field 0
AutoCash Rule Set field Oldest transaction first
Application Rule Set field Line and Tax Prorate

Implementation
System Option Value
Match Receipts By field Transaction Number
Chargeback Due Date field Current Date
Realized Gains Account field Expense - Realized Gain/Loss on Foreign Currency
Conversions default account for the business unit
Realized Losses Account field Expense - Realized Gain/Loss on Foreign Currency

Conversions default account for the business unit
Cross Currency Rate Type field Corporate

Cross Currency Rounding Account field Expense - Rounding Difference and Balancing
Adjustments default account for the business unit
Invoices per Commit field 500

Receipts per Commit field 500

Practice 17-1 Overview: Reviewing Receivables
System Options
This practice covers topics:
• Reviewing the Billing and Revenue options for your Business Unit.
• Reviewing the Cash Processing options for your Business Unit.

Managing AutoAccounting Rules
Another setup created by the GL Rapid Implementation Spreadsheet includes AutoAccounting rules.
They provide default accounting information for transactions that you enter manually or import using
AutoInvoice. You must define AutoAccounting before you can enter transactions in Receivables. When
you enter or update a transaction, you can override the default general ledger accounts that
AutoAccounting creates.
Define an AutoAccounting record for each account type. You can then assign either a table name or
constant value to each segment of the account.
Following are the available account types:
• AutoInvoice Clearing: Clearing account for imported transactions. Holds any difference
between the specified revenue amount and (Sale Price * Quantity).
• Freight: Freight account for transactions.
• Receivable: Receivable account for transactions.
• Revenue: Revenue account for transactions, including late charges of type invoice or debit
memo.
• Tax: Tax account for transactions.
• Unbilled Receivable: Unbilled receivable account for transactions that use the In Arrears
invoicing rule.
• Unearned Revenue: Unearned revenue account for transactions that use the In Advance
invoicing rule.

AutoAccounting Rules: Table Names and Constant
Values
AutoAccounting rules use either the table name or constant value to retrieve information for each
accounting flexfield segment of a given account type.
Use a constant value if you want AutoAccounting to always use the same value for a given segment.
You must ensure that you enter information that is valid for this segment. For example, if you defined
your Company segment as a two-character segment with valid values ranging from 00 to 10, you must
enter a two-character value within this range.
When you use a table name, make sure that general ledger accounts are defined for the source. For
example, if you enable the Company segment to be derived from the transaction type for Revenue, the
revenue account must be entered for all transaction types.
The table names are:
• Bill-to Site: Receivables uses the account value associated with the customer’s bill-to site.
• Salesperson: Receivables uses the account value associated with the salesperson on the
transaction.
- Exception: If the transaction has a line type of Line with an inventory item of Freight,
AutoAccounting uses the revenue scheduling rules for the freight revenue account
rather than the salesperson’s account value.
• Standard Lines: Receivables uses the revenue account associated with the memo line item or
inventory item.
- Exception: If the transaction has a line type of Line with an inventory item of Freight,
AutoAccounting uses the revenue scheduling rules for the freight account rather
than the revenue account on the standard lines.
• Tax: Tax account assigned to the transaction tax rate codes.
• Transaction Types: A best practice is to use this table for the Natural Account segment value.
Exception: If the transaction has a line type of Line with an inventory item of Freight,
AutoAccounting uses the revenue scheduling rules for the freight account rather than the
revenue account on the transaction type.

Rapid Implementation: AutoAccounting
Account Type Value

Receivable Asset - Accounts Receivable
Revenue Revenue - Revenue
Tax Liability - Tax Payable
Freight Expense - Freight
AutoInvoice Clearing Revenue - AutoInvoice Clearing
Unearned Revenue Liability - Unearned Revenue
Unbilled Receivable Asset - Unbilled Receivables
The table above shows the Constant values that the Rapid Implementation Spreadsheet created for
each account type for a Business Unit. No table names are used for the creation of an AutoAccounting
Rule from the spreadsheet upload.

Configuring Accounting Rules
You can configure accounting rules with a streamlined navigation across rule
components.
• Select the Configure Accounting Rules task from the Setup and Maintenance work
area.
• Highlight the subledger application that you use to configure accounting rules.
• On the Configure Accounting Rules user interface, navigate across the rule
components that you would like to create or edit.
Navigate to: Others > Setup and Maintenance > Tasks panel tab > Search > Configure Accounting
Rules.
This task is also embedded in the Define Accounting Entry Configuration for Rapid Implementation
task list.

Practice 17-2 Overview: Reviewing AutoAccounting
Rules
This practice covers reviewing the AutoAccounting Rules for your Business Unit.

Managing Remit-to Addresses
The remit-to address is the address that customers use to send payment for their open debit items.
• Assign a remit-to address to all transactions either entered manually or imported using
AutoInvoice.
• During the import process, AutoInvoice rejects all invoices for which it cannot determine a
remit-to address.
Note: If you use Rapid Implementation to set the remit-to address for business units, review the setup
to ensure that:
• The address used is that of the default legal entity for the applicable business unit.
• The Remit-to Address set is the Common set.
• The Receipt From Criteria section uses the default values for Country and State.

Remit-to Addresses: Automatic Assignment
Automatically assign remit-to addresses to bill-to sites in one of these ways:

• Country only: All customer bill-to sites in the selected country are assigned the
specified remit-to address.
• Country and state/region: All customer bill-to sites in the selected state or region of
the country are assigned the specified remit-to address.
• Country and state/region, and postal codes: All customer bill-to sites in the
designated postal code or range of postal codes in the selected state or region are
assigned the specified remit-to address.
Automatically assign default remit-to addresses to bill-to sites to ensure that:
• Receivables provides a default remit-to address when you enter transactions.
• AutoInvoice does not reject transactions because it cannot determine a remit-to address.
For United States remit-to addresses, you can have only one default remit-to address for each country
and state combination. For example, you can have one default remit-to address for the United
States/California, one for the United States/Nevada, and so on.
Tip: Define lockbox addresses as remit-to addresses to let customers know where to send payment.

Practice 17-3 Overview: Reviewing Remit-to
Addresses
This practice covers reviewing the Remit-to Address for your Business Unit.

Managing Receivables Activities
Receivables Activities provide default accounting for:

• Adjustments • Late Charges
• Bank Errors • Miscellaneous Cash
• Credit Card Chargebacks • Refunds
• Earned Discounts • Receipt Write-Offs
• Unearned Discounts
Receivables activities provide default accounting information for all activities other than transactions
and receipts. You must create at least one Adjustment, Earned Discount, Refund, and Unearned
Discount receivables activity.
• Adjustment: Use for adjustments to transactions.
• Bank Error: Needed for reconciling bank statements in Cash Management and for
miscellaneous receipts.
• Credit Card Chargeback: Indicates the clearing account for chargebacks. The account is
credited when you apply the credit card chargeback, and debited after the negative
miscellaneous receipt is generated.
• Credit Card Refund: Indicates the clearing account for credit card refunds. You must create at
least one activity to process credit card refunds.
• Earned Discount: Use to adjust a transaction when payment is received within the discount
period, as determined by the payment terms.
• Unearned Discount: Use to adjust a transaction when payment is received after the discount
period.
• Late Charges: Required if you record late charges as adjustments against overdue
transactions. If you also assess penalties, define a separate activity for penalties.

• Miscellaneous Cash: Required if you plan to enter and record miscellaneous receipts.
• Refund: Use to process non-credit card refunds. Required if you plan to pay the refund
through Oracle Payments.
• Receipt Write-Off: Indicates the account for crediting write-offs.

Receivables Activities: Setup
• Select a business unit • Select Tax Rate Code Source:

• Select an Activity Type – None
• Select GL Account Source: – Activity
– Activity GL Account – Invoice
– Distribution Set
– Revenue on Invoice
– Tax Rate Code on Invoice
GL Account Source: Derives the accounts for the expense or revenue generated:
• Activity GL Account: Allocate to the specified general ledger account.
• Distribution Set: Allocate to the specified distribution set. (Miscellaneous Cash only)
• Revenue on Invoice: Allocate the expense or revenue net of any tax to the revenue account or
accounts specified on the invoice. (Adjustment, Earned Discount, or Unearned Discount
activity types only)
• Tax Rate Code on Invoice: Allocate the net portion using the expense/revenue accounts
specified by the tax rate code on the invoice. (Adjustment, Earned Discount, or Unearned
Discount activity types only)
Tax Rate Code Source: Determines how Receivables calculates and accounts for tax on adjustments,
discounts, and miscellaneous receipts:
• None: Enable this option if you do not want to separately account for tax.
• Activity: Allocate the tax amount to the asset or liability tax accounts specified.
• Invoice: Distribute the tax amount to the tax accounts specified by the tax rate code on the
invoice. You cannot choose this option for Miscellaneous Cash or Late Charges.

Rapid Implementation: Receivables Activities
Activity Type Field Value

Earned Discount
GL Account Source Activity GL Account
Activity GL Account Expense - Discounts Given
Unearned Discount
GL Account Source Activity GL Account
Activity GL Account Expense - Discounts Given
Adjustment
GL Account Source Revenue on Invoice
Activity GL Account None
This table indicates the three activity types and corresponding account values created by the Rapid
Implementation spreadsheet upload.
• All accounts are for the given business unit.
• The Active option is enabled for all activity types.
• The Tax Rate Code Source and Distribution Set fields are not used.

Practice 17-4 Overview: Reviewing Receivables
Activities
This practice covers reviewing the Receivables Activities for your Business Unit.

Managing Statement Cycles
Statement cycles determine when to send statements to your customers. To define a statement cycle:
• Assign the interval to use for the cycle: weekly, monthly, quarterly. The Rapid Implementation
upload creates one statement cycle for each interval.
• Enter the dates on which to print statements for the cycle.
• Indicate whether to skip certain statement dates.
• Optionally enhance statements by creating modified messages.
• Optionally enable the Print remit-to address system option. If you enable this option,
Receivables prints the remit-to address on the related statements.
Rapid Implementation and Statement Cycles:
• Three statement cycles provided: Weekly, Monthly, Quarterly.
• Statement date used:
- Weekly: Date of the previous Friday from the system date.
- Monthly: Last date of the previous month from the system date.
- Quarterly: Last date of the previous quarter from the system date.

Sending Statements
Several other setups must be done before the system sends statements based on a statement cycle.
You must:
• Enable Send Statement on Customer Profile Classes: Enable the Send Statement option on
the applicable customer account or site profile. This setting on the profile class ensures that a
statement is generated. After enabling this option, you must also:
- Enter the statement cycle.
- Enter a value in the Minimum Statement Amount field. Statements are printed for
customers with a minimum outstanding balance greater than this value.
• Define Customer Statement Sites: You can define only one active statement site per
customer. This generates a single, consolidated statement for all bill-to sites belonging to a
customer, rather than a separate statement for each site. If you don’t define a statement site
then all bill-to sites each receive separate statements.
• Submit the Create Customer Statements Program: Prints statements and, if enabled,
automatically sends statements as an email attachment to customers. The program prints
statements based on:
- If you defined a statement site for the customer, uses the statement cycle defined in
the customer account profile as the default statement cycle to use to send this
consolidated statement.

- If you did not define a statement site, uses the statement cycle defined in the
customer site profile for each applicable bill-to site included in the print run.
- If you do not select a customer, prints statements for all customers that have a
statement cycle that matches the statement cycle you enter for the print run.

Email Delivery of Statements
The Create Customer Statements program automatically emails statements as

attachments to the designated customer contacts.
• Expedites the delivery of statements to customers in a timely manner..
• Reduces costs by omitting postal delivery of customer statements.
• Helps customers reduce costs by having an appointed contact receive
the statements directly.
Email Delivery of Statements automatically supports the existing Consolidated Statement feature by
sending the consolidated statement to the designated statement site.
You can:
• Define outbound parameters, such as your company email address and reply-to address.
• Create unique text for the body of the email for each organization receiving statements via
email.
• Customers can download and view the statements at their convenience.

Resending Email
• Navigate to: Tools > Scheduled Processes
Navigate to: Tools > Scheduled Processes
Undeliverable Emails
If the emails to customers cannot be successfully delivered, the Reply-to Email address specified under
Receivables System Options receives the returned emails.
The email inbox monitor can resend the emails from the local email client. For this reason, it is
important to set up Reply-to Email correctly.
Using Scheduled Processes to Resend Emails
• The user who monitors the status of scheduled processes can also resend emails.
• If email delivery fails for any reason, the process displays a failure status.
• Click the Send icon to send the emails again without having to resubmit the scheduled
process Create Customer Statements.
• You only need to enter the To, Reply-to, Subject, and the email message text again.

Using Email Delivery of Statements
• Complete the applicable fields under the Statement Delivery Using Email section
of the Billing and Revenue tabbed section of Create or Edit Receivables System
Options for the applicable business unit.
• Completed information is included in the email to the customer, along with the
statement, when you run the Create Customer Statements process.
System Options > Receivables System Option page > Billing and Revenue tab > Statement Delivery
Using Email (for applicable business unit).
To set up customers to receive statements using email follow these steps:
For each organization that sends statements via email:
• Specify the organization name, email address, and reply-to email address.
• Create the unique subject text and indicate whether to include the business unit and
statement date in the subject.
• Write body text specific to each of your business units. This information is included in the
email to the customer, along with the statement, when you run the Create Customer
Statements process for this business unit.

Setting Up Customer Profiles for Email Delivery of
Statements
• Set the Statement Preferred Delivery Method field to Email.
• Update the profile on specific customer accounts or sites that choose to receive an
email statement.
Specific Customer
Account
In the profile class for each applicable customer:
• Set the Statement Preferred Delivery Method field to Email in order for customers to receive
statements using email.
• For existing customers:
- Update the profile class option to Email.
- Reapply the profile, thereby updating all customers using this profile.

Setting Up Customer Contacts for Email Delivery of
Statements
Enter the customer contact point information including:
• Contact Point Type
• Contact Responsibility Type
In the Customer Contact Point section of the Manage Customer page, enter the contact point
information for each applicable customer.
• The Contact Point Type: Designates the contact’s email address for receiving documents.
• The Contact Responsibility Type: Specifies the type of document. In this case, enable the
responsibility type of Statements.
If multiple contacts should receive a copy of the statement, ensure that each contact has an email
address and the responsibility type of Statements.

Practice 17-5 Overview: Reviewing Statement Cycles
This practice covers:

• Reviewing the Statement Cycles for your Business Unit.

Defining Approval Limits
The combination of user, document type, and currency identify a specific approval limit record.
• Define approval limits for your users for specific transaction activities and amount ranges per
currency.
• Use the document types to identify the transaction activities that a user can approve.
• Assign approval limits to valid users that are defined in your system.
• For example, define multiple approval limit ranges for the same user and document type in
each currency defined in your system.
The document types are:
• Adjustment: Approval limit for both creating and approving adjustments. When you enter an
adjustment that is outside your approval limit range, Receivables assigns the adjustment a
status of Pending until someone with the appropriate approval limits either approves or
rejects it.
• Credit Memo Refund: Approval limit when you attempt to refund an on-account credit memo.
• Receipt Write-off: Approval Limit: Used for writing off an unapplied receipt amount.
- You can't write off a receipt amount that is outside your approval limit range.
- The approval limits for write-offs are separate from, but can't exceed, the
Receivables system options write-off amounts.

Other Optional Implementation Tasks
Depending on your requirements, you may need to configure or update these setups:
• Receivables Document Sequencing
• Foreign Currency Conversions
• Users for Credit Memo Workflow
• Value Sets
• Receivables Document Sequencing: Set up your primary ledger to enable document

sequencing at the legal entity level instead of at the ledger level.
• Foreign Currency Conversions: Specify Ledger Options task for out of balance amounts as the
result of foreign currency conversions.
• Users for Credit Memo Workflow: The approval process makes use of approval groups that
contain either static or dynamically generated lists of approvers.
• Value Sets: Set the Financial Category to Accounts Receivable on the value set to get data in
Receivables extracts and reports.

Legal Entity Document Sequencing
Use document sequences to assign an additional unique document number to

Receivables transactions, receipts, and adjustments. You can use document
sequencing at the:
• Ledger Level
• Legal Entity Level
• Business Unit Level
If you setup document sequencing at the legal entity level, this means that if you have more than one
legal entity assigned to the same ledger, you can assign separate document sequences to Receivables
transactions, adjustments, and receipts belonging to each legal entity.
Legal entity level document sequencing helps you conform to local and governmental authority
requirements, while still being able to organize multiple legal entities under the same primary ledger.
To setup legal entity level sequencing navigate to the Sequencing section of the Specify Options page
of your primary ledger, perform one or both of these tasks:
• Set the Sequencing By option to Legal Entity.
• Optionally enable the Enforce Document Sequencing option for Receivables.
If you perform step 1 and step 2, then document sequencing is always used in all legal entities assigned
to the ledger. You must assign a document sequence to every document category generated by
Receivables events.
If you perform step 1 but not step 2, then you can optionally assign document sequences to the
Receivables document categories that meet your business requirements. For example, you can only
use sequential numbering for automatic receipt processing and not for transactions.

Managing Receivables Document Sequencing
If the primary ledger is enabled for document sequencing at the legal entity level (Sequencing By
option set to Legal Entity), then Receivables creates a document category for each of these
Receivables events in all legal entities assigned to the ledger:
• Invoice transaction type
• Credit memo transaction type
• Debit memo transaction type
• Bills receivable transaction type
• Standard receipt
• Adjustment
For each Receivables event, the document sequence number is generated when the following related
action takes place:
• Transactions: At the time of either saving or completing the transaction, depending on the
setting of the Receivables system option Document Number Generation Level for the
applicable business units.
• Adjustments: When the adjustment is submitted.
• Receipts: When the receipt is submitted.
• Bills Receivable: When the bill receivable is completed.

These rules apply to Receivables document sequencing:
• Document sequence date is the accounting date (not, for example, the transaction date or
receipt date).
Note: If a bill receivable requires drawee acceptance, then Receivables uses the transaction
date instead of the accounting date to assign the document number. This is because a bills
receivable document number is generated when the bill is completed, not accepted.
• You can't change the legal entity on any transaction that has a document sequence number.
• By default, you can't delete any transaction or receipt that has a document sequence number.
If the Receivables system option Allow payment deletion is enabled, then you can only delete
receipts and bills receivable transactions for the applicable business units.

Gapless Document Sequencing
• Document sequencing uses the accounting date as the document sequence date.
• To ensure gapless document sequencing for your transactions, you can enforce the
sequencing of document numbers in chronological order.
To ensure gapless document sequencing at the legal entity level for Receivables transactions, in the
Sequencing section of the Specify Options page of your primary ledger perform these three tasks:
1. Set the Sequencing By option to Legal Entity.
2. Enable the Enforce Document Sequencing option for Receivables.
3. Enable the Enforce Chronological Order on Document Date option.
You must perform all three steps for gapless document sequencing. Enabling the Enforce
Chronological Order on Document Date option enforces the correlation between the document
sequence accounting date and the transaction accounting date. This prevents Receivables from
creating a transaction with an accounting date that is earlier than the accounting date of the last
sequenced document within the same document sequence.
For example, you create an invoice with an accounting date of 01-Jan-2014. This invoice is assigned
the document number 100. The next invoice you create is assigned the document number 101
provided the accounting date of the invoice is 01-Jan-2014 or later. If the accounting date is earlier
than 01-Jan-2014, then Receivables doesn't create the transaction.
Note: Gapless document sequencing applies only to invoice, credit memo and debit memo
transactions, either entered manually or imported using AutoInvoice. It doesn't apply to receipts,
adjustments or bills receivable.

Disallow Future-Dated Invoices Created Manually
When Chronological Document Sequencing is
Enabled
If your ledger is enabled for chronological document sequencing, you can disallow the
creation of manual transactions that have both a future transaction date and future
accounting date.
In the Create or Edit Transaction Type page, enable the option 'No future dates with
chronological document sequencing' and assign this transaction type to the applicable
transactions.
You cannot manually create transactions with this transaction type that have future transaction
and accounting dates.
• This feature only applies to transactions created in a ledger that has chronological document
sequencing enabled.
• The transaction types assigned to invoices must have the option 'No future dates with
chronological document sequencing' enabled.
• Invoices created through the Import AutoInvoice process also use this feature to prevent the
creation of invoices with future dates.
Role Information:
No new role or privilege access is required to use this feature.
To enable the chronological document sequencing:
1. Document Sequencing type should be gapless.
2. In the Specify ledger options, and under the heading Accounting and Document Sequencing,
select the following:
• Sequencing by: Legal Entity.
• Enforce Chronological order on Document Accounting date: Receivable.

Foreign Currency Conversion Options
Navigate to: Others > Setup and Maintenance > Setup: Financials > General Ledger > Specify Ledger
Options.
If you process foreign currency transactions, complete these steps in the Specify Ledger Options task
for out of balance amounts as the result of foreign currency conversions.
In the Journal Processing: Balancing section:
• Enable the Enable Suspense General Ledger option.
• Complete the Entered Currency Balancing Account field.

Define Users for Credit Memo Workflow
The two predefined rule sets for credit memo workflow are:
• Collection agent rule set
• Non-collection agent rule set
These two predefined rule sets refer to two approval groups that are not predefined.
You must define these two approval groups:
• Collection_Manager_Approval_Group
• Billing_Manager_Approval_Group
The Credit Memo Request Approval process is managed by the Approval Management extensions
(AMX) to the human workflow services of Oracle SOA Suite. The approval process makes use of
approval groups that contain either static or dynamically generated lists of approvers.
An approval group consists of a name and a predefined set of users configured to act on a task in a
certain pattern. Approval groups are configured and managed with the Oracle BPM Worklist.
Assign the users that you want to each approval group.
Note: You must assign the user with the Billing Manager role to the Billing_Manager_Approval_Group,
and the user with the Collection Manager role to the Collection_Manager_Approval_Group.

Configurable Credit Memo Request Approval
Workflow Notifications
Use workflow notifications for credit memo request approval.
• You can use Oracle Business Intelligence Publisher templates to generate email and
in-application notifications.
• Modify predefined template to meet business requirements and policies.
Navigate to: Tools > Reports and Analytics > Shared Folders > Financials > Workflow Notifications >
Receivables > Billing.
The predefined template is used by default to present the workflow notification.
You can copy and modify this template according to your business requirements and set the modified
template as the new default.
Enable the optin ‘Configurable Credit Memo Approval Workflow Notifications’ to use this feature.
Steps to Enable an optin:
1. Navigate to: Others > Setup and Maintenance.
2. On the Setup page, select your offering, and then click Change Feature Opt In.
3. On the Opt In page, click the Edit Features icon for any area that includes features you want to opt
in.
4. On the Edit Features page, select the optin Enable option for any feature you want to opt in to. If
the Enable column includes an Edit icon instead of a check box, then click the icon, select your
feature options.
5. Save and Close.
Role Information:
No new role or privilege access is required to use this feature.

Configuration Prohibit Users Self Approval Section
On the Configuration tab, use this section to prevent users from approving their own
transactions.
• Prevent approval workflow assignments to users based on task attributes.
• Select one or more task attributes that represent the users not to assign the task to.
Note: These attributes can now be read from the task payload.
Navigate to: Others > Setup and Maintenance > Enter Manage Task Configurations in search field >
Search > Click appropriate task in Name column > Select task in Tasks to be configured pane > Edit task >
Configuration tab.
• Select the Prohibit self-approval by users named in these payload attributes check box.
• Select the task attributes that contain the IDs of the users whom you would like to skip. You
can specify more than one.
Select the Reassign approvals to those users' managers check box to have the approval sent to the
manager of the user who is skipped.
If you don’t select this, the prohibited user is simply left out of the list of approvers.
You can also do this setup for specific participants in the task, if it's not an FYI task. In the Assignees
subtab, select the participant, click Advanced, and find the same Prohibit User Self-Approval section.

Manage Value Sets
Receivables provides the Prepare Receivables to General Ledger Reconciliation extract and Receivables
to Ledger Reconciliation report to help you reconcile the transactions in your accounts receivable
system, both before and after posting to general ledger. To use the extract and report, assign the
financial category of Accounts Receivable to the receivables natural account values that you want to
include for reconciliation.
Navigate to: Setup and Maintenance > Setup: Financials > Financial Reporting Structures > Manage
Chart of Account Value Sets > Value Set Code Search > Click Manage Values button > Value Search >
Click the Edit button.
If the financial category of Accounts Receivable is not included, the Prepare Receivables to General
Ledger Reconciliation extract does not select any data. When you run the extract program, if you try to
select general ledger natural account values that do not have this category assigned, the extract
program displays an error indicating that the financial category was not assigned.

AutoInvoice Process
AutoInvoice imports and validates large numbers of transaction data. It integrates with Configure,
Price, and Quote (CPQ) Cloud, Distributed Order Orchestration, Projects, and Intercompany to creates
invoices, debit memos, credit memos, and on-account credits in Receivables.
AutoInvoice also integrates with external systems. You must use a program to transfer transaction
data from an external system into the AutoInvoice interface tables.
When imported transactions are processed through the AutoInvoice program, the following events
happen:
• Line, accounting, and sales credit information populates the three Receivables interface
tables.
• Transaction lines are ordered and grouped by the grouping and line ordering rules defined.
• If the Contingencies for the Invoice lines are passed in the AR_INTERFACE_CONTS_ALL table,
then a contingency is created on the appropriate line. Additionally, in the process of creating
an invoice line through AutoInvoice, all the enabled rules for Revenue Contingencies get
evaluated. If the matching criteria of the rules are met, the default contingencies are assigned
to the invoice line. The Revenue Management Engine immediately defers revenue for invoice
lines that have contingencies assigned.

• Transaction is stamped with legal entity information. Because each transaction can only
belong to one legal entity, when multiple legal entities exist, the system optionally defaults a
legal entity from the transaction type or transaction source, if defined. If legal entity defaults
are not defined, then the user must enter the legal entity manually. Oracle provides an
Interface Program to load data from other Oracle applications. You must write a SQL loader to
load data from third parties.
• Accounting date is determined by the accounting rules or, if rules are not used, from the ship
or sales order date.
• GL accounts are assigned using AutoAccounting, except where accounting is provided on the
transaction.
• Tax, freight, and credit memos are linked to transaction lines based on the Reference ID or
Reference flexfield.
• Validated lines are used to create the transactions.
• Transactions that fail the import process are transferred to the RA_INTERFACE_ERRORS_ALL
table. You can correct these errors in a spreadsheet and upload again.

AutoInvoice Interface Tables
Every line must use the RA_INTERFACE_LINES_ALL table. The RA_INTERFACE_DISTRIBUTIONS_ALL

and RA_INTERFACE_SALESCREDITS_ALL tables are optional.
AutoInvoice also uses the AR_INTERFACE_CONTS_ALL table to store imported contingency

information and the RA_INTERFACE_ERRORS_ALL table to store information about interface data that
failed validation.
RA_INTERFACE_LINES_ALL Table: This table contains information related to all transactions to be

processed by AutoInvoice. Transactions include invoices, debit memos, credit memos, and on-account
credits. This table holds the key data, such as bill-to customer, ship-to customer, and transaction date.
• Each record contains line, tax, freight, or late charges information.
• The Line Type field identifies the type of information contained in the record.
• A record can be a parent record: Line, Header Freight, or Charges; or a child record: Tax or
line-level Freight.
• A child record is linked to the parent record using the Link-To Transaction flexfield.
RA_INTERFACE_DISTRIBUTIONS_ALL Table: Oracle Order Management does not use this table
because AutoAccounting creates the distributions in Receivables.
• This table contains accounting distributions to be used by the transactions defined in

RA_INTERFACE_LINES_ALL.
• Accounts defined in this table override any accounts created using AutoAccounting.

• You can choose to pass some or all account information to AutoInvoice. Any accounts that
are not passed are derived using AutoAccounting.
• Records in this table are linked to records in the RA_INTERFACE_LINES_ALL table using the
Transaction flexfield.
RA_INTERFACE_SALESCREDITS_ALL Table: This table contains all sales credit information for the
transactions in the RA_INTERFACE_LINES_ALL table.
• The two tables are linked using the Transaction flexfield.
• This table is required to track sales credits.

Profile Option Settings
• ID Accounting Flexfield Code

• Maximum Lines per AutoInvoice Worker
• Source Code
• Use Parallel Hints
• AutoInvoice Gather Statistics Allowed
• ID Accounting Flexfield Code: Specify the accounting flexfield identifier that AutoInvoice uses
to process accounting information for transaction distributions. Account IDs process
information faster than account names.
• Maximum Lines per AutoInvoice Worker: Multiple workers help AutoInvoice process data in
parallel for better performance. The maximum number of transaction lines that you specify
determines how much data can be processed by each worker. Depending on how many lines
need to be processed, you can use this parameter setting to determine how many parallel
workers are needed to process data.
• Source Code: Specify the source system data that is transferred to the AutoInvoice tables.
• Use Parallel Hints: Specify whether to use parallel hints while running AutoInvoice. Parallel
hints are instructions that enable a SQL statement to be simultaneously processed by
multiple threads or processes.
• AutoInvoice Gather Statistics Allowed: If you set this profile option to Yes, then when you
submit AutoInvoice, the program first analyzes the interface tables
(RA_INTERFACE_LINES_ALL, RA_INTERFACE_DISTRIBUTIONS_ALL, and RA_INTERFACE
SALESCREDITS_ALL) and gathers statistics to determine how best to perform the transaction
import. If the number of records to be imported and the number of worker processes are
approximately the same as the previous submission of AutoInvoice, then you can set this
profile option to No and skip this analysis.

Transaction Flexfields
Transaction flexfields uniquely identify each imported transaction and transaction line.
• Define both a Line-level and Header-level transaction flexfield.
• Optionally define a Reference and Link-to transaction flexfield.
Receivables uses the transaction flexfield to uniquely identify each transaction and transaction line
you import using AutoInvoice. Transaction flexfields are also used to refer to and link transaction lines.
You must define both a line-level and a header-level transaction flexfield. All segments in the line-level
transaction flexfield that refer to header information must also exist in the header-level transaction
flexfield. For example, if you define a line-level transaction flexfield with four segments, and only the
last two segments refer to line-level information, define the header-level transaction flexfield using the
first two segments.
If you do not create Reference and Link-to transaction flexfields, then Receivables uses the line-level
transaction flexfield structure to link and reference different lines. You do not have to define separate
Reference and Link-to transaction flexfields in this case.
However, if you are planning to create a customized form to enter interface data to display the
Reference and Link-to transaction flexfields, then you must define these transaction flexfields. These
flexfields must have the same flexfield structures as the line-level transaction flexfield.

Optional Setups
• AutoInvoice Grouping Rules

• AutoInvoice Line Ordering Rules
• AutoInvoice Clearing Account
• AutoInvoice Grouping Rules: Grouping rules define how to group transactions created by
AutoInvoice. You assign a line ordering rule to a grouping rule.
• AutoInvoice Line Ordering Rules: Line ordering rules define how to order transaction lines
within transactions created by AutoInvoice.
• AutoInvoice Clearing Account: Define this account, if you enable the Create clearing option, to
hold any difference on a transaction between the revenue amount and (Selling price *
Quantity).

Grouping Rules: Part One
AutoInvoice Records Transaction Flexfields

Currency Bill-to Item Attr1: Order Number Attr2: Order Type
USD Acme A 5001 Domestic

USD Acme B 5002 Domestic
USD Acme C 112 No Ship
USD Acme D 601 International
USD Acme E 602 International
Define additional grouping rules or update the default grouping rule provided by Receivables.
AutoInvoice uses grouping rules to determine how to create transactions.
AutoInvoice grouping rules contain transaction attributes that must be identical for all items on the
same transaction. For example, transaction number (TRX_NUMBER) is a mandatory attribute of all
grouping rules. If you have two records in the interface tables with different transaction numbers,
AutoInvoice creates separate transactions for each record.

Grouping Rules: Part Two
AutoInvoice grouping rules contain transaction attributes that must be identical for all items on the
same transaction. For example, transaction number (TRX_NUMBER) is a mandatory attribute of all
grouping rules. If you have two records in the interface tables with different transaction numbers,
AutoInvoice creates separate transactions for each record.
Oracle Receivables provides both mandatory and optional transaction attributes for imported
transactions. You cannot delete a mandatory attribute from any grouping rule, but you can add
optional attributes to the mandatory attributes to create a new grouping rule.
Examples of mandatory Transaction Attributes are:
• CURRENCY_CODE
• CUST_TRX_TYPE_ID
• GL_DATE
• ORIG_SYSTEM_BILL_ADDRESS_ID
• ORIG_SYSTEM_BILL_CUSTOMER_ID
• TERM_ID
• TRX_DATE
• TRX_NUMBER

Examples of Optional Transaction Attributes are:
• ACCOUNTING_RULE_ID
• ATTRIBUTE1-15
• SALES_ORDER
• TAX_CODE
• TAX_RATE
For a complete list of the mandatory and optional transaction attributes see the Oracle Financials
Cloud Implementing Receivables Credit to Cash implementation guide.

Line Ordering Rules
AutoInvoice uses line ordering rules to determine how to order and number each line after your
transactions have been grouped into invoices, debit memos, and credit memos. You can specify a line
ordering rule for each grouping rule. You also determine whether to sort the lines ascending or
descending. AutoInvoice randomly orders lines on your transactions if you don't define line ordering
rules.
Oracle Receivables provides transaction attributes from the RA_INTERFACE_LINES_ALL table that you
can use for AutoInvoice line ordering rules.
Examples of line ordering transaction attributes are:
• AMOUNT
• ATTRIBUTE1-15
• QUANTITY
• SALES ORDER
• SALES_ORDER_DATE
• SALES_ORDER_LINE
• SHIP_VIA
• TAX_CODE

Import Exceptions Overview
Records that fail validation remain in the AutoInvoice interface tables. You can display
AutoInvoice errors in an Excel workbook by:
• Using the Manage AutoInvoice Lines task
• Using the Import Exceptions Infotile.
Records that pass validation are transferred to the Receivables tables. Records that fail validation
remain in the AutoInvoice interface tables. Before AutoInvoice can validate these records and create
transactions, you must correct invalid data and run AutoInvoice again.
Each time that you run AutoInvoice, the process generates a list of records that fail validation. You can
display AutoInvoice exception in an Excel workbook in either of two ways:
• Click the Manage AutoInvoice Lines task to open an Excel workbook with all error records.
• Click a Number of Exceptions link from the Import Exception Infotile to open a workbook for
these specific error records.
Every workbook has three tabbed worksheets. You can use the tools available in the workbook to
manage the display of information.
The three tabbed worksheets arrange AutoInvoice information in this way:
• AutoInvoice lines and line distributions
• Tax and freight distributions
• Sales credits and revenue contingencies

A workbook presents only existing records for update or deletion. You cannot enter new transaction
information into a workbook. Each column in a given worksheet corresponds to the columns in the
respective interface tables. Five additional columns manage the processing of your updates:
• Changed: Tracks changes made to a given row. The upload processes only rows marked in
this column.
• Flagged for Deletion: Indicates rows marked for deletion. When a row is flagged for deletion,
all the corresponding lines in all the related tables are also deleted.
• Update Status: Displays the results of each update to the interface tables.
• Number: Displays the row number.
• Import Errors: Displays the import rejection reason.
When you have finished updating a workbook, click the Save and Run AutoInvoice button to display
the parameters for AutoInvoice submission. After the process is successfully submitted, AutoInvoice
provides a concurrent request ID.

Defining Payment Terms
Use payment terms to identify due dates, discount dates, and installment details for customer open
items. You assign payment terms to customer profiles or to customer information on transactions.
The formula used to determine the amount due is:
Amount Due = Relative Amount/Base Amount * Invoice Amount
For example: Relative Amount = 60%/Base Amount = 100% would be 60% of the invoice amount.
The base amount is the denominator for the ratio Receivables uses to determine the amount due for
installments on transactions. The sum of the relative amounts for all of the payment schedules that
you define for payment terms must equal the value that you specify as the base amount.
Defining payment terms includes:
• Credit Check: When enabled, a customer’s creditworthiness is verified.
• Print Lead Days field: The number of days before the due date that the invoice should be
printed.
• Allow Discount on Partial Payments option: Lets customers take discounts for partial
payments on items associated with payment terms.
Note: Ensure that the Discount on partial payment Receivables system option is also enabled.
• Discount Basis field: Designates the amount to use to calculate discounts.

• Installment Option field: Determines how to allocate the freight and tax charged to
transactions with split terms. You can either distribute tax and freight charges across all
installments, or allocate all freight and tax charges to the first installment.

Transaction Types Overview
Navigate to: Others > Setup and Maintenance > Setup: Financials > Customer Billing > Show: All Tasks
> Manage Transaction Types.
Transaction types provide a number of default settings that help to characterize your transactions.
Use transaction types to:
• Set up specific transaction details for each transaction class: debit memo, credit memo, on-
account credit, chargeback, and invoice.
• Assign a legal entity to the transaction.
• Define accounting for transactions, including whether transaction entries update customer
balances and whether Receivables posts transactions to general ledger.
• Determine the natural application setting.
• Define transactions for late charges, freight, and tax classification code.
• Determine the creation sign.

Defining Transaction Types
If you are using a shared accounting environment, you can assign a legal entity to a
transaction type to appear by default on the transaction. Receivables looks for and
assigns a legal entity to a transaction according to this hierarchy:
• Legal entity of the transaction type assigned to the transaction.
• Legal entity of the transaction source assigned to the transaction.
• Default legal entity assigned to the business unit.

Defining Transaction Types
Define transaction types in this order to properly associate one transaction type with:
• A Credit Memo Type
• An Invoice Type
• An Application Rule Set
• Payment Terms
Enable the Exclude from late charges calculation option to exclude specific categories of transaction
from late charges.
You can optionally enable the Default tax classification code option to assign a tax classification code
to the transaction line. You use tax classification codes as determining factors in tax calculation.
Note: Defining credit memo transaction types first lets you assign a credit memo to the Invoice
transaction type. When you create a credit memo for the invoice, the credit memo transaction type is
used by default.

Using Natural Application Only and Allow
Overapplication Options
If you enable Natural Application Only, you cannot enable Allow Overapplication and if
you enable Allow Overapplication, you cannot enable Natural Application Only.
The transaction type that you assign to a transaction defines the type of application that is permitted
against the transaction balance. This definition is managed by the Natural Application Only and Allow
Overapplication options on the transaction type.
• Natural application lets you apply only a payment or credit to a transaction that brings the
transaction balance close to or equal to zero. For example, if an invoice has a balance due of
$400, you can make applications against this transaction only up to $400. With natural
application, you can only bring the balance to zero.
• Overapplication lets you apply more than the balance due on a transaction. For example, if
you apply a $500 receipt to a $400 invoice, this overapplies the invoice by $100 and reverses
the balance sign from positive to negative.
Using Natural Application and Overapplication:
• Whether or not a transaction allows overapplication determines the actions that you can take
on that transaction.
• If a transaction that allows only natural application is paid in full, then in order to credit the
transaction you must first unapply the receipt from the transaction before creating the credit.
• If you want to use AutoInvoice to import credit memos against paid invoices and evaluate
these credits for automatic receipt handling, then the transaction type of the paid invoices
must allow only natural application. However, if the Receipt Handling for Credits option is not
enabled on the transaction source of the transaction, AutoInvoice leaves the related credit
memo in the interface tables until you unapply the receipt from the invoice.

Practice 17-6 Overview: Defining a Transaction Type
This practice covers defining a transaction type for your Business Unit.

Transaction Sources Overview
> Manage Transaction Sources.
Transaction sources also provide default information for transactions entered manually or imported
using AutoInvoice. Transaction sources have these uses and recommendations:
• Enable transaction batching and numbering, where applicable.
• Assign default values to transactions.
• Assign a legal entity to transactions.
• Enable validation options for imported transactions.
• Create a transaction source for late charges, if applicable.
• Set up for automated non-credit card refunds.
• Enable the Copy Document Number to Transaction Number option to use the same value for
both the document number and the transaction number for transactions assigned to this
source. You must enable this option if you are using Gapless document sequences.

Defining Transaction Sources
Depending on your requirements, create these setup objects before creating
your transaction sources:
Transaction Types
Invoice Transaction Flexfield
Credit Memo Transaction Source
87
Transaction Types: Define the transaction types that you want to appear by default on transactions.
Invoice Transaction Flexfield: Define the reference information that you want to capture in the
invoice transaction flexfield and display on imported transactions, such as a purchase order number.
Credit Memo Transaction Source: Define a transaction source for credit memos before you define a
transaction source for invoices. Use this transaction source to number the credit memos created
against invoices differently from the invoices they are crediting.
If the late charge policy for any of your business units is to create either Interest Invoices or Debit
Memos, then create a separate transaction source for late charges. Create a transaction source for
Interest Invoice or Debit Memo late charges with Type Imported. The transaction source type is
Imported because the Interest Invoice and Debit Memo creation is done as a batch process that calls
the Invoice API. You then assign this source on the Receivables System Options pages.
You can set up Receivables to automate the refund process for non-credit card transactions.
Receivables submits the refund request to Payables, and Payables in turn transacts refunds using
Payments.
To set up for automated refunds:
• Create a Refund receivables activity.

Use the Credit Card Refund activity type for credit card refunds.
• Set the Receipt Handling for Credits field to Refund in the transaction source. You set this
option to Refund for both credit card and non-credit card automated refunds.

Defining Transaction Sources for AutoInvoice
Navigate to: Others > Setup and Maintenance > Setup: Financials > Setup > Customer Billing > Show:
All Tasks > Manage Transaction Sources.
Create transaction sources of type Imported to use with the AutoInvoice program. Use the AutoInvoice
Options and Import Information sections of an Imported transaction source to define how AutoInvoice
validates imported transaction lines assigned a particular transaction source.
In the Import Information section, where applicable, enable Number, Value, Segment, or ID for each
option to indicate how AutoInvoice validates information.
• Select Number to import a record into the interface tables using its assigned number.
• Select Value to import a record into the interface tables using its actual name. Use Value if
you intend to use the transaction source to import data from a non-Oracle system.
• Select Segment to use the flexfield segment.
• Select ID to use the internal identifier of the record. If you use an Oracle system, then ID is
quicker because of the shorter character length.
• Select Amount or Percent to indicate how AutoInvoice validates Sales Credits and Revenue
Account Allocations on transaction lines.

Define Transaction Sources for CPQ Cloud
Integration
Oracle Configure, Price, and Quote (CPQ) Cloud integrates with the Create Invoice public
service to create and process Receivables transactions from CPQ Cloud orders using
AutoInvoice.
> Manage Transaction Sources.
Receivables provides an Imported transaction source under the Common reference set to use to
configure the CPQ Cloud/Receivables integrated service. Use this transaction source to:
• Manage the transfer of transaction information from CPQ Cloud to the AutoInvoice interface
tables.
• Manage the Call Back service to send Receivables transaction information to CPQ Cloud after
the transactions are created.
In the Oracle CPQ Cloud Integration section of the Create or Edit Transaction Source page, select the
Enabled option and then click the Define button to open the Define Endpoint Policy window:
• In the URL field, enter the URL to use to contact the Call Back service.
• In the Security Policy field, enter oracle/wss_username_token_over_ssl_client_policy.
• In the User Name field, enter the user name to use for the Call Back service.
• In the Password field, enter the accompanying password for the valid user.
• Click the Save and Close button to exit the Define Endpoint Policy window.
• Save and close the Create or Edit Transaction Source page.

Practice 17-7 Overview: Defining a Transaction
Source
This practice covers reviewing a transaction source for your business unit.

Defining Standard Memo Lines
You can define standard memo lines for these types of lines:
• Chargeback
• Charges
• Freight
• Line
• Debit Memo
Reversal
• Tax
> Manage Standard Memo Lines.
Use standard memo lines to define goods or services that are sold frequently, but have not been
defined as inventory items, such as Annual Maintenance Contracts or Consulting Services. You can
assign memo lines to debit memos, on-account credits, debit memo reversals, chargebacks, and
invoices.
Use the line type of Line to create a memo line for non-inventory items. If the price is constant, you
can enter a default unit price to use when this memo line is selected.
You can optionally associate a revenue account with a memo line.
Use line types of Charges, Freight, or Tax to create memo lines specific to these transaction details.
You can use tax memo lines on transactions if your tax definition lets you enter manual tax lines on
transactions. After you enter a tax memo line on a transaction, you can specify the amount of tax to
assign to the transaction line.

Setting Up Balance Forward Billing
Use balance forward billing to consolidate the open transactions belonging to a customer into a single
bill that you send on a regular basis, instead of sending a separate invoice for each individual
transaction. Balance forward billing provides customers with a complete picture of their beginning
balance, activities during the billing period, and current outstanding balance. The single bill with single
payment terms also simplifies the process of customer payment.
You can generate bills consolidated at either the customer account level or site level:
• Account-level balance forward billing lets you generate one bill for each business unit of the
customer account, addressed to the primary bill-to site of the account.
• Site-level balance forward billing lets you generate a balance forward bill for each bill-to site
of a customer account that has multiple bill-to sites.
Note: You can exclude a site from a balance forward bill by disabling balance forward billing on the
customer profile of the site.
In order to enable balance forward billing, you must do the following:
• Define Billing Cycles: Assign balance forward billing cycles to generate balance forward bills
on a weekly, monthly, bimonthly, quarterly, yearly, or even daily basis. You can either create
these billing cycles in Receivables or maintain them in external feeder systems.
• Define Payment Terms: When a billing cycle is defined, it must be attached to payment terms.
• Enable Balance Forward Billing: This can be enabled on profile classes, the customer account,
or customer sites.

• Attach Payment Terms: The new payment terms are then attached to a profile class,
customer account or customer.
To create a balance forward bill, you run the Create Balance Forward Bill program. You should create
a balance forward bill in draft mode, and print and review the contents of the bill. Best practice is to
create a balance forward bill in draft mode and then review the contents of the bill. After reviewing
the bill:
• the bill is correct and contains all of the intended transactions, you can either confirm the bill or
print the bill in final mode.
• If the bill is missing transactions or contains unintended transactions, reject the bill and update
the transactions of the applicable customers.

Deliver Balance Forward Bills Using Email
• You can deliver balance forward bills by email as PDF attachments to your customer
account or site level contacts.
• Using the Deliver Balance Forward Bills process you can re-deliver previously
delivered balance forward bills to customers using the delivery method (Paper or
Email) enabled in the customer profile.
• This process replaces the existing Print Detailed Balance Forward Bills or Print
Summary Balance Forward Bills processes.
Navigate to: Tools > Scheduled Processes > Deliver Balance Forward Bills
You must opt-in to use this feature.
The Create Balance Forward Bills process can deliver bills by email, in addition to the current option of
printing balance forward bills.
Deliver Balance Forward Bills Process
• Deliver balance forward bills using email with the balance forward bill output attached in PDF
format.
• Email balance forward bills to either customer account or site level contacts, according to the
respective profile setting.
• Run the Create Balance Forward Bills process in Draft mode by providing a draft email ID to
review the output before the final run.
If you choose to not opt in to this feature:
• Set the Balance Forward Bills delivery method to Paper in your customer profiles to print and
deliver paper balance forward bills.
• Run the Create Balance Forward Bills process to deliver new bills.
• Run the Print Detailed Balance Forward Bills or Print Summary Balance Forward Bills process
to deliver existing bills.

Delivering Balance Forward Bills Email Setup Steps
1. Receivables System Options (for the applicable business units): In the Transaction Delivery
Using E-Mail section of the Billing and Revenue tabbed region of the Create or Edit System
Options page, complete the Email fields for your organization.
2. Profile Setting: Preferred Delivery Method: Set the Preferred Delivery Method field to Email at
the customer site or customer account level, depending upon whether you want to deliver
using email for specific customer sites or all sites belonging to a customer account.
The applicable profiles must also be enabled for Balance Forward Billing and include a Billing
Cycle and Balance Forward Billing payment terms.
3. Communication: Customer contacts and Contact Points: Assign at least one customer contact
at the account or site level both an email address and the Bill-to business purpose.
If you use a custom report or custom data model, you must also complete these setups:
1. Delete the custom data model and recreate a modified data model from the predefined data
model.
2. Enable bursting of the modified report:
a. Click Properties on the Balance Forward Bills detail or summary modified report.
b. Enable the Enable Bursting option and select BFBDelivery.
c. Save the report.
The applicable profiles must also be enabled for Balance Forward Billing and include a Billing Cycle and
Balance Forward Billing payment terms.

Receivables Recurring Billing: Overview
Recurring Billing:
• Can automatically generate transactions at periodic intervals.
• Uses an easily configurable bill plan.
The Recurring Billing feature helps you manage the creation of invoices on a cyclical basis for a fixed
period of time, according to the terms of the contract with your customer. A recurring bill plan can
reliably generate invoices at a specified interval, thereby saving you from manually creating the
transactions. If during the life of the contract the terms change, you can easily update the bill plan and
continue to generate invoices according to the new terms of the contract.

Receivables Recurring Bill Plans: What Can You Do?
• Capture contract attributes in a bill plan.

• Process recurring transactions automatically.
• Modify bill plan to generate future transactions differently.
• Track bill plan history for modifications.
• Review transactions generated by the bill plan.
Navigate to: Receivables > Billing Work Area > Tasks > Transactions > Manage Recurring Bill Plans.
Navigate to: Setup and Maintenance > Setup: Financials > Receivables > Manage Receivables System
Options.
Before you can use recurring billing, you must enable this feature in the Transactions section of the
Billing and Revenue tab of the Create or Edit Receivables System Options page.

Creating a Recurring Bill Plan: Contract Attributes
The Create Recurring Bill Plan page opens with certain fields supplied by default. The following
contract attributes can be captured:
• Transaction Source: ORA_RecurringBilling. You can use this predefined transaction source, or
define a new transaction source. Transaction sources for use with recurring bill plans must be
of type Imported, and must have the Automatic Transaction Numbering option enabled.
• Transaction Type: Invoice. You can use this predefined transaction type, or define a new
transaction type. Transaction types for use with recurring bill plans must not be of status
Void, and must have the Post To GL and Open Receivables options enabled.
• Currency: Ledger currency.
• Billing Frequency: Monthly.
• Contract Start Date: System date.
• Contract End Date: System date plus 12 months.
• First Transaction Date: System date. This date is used as the transaction date for the first
transaction generated by the bill plan and all subsequent transactions, increased by the billing
frequency, unless you enter a value in the Second Transaction Date field.
• Second Transaction Date: Use this field to create a transaction date for the second and all
subsequent transactions created by the bill plan, increased by the billing frequency. You enter
a second transaction date if the first transaction created was only for a partial period, and you
do not want to use the first transaction date as the creation date for all remaining
transactions in the plan.

• Second Billing Period Start Date: The first billing period start date is the same as the contract
start date. By default, each subsequent billing period begins according to the contract start
date increased by the billing frequency.
If you enter a date in the Second Billing Period Start Date field, this becomes the start date of
the second billing period and all subsequent billing periods increased by the billing frequency.
Revenue is recognized for recurring transactions generated by a bill plan based on the billing period
start and end date.
Transactions are not prorated for partial periods.
Transaction amount remains the same for each billing period.

Receivables Installment Update: Overview
What can you do?

• Flexibly update the unpaid portion of an installment amount on a Receivables
transaction.
• Update the due date of an installment.
• Add or delete installments to reflect payment schedule changes.
Navigate to: Receivables > Billing Work Area > Manage Transactions Task >Search and Select
Transaction > Review Transaction > Review Installment Page Action.
You can now use the Review Installments window to easily update the unpaid portion of the
installment amount, update installment due date, and add or delete installments to reflect the changes
on installment amounts. This helps you manage the installments to reflect new agreements with the
customer on installment amounts and payments.

Setup Detail for Due Date
Navigate to: Others > Setup and Maintenance > Setup: Financials > Receivables > Show: All Tasks >
Manage Receivables Profile Options > In the Profile Display Name field, search for AR: Update Due
Date.
You must set the AR: Update Due Date profile option to use the Installment Update feature.
You can set the profile option at the Site, Product, or User level.

Setup Detail for All Other Adjustments
System Options.
If the transactions have been printed, before you can update the unpaid portion of the installment
amount, or add or delete installments, you must enable the “Allow changes to printed transactions”
option in the Transactions section of the Billing and Revenue tab of the Create or Edit Receivables
System Options page.

Customers and Parties
• Create customers to properly record and account for sales transactions, as well as
identify other attributes of the selling relationship.
• Key concepts related to customers and customer activities include:
– Party
– Customer
– Customer Account
– Site
– Relationship
– Contact
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• A party is an organization or a person that can enter into a business relationship with another
party. A party exists separately from the business relationship in the Trading Community
Model.
• A customer is a party with whom you have a selling relationship, such as the purchase of
products and services, or the negotiation of terms and conditions for future purchases.
• A customer account represents the attributes of the business relationship that a party can
enter into with another party. The customer account has information about the terms and
conditions of doing business with the party.
• A site is a point in space described by an address. A party site is the place where a party is
physically located. An account site is a party site used in the context of a customer account.
• A party relationship is the role of the party in the context of another party, such as affiliate,
subsidiary, or partner. An account relationship between different customer accounts of a
party enables the sharing of billing, shipping, and payment information.
• A contact is a person who communicates for or acts on behalf of a party or customer account.

The Trading Community Model
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Customers are part of the Trading Community Model (TCM). Customers are:
• Global entities.
• Not created within a business unit or within any other organizational context.
Customer sites are assigned to one or more business units.
The TCM enables the creation of one entity being used for multiple purposes in the Cloud applications.
The Oracle Enterprise Data Quality application includes a matching engine that can perform matching
checks against all external parties including:
• Customers
• Legal entities
• Suppliers
• Banks and Branches
You can configure the types of parties to consider for matching, such as customers and suppliers, to
be checked for similar and exact name matches. For example, if a company exists as a supplier, the
user is informed so that they can decide whether the party can be used as a customer. If selected, the
existing party is used to establish the customer.

The graphic in the slide illustrates that:
• The ABC Corporation entity can be created as both a supplier and a customer.
• The customer ship-to site address can be created from the supplier purchasing site purpose
and the customer bill-to site can be created from the pay site purpose.
The Trading Community Model ensures the integrity of your Master tables.

Managing Customers
106
Managing customers includes these activities:
• Create customer profile classes.
• Create customer, customer account, and customer site records. Create at least one customer
account for each customer record, and at least one customer site with a bill-to site business
purpose for each customer account.
Note: You must have a bill-to site to create transactions under the customer account.
• Assign profile classes to customer accounts and customer bill-to sites.
• Define relationships between parties and between customer accounts (both reciprocal and
nonreciprocal). You use customer account relationships to manage the sharing of billing and
shipping services and payment activities between two accounts.
• Review and update customer information. If you use the Oracle Trading Community Model,
you can also manage the control of duplicate and redundant party information.

Managing Customer Profile Classes
107
Profile classes are a required element for defining customer accounts and sites. Profile classes:
• Are used to organize customer accounts and sites into categories that reflect the needs of
your enterprise.
• Contain generic options that you can set in different ways to group your customers into
broad categories, such as by industry, location, size, creditworthiness, business volume, or
payment cycles.
After you assign a profile class to an account or site, you can modify details of the customer account or
site profile to meet specific requirements for that account or site. For example, a particular site may
transact business in a separate currency, or the site may be subject to additional late charges or
penalty charges. These updates apply only to that particular account or site and do not affect the
profile class record itself.
You manage profile class updates and assignments by means of effective date ranges.
• Each profile class that you assign or update supersedes the previous profile class for the
given date range.
• You can manage over time the changes that take place in customer behavior or customer
requirements.

Profile Class Tab: Part One
The Profile Class tab defines:

• Credit and Collections Options
• Balance Forward Billing Options
• Terms
• Receipt Matching
• Statement and Dunning
• Invoicing
• Credit Profile
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• Credit and Collections: Define the following:
- Collector
- Credit Classification
- Credit Limit
- Tolerance
- Conversion Rate Type
- Include in Credit Check
- Expiration Offset Days
• Balance Forward Billing:
- Enable
- Bill Level: Account or Site
- Bill Type: Detail, Summary, or Imported

• Terms:
- Payment Terms
- Discount Grace Days
- Allow Discount
- Override Terms
• Receipt Matching:
- Match Receipts By: The choices are Balance Forward Billing Number,
Contract Number, Purchase Order, Sales Order, Shipping Reference, and
Transaction Number.
- AutoMatch Rule Set
- Automatically Update Receipt Match By
- AutoCash Rule Set
- Remainder Rule Set
- Application Exception Rule Set
- Receipt Clearing Days
- AutoReceipts Include Disputed Items
• Statement and Dunning: If enabled, include:
- Statement Cycle
- Send Credit Balance
- Send dunning Letters
- Preferred Contact Method: Email, Fax, or Print.
- Statement Preferred Delivery Method: Email, Fax, or Print.
• Invoicing:
- Grouping Rule
- Preferred Delivery Method: Email or Paper

Profile Class Tab: Part Two

• Credit and Collections Options
• Balance Forward Billing Options
• Terms
• Receipt Matching
• Statement and Dunning
• Invoicing
• Credit Profile
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• Credit Profile
- Effective Start/End Dates
- Credit Analyst
- Credit Classification
- Credit Limit
- Order Amount Limit
- Credit Currency
- Tolerance
- Risk Code
- Risk Code
- Credit Rating

- Expiration Offset Days
- Credit Review Cycle
- Last Review Date
- Next Review Date
- Include in credit check
- Credit hold

Late Charges Tab
The Late Charges tab includes:

• Charges and Reductions
• Charge Calculation Setup
• Currency Settings
112
If late charges are enabled, you must define:

• Charges and Reductions:
- Late Charge Calculation Method
- Charge Reductions
• Charge Calculation Setup:
- Late Charge Type
- Payment Terms
- Interest Calculation Formula
- Interest Calculation Period
- Use Multiple Interest Rates
- Receipt Grace Days
- Interest Days Period
- Assess Late Charges Once
- Charge Start Date
- Message Text
• Currency Settings:
- Currency
- Minimum Receipt Amount
- Minimum Statement Amount
- Minimum Dunning Amount
- Minimum Dunning Invoice Amount
- Late Charges Rates and Conditions (per currency)

Practice 17-8 Overview: Defining a Customer Profile
Class
This practice covers defining a customer profile class for a moderate risk customer.
113

Customer Model
114
The graphic in this slide illustrates all the different information that can be part of the customer record.
This lesson covers the required information needed to create invoices and record receipts.

Header
The header information includes:

• Organization Information
• Account Information
115
Navigate to: Receivables > Billing > Tasks panel tab > Customers > Create Customer.
The header information applies to all the sites under the Customer and Customer Account. It includes:
Organization Information
• Name: To avoid duplicates, the Data Quality process checks for similar parties. You can also
do a search for a customer or party before creating a new name.
• Registry ID: This represents the organization’s party number. No Receivables transactions are
performed with the registry ID. A Customer is assigned two numbers, the party number and
the customer account number.
• D-U-N-S Number: If you have a Dun and Bradstreet service, you can provide the customer’s
qualified number.
• Taxpayer Identification Number: This is needed for tax reports.
Account Information
• Account Number: A Customer party can have more than one account. You need to create at
least one account and one account site with a bill-to purpose under the customer record to
properly record and account for both sales transactions with the party and other attributes of
the selling relationship with the party. This can be system generated or manually created.
• Account Description (Optional): You can provide a meaningful description.

Address
Consider these points when entering and updating customer address information:
• Reference Data Set for Account Sites
• Update Sharing
• Account Address Details
• Address Business Purposes
• Reference Accounts
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When you create a customer, you must enter account and address information. This address becomes
an account site record of the customer.
When you create additional customer accounts for the customer, you can either enter new address
information to create a new account site, or you can use an existing account site. If you assign an
existing account site to the new account, you can modify the address information itself, but you
receive a warning if this address is shared by other parties.
• Reference Data Set for Account Sites: Before creating or importing customers, you must
create a reference data set for use with customer account sites. You can share this reference
data set across one or more business units, according to your requirements. To access the
new reference data set on customer account sites, provision the appropriate data role to the
designated users to grant them access to the job role for the given business units and
reference data sets.
• Update Sharing: If you update an address due to incorrect or missing information, these
updates are shared with all account sites that use this address. Update sharing applies only to
address information, and not to account address details or business purposes.
• Account Address Details: Use the Account Address Details subsection to identify these values
for the account site:
- Customer Category Code: Used to classify this customer according to the needs of
your enterprise. You define these category codes under the Oracle Trading
Community Model.

- Translated Customer Name: Used to enter the customer name in another
language. The translated name replaces the customer name on external
documents.
- Address Business Purposes: See the next slide for more details.
- Reference Accounts: Assign distributions for revenue, freight, receivable,

AutoInvoice clearing, tax, unbilled receivable, and deferred revenue
accounts to customer bill-to sites. If AutoAccounting depends on Bill-to
Site, then Receivables uses the bill-to site of the transaction to determine
the related segment for these distributions

Address Business Purposes
Used to identify the functions performed by each particular customer account site.
The most common are:
• Bill-to
• Ship-to
• Deliver-to
• Bills of lading
• Dunning
• Late Charges
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Assign address business purposes to account sites to identify the functions performed by each
particular customer account site. You can designate one account site as Primary for each address
business purpose.
Common address business purposes include:
• Bill-to: Assign the bill-to business purpose to account sites designated to receive and process
bills. You must create at least one bill-to site to process transactions for a customer.
• Ship-to: Assign the ship-to business purpose to account sites designated to receive goods
purchased by the customer account. If you create a ship-to business purpose, you must
indicate the related bill-to site that processes the bills for the shipped goods. Bill-to sites
available for association with ship-to sites either belong to the same customer account or to
related customer accounts.
• Deliver-to: Assign the deliver-to business purpose to sites that receive all or part of goods
sent to a ship-to site.
• Bills of lading: Assign the bills of lading business purpose to sites that manage contracts for
carriers that ship customer goods.
• Dunning: Assign the dunning business purpose to sites that receive dunning letters from you.
• Late Charges: Assign the late charges business purpose to the site that is assigned the late
charge policy for this customer account.
If the Statement, Dunning, and Late Charges Site Profiles Used profile option is set to Yes, then
Receivables uses the late charge policy assigned to the late charge site to calculate late charges on
transactions. If the profile option is set to No, then Receivables uses the late charge policy
assigned to the bill-to site assigned to the transaction.

Search for Customer by Site Number
• Use this feature to search for a customer using the site number search attribute on
the Manage Customers page.
119
• Navigate to: Others > Setup and Maintenance > Setup: Financials > Customers > Manage
Customers page.
• You can use the Advanced search to search for sites by site number. The search results
display all sites across all customers and customer accounts that match the search value.
• You can also enable the Show related contact sites option to display in the Sites section
additional sites belonging to a customer account that don't display by default.

Assign the Primary Receipt Method to Manual
Transactions
• To speed up the entry and improve the accuracy of Manual Transactions, you can
default the primary receipt method defined in the bill to customer payment details
when creating a manual invoice or debit memo using the Create Transaction page.
• To optionally use this feature you must assign at least one receipt method to the
applicable bill-to customers and mark as Primary one receipt method for each bill-to
customer.
• The receipt method marked primary on the bill-to customer site is assigned to the
transaction. If the bill-to customer site does not have a primary receipt method, the
receipt method marked primary on the bill-to customer account, if it exists, is
assigned to the transaction.
120
To Enable this feature, use the Opt In: Assign the Primary Receipt Method to Manual Transactions.
This feature is no longer optional from 21A.

Simplified Customer Upload
121
Use the Upload Customers from Spreadsheet task to open the Manage Customer Uploads page to
transfer large amounts of customer data using a spreadsheet template:
1. Download the customer spreadsheet template using the Download Customer Spreadsheet
Template button on the Manage Customer Uploads page. The spreadsheet template contains
four worksheets: Customers, Contacts, Reference Accounts, and Customer Bank Accounts.
2. Populate the template with your customer data and generate the zip file.
3. Upload the zip file using the Upload Customers from Spreadsheet button on the Manage
Customers Upload page. The upload process prompts you for a batch name that you can use
to track the status of the upload.
4. Track upload errors using the Unsuccessful Records column on the Manage Customer
Uploads page.
5. Click the link to open the error correction spreadsheet.
6. Correct the errors and resubmit the batch.

File Based Data Import (FBDI)
File Based Data Import (FBDI) is used to load data into Oracle Cloud Applications from
external sources, such as legacy systems and third-party applications. The File Based Data
Import for Oracle Financials Cloud Guide includes links to:
• Spreadsheets used to load data into Oracle Cloud Applications from external
sources, such as legacy systems and third-party applications. The spreadsheet
templates help to structure, format, and generate the data file according to the
requirements of the target application tables.
• File-based load process to load the data files into the interface tables.
• Application-specific data import processes to transfer data from interface tables to

the application tables in your Oracle Cloud Applications.

Simplified Customer Upload using ERP Integration
The Upload Simplified Customer process can now be run remotely using the ERP
Integration service.
123
Navigate to: Excel > Open UploadCustomersTemplate.xlms.
Originally, the Simplified Customer Upload process could be run only from the Upload Customers from
Spreadsheet Page in FSM. With this feature, the Simplified Customer Upload can also be run outside of
Oracle as a standalone process from remote systems using the ERP Integration Service. This provides
external operations for ERP integration scenarios to execute end-to-end inbound and outbound data
flows. It also tracks the status of inbound and outbound data processes.
To run the Simplified Customer Upload process using the ERP Integration Service:
1. Populate the UploadCustomersTemplate.xlsm simplified template.
2. Upload the template to the Universal Content Manager using the uploadFileToUcm operation.
3. Submit a ESSJobRequest using the submitESSJobRequest operation:
a. job package -
oracle/apps/ess/financials/receivables/customerSetup/customerProfileClasses
b. job definition – UploadCustomerEss
c. job parameters - batchName, payload, batchId, "CREATE“
d. batchName: Name of the batch
e. batchId: Randomly generated unique number. Tip: Use systemtimestamp to

generate this number
f. Mode: Always use "CREATE
4. Poll for the job status using the getESSJobStatus operation. If the status is not WAIT,
BLOCKED, RUNNING, PAUSED, COMPLETED and READY, then it means the process
has completed with success or error.

Practice 17-9 Overview: Creating a Customer.

• Creating a customer
• Creating an address and site
• Creating a reference account
• Attaching a profile class
124

Manage Data Import Process Overview
• Use the File-Based Import process to import data from a CSV or XML file.
• Use the Data Import dashboard to monitor the import job and view reports and
statistics.
• You can also pause a File-Import batch, and then use the Data Import work area to
configure data quality services for the batch.
If the HZ_IMP_PAUSE_FILE_IMPORT profile option is set to Yes in the Manage Import
Profile Options page:
• You can pause import activities.
• All submitted import activities are sent for administrator review
and appear in the Data Import Batches Overview page.
125
Navigate to: Tools > Scheduled Processes > File-Based Import process
Navigate to: Tools > Scheduled Processes > Setup: Financials > Receivables > Show: All Tasks >
Manage Import Profile Options

Data Quality Service
Before importing data into the registry, you must decide if you want to use the data
quality services and how you want to configure the following data quality services:
Registry Import to Registry

Batch Deduplication
Deduplication Options
126
Batch Deduplication
Batch deduplication lets you identify and resolve duplicates within the batch that you are importing.
To define batch deduplication, you must:
• Select the match configuration rule you want to use to identify duplicates for each entity.
• Specify the action to perform on the duplicate records within the batch. These actions are
performed when the data is imported into the registry.
Registry Deduplication
Registry deduplication, similar to the batch deduplication, identifies duplicates between the data in the
batch and the data in the registry before the data is imported into the registry.
With registry deduplication you select the match configuration and specify the action for duplication
records.
Import to Registry Options
Use the import to registry options to define:
• Import Process mode:
- You can run the import process in preview mode, or load the data directly into the
registry without previewing the data.

- In preview mode, you can review information, such as the number of
duplicates, incorrect addresses in the batch data, the number of records
that will be updated, and the number of records that will be created, before
the data is actually imported.
- After reviewing the batch, you can decide to either import the batch, or
amend the match configuration rules and actions and then rerun the batch
to review the data again.
Cleanse Addresses:
You can choose to validate the addresses in the interface tables before importing them into
the registry. The addresses are validated using an integrated third-party service that verifies
addresses and corrects them if they are incorrect.
Geography Validation:
You can configure geography validation for data import by setting the
HZ_IMP_DEFAULT_GEO_VALID_ADDRESS profile option to Yes.
This validates the addresses in an import batch against geography data before importing them
into the registry. Geography validation uses the geography-based address validation settings
for each country, and imports only valid addresses.
• Note: Geography Name Referencing is run on all imported addresses regardless of

this profile option setting.
• Error Handling Limit: You can define how many process errors can be generated by
the import batch process before the process terminates automatically.

Import Process for Customers and Consumers
To import customer and consumer data:
Create
• Create an import batch containing Import
customer and consumer objects. Batch
• Load the import data into the interface

Run Load
tables.
Batch in Import
• Configure the data import process for Preview Import Process Data
Mode Steps
deduplication.
• Run the batch in preview mode to
check that all duplicate data is Configure
removed, then submit the batch. Data
Import
Process
128
Batch Deduplication
Check the batch for address, organization, and person duplicates and remove any duplicates from the
batch.
Registry Deduplication
Check for address, organization, and person duplicates between the import batch and the registry, and
prevent the import of duplicate records.
Import to Registry
Configure the data import process so that you can view the batch in preview mode, in order to review
the data after preprocessing.
Cleanse addresses before they are imported, and specify an error limit for the batch.
Validate all addresses in the import batch against geography data.
• This validates all incoming addresses as per the geography structure and validation level
setup in the Manage Geographies task.
• The addresses that are reported as Error during validation are not imported

Defining Data Quality Services for File-Based Import
and Data Import
In the file-based import process you can:
• Define Registry deduplication options.
• Pause and import activity and send it for administrator review after preprocessing
and before importing the data.
In the Data import process you can:
• Select a match configuration to identify duplicates and duplicate resolution action.
• Run the import process in preview mode.
• Cleanse data before import.
• Perform geography validation of data before import.
129
Navigate to: Tools > Scheduled Processes > Data Import Process
Note: You cannot define Batch Deduplication and Import to Registry options.
• To configure geography validation for data import at the site level, set the
HZ_IMP_DEFAULT_GEO_VALID_ADDRESS profile option to Yes.
• The addresses are validated against the master reference geography data, according to the
geography-based address validation settings for each country.
• The addresses with validation errors are not imported.

Remove Customer Profile Attribute Values in Bulk
Through Customer Import
• The Customer Import upload spreadsheet can remove existing values for Credit
Limit, Order Credit Limit, Credit Review Cycle, Last Review Date, and Next Review
Date when #NULL is populated for those attributes during the spreadsheet upload.
130

FAQs for Manage Data Import
FAQs Description
Can I view the import process

details? The import process details are only available when you run the batch
in preview mode, and submitted the batch for import.
Yes, you can reimport a batch to correct validation errors if the import
Can I import a batch again? process status is one of the following: Preimport Completed,
Completed With Errors, Error, or Terminated When Error Limit
Reached.
Can I redefine the data import Yes. If the data is still available in the interface tables and the batch
process for an already imported status is Preimport Completed, Completed with Errors, Error, or
batch and reimport it? Terminated when Error Limit Reached, you can redefine the data
import process and reimport the batch.
131

FAQs Description
You permanently remove all records in the batch from the import
interface tables. You should purge batches after the batch has been
What happens if I purge a data imported successfully, and you have ensured that the data in the
import batch? interface tables is no longer required.
Purging the interface tables improves import performance. To archive

imported data, you should copy the data to a set of custom tables.
You cannot purge data import batches with the status Processing.
Can I purge a data import
Purging a batch purges the batch data in the interface tables; this
batch?
process cannot be carried out while the batch is importing the data
from the interface tables into the registry
132

FAQs Description
How can I view the errors that In the Manage Data Import Batches page, click the batch ID of the
occurred during preimport batch you want. Then in the Edit Data Import Batch page, click the
processing? Report button to display the Error Report window.
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Summary

• Understand key concepts in Oracle Receivables.
• Understand how the Rapid Implementation spreadsheet creates setups for
Receivables.
• Understand required setups for Receivables.
• Explain the optional setups for Receivables.
• Configure customer billing.
• Understand the customer model.
• Discuss customer profile classes.
• Create a customer.

18
Configuring Oracle Payments for Receivables

Objectives

• Understand remittance banks and bank accounts.
• Describe receipt classes and receipt methods.
• Explain receipt sources.
• Define AutoCash rules.
• Define Application rules.
• Understand AutoMatch rules.
• Define Receipt Application Exception rules.
• Explain the implementation considerations for Lockbox.

Defining Remittance Banks and Bank Accounts
• Define all of the banks and bank accounts that you use to remit payment.
• Define multiple currency bank accounts to accept payments in more than one currency.
• Define banks and bank accounts in Oracle Cash Management.
Note: This course covers in more detail defining banks, branches and bank accounts in the
Configuring Oracle Cash Management lesson.

Receipt Class, Receipt Method, and Bank Account
Relationship
The relationship between receipt class, receipt method, and bank account provides the accounting
defaults during receipt processing.
When you create a receipt:
• Specify the receipt method and one of the remittance bank accounts assigned to the receipt
method to use for the receipt.
• Accounting for the receipt is derived from the general ledger accounts assigned to the
remittance bank account.
• Receivables processes the receipt according to the receipt class and with the associated
receipt method.
• For automatic receipts, Receivables uses the automatic processing settings on the receipt
method.

Defining Receipt Classes
Receipt Classes provide:

• Creation Method
• Remittance Method
• Clearance Method
• Receipt Method
The receipt class determines the processing steps that are required for receipts. These steps include
automatic or manual creation, the remittance method, the bank clearance method, and whether
receipts require confirmation by the customer.
Specify for each receipt class:
• Creation Method: How to create receipts:
- Manual: Standard, batch, and lockbox receipts
- Automatic: Bank account transfer and credit card receipts. Oracle Payments
processes funds capture.
• Remittance Method: How to derive the remittance account for automatic receipts:
- No Remittance: Receipts that are not remitted.
- Standard: Regular remittance.
- Factoring: Factored remittance.
- Standard and Factoring: Use the receipt class for either standard or factored
remittance.

• Clearance Method: How to reconcile receipts before posting to general ledger:
- Direct: Clear at the time of receipt entry. Use this method if you do not expect the
receipts to be remitted to the bank and subsequently cleared. Receipts are assumed
to be cleared at the time of receipt entry and requires no further processing. This is
the equivalent of No Clearing Method.
- By Automatic Clearing: Clear using the Clear Receipts Automatically program.
- By Matching: Clear receipts manually in Cash Management. This is the preferred

method of clearing receipts. Receipts cleared through Cash Management
automatically generate reconciliation accounting entries that are posted to general
ledger.
• Require Confirmation: Used only for automatic receipts. The receipts are generated from
transactions automatically and the batch is sent to the customer for review and confirmation.
After confirmation is received, the receipts can be set to Confirmed and then remitted.

Assigning Receipt Methods
You can assign:

• One or more receipt methods with each receipt class.
• One or more remittance banks with each receipt method.
You can assign more than one remittance bank to each receipt class and receipt method combination.
• Specify the bank name, branch, account, and currency for your remittance bank. You must
designate one remittance bank account as Primary for each currency.
• Specify the general ledger accounts that Receivables uses when you enter or apply receipts
using this remittance bank account.
Legal entities are linked to remittance bank accounts.
All receipts inherit the legal entity from the bank account, and all refunds inherit the legal entity of the
original receipt.

Practice 18-1 Overview: Creating a Receipt Class and
Receipt Method
• Creating a receipt class and receipt method.
• Associating your bank account to the receipt method.

Defining Receipt Sources
Determine:
• Receipt Source Type
– Automatic
– Manual
• Batch Numbering
– Automatic
– Manual
• Defaults
– Receipt Class
– Receipt Method
– Bank Account
Define a receipt source to determine:
• Creation method (automatic or manual)
• Batch numbering (automatic or manual)
• Default receipt class, receipt method, and bank account

Practice 18-2 Overview: Creating a Receipt Source
This practice covers creating a receipt source.

AutoCash Rules
The receipts can be applied by using:

• Clear the Account
• Clear Past Due Invoices Grouped by Payment Terms
• Combo Rule
• Apply to the Oldest Invoice First
• Match Payment with Invoice
• Clear Past Due Invoices
Receivables uses the AutoCash rule set, if one is available, to apply a receipt when no transaction
information is available for the receipt. The AutoCash rule set:
• Determines how to apply a receipt to customer open debit items and update the customer
account balance.
• Consists of general settings and a combination of the five available rules for applying
receipts.
When you apply a receipt, Receivables uses:
• The first rule in the AutoCash rule set.
• the next rule in the sequence, and so on until it can apply the receipt.
If none of the rules in the AutoCash rule set apply, Receivables places the remaining amount either
unapplied or on-account, depending on the setting of the Remaining Remittance Amount option in the
AutoCash rule set.
• Match Payment with Invoice: Only apply a receipt to a single invoice, debit memo, or
chargeback if the receipt amount exactly matches the amount of the debit item.

• Clear the Account: Only apply a receipt if the receipt amount exactly matches the customer
open balance.
• Clearance Method: How to reconcile receipts before posting to general ledger:
- Direct: Clear at the time of receipt entry. Use this method if you do not expect the
receipts to be remitted to the bank and subsequently cleared. Receipts are assumed
to be cleared at the time of receipt entry and requires no further processing. This is
the equivalent of No Clearing Method.
- By Automatic Clearing: Clear using the Clear Receipts Automatically program.
- By Matching: Clear receipts manually in Cash Management. This is the preferred

method of clearing receipts. Receipts cleared through Cash Management
automatically generate reconciliation accounting entries that are posted to general
ledger.
• Require Confirmation: Used only for automatic receipts. The receipts are generated from
transactions automatically and the batch is sent to the customer for review and confirmation.
After confirmation is received, the receipts can be set to Confirmed and then remitted.

Defining Application Rule sets
Receivables predefines the following:

• Line First – Tax After
• Line and Tax Prorate
• Prorate All
• Overapplication
An Application rule set determines how Receivables reduces the balance due on line, tax, freight, and
late charge amounts when you apply a payment or credit memo to a transection can:
• Use a predefined application rule set or set up one to assign it to Receivables system options.
• Assign Application rule sets to transaction types to indicate how to process payment
applications for the related transactions. During receipt processing, if no Application rule set
is assigned to a transaction type, Receivables uses the Application rule set assigned to
Receivables system options.
• Arrange the order of the line types and application rules in an Application rule set according
to your requirements.
- Each line type must appear in an Application rule set, and appear only once.
- The Overapplication rule is always last in the sequence.
Following are the predefined rules:
• Line First - Tax After: Applies the payment to the open line amount, and then applies the
remaining amount to the associated tax.
• Line and Tax Prorate: Applies a proportionate amount of the payment to the open line and
tax amount for each line.
• Prorate All: Applies a proportionate amount of the payment to each open amount associated
with a debit item.

Tax Treatment Option
The Tax Treatment option determines how to reduce the tax amount in relation to the
line amount:
• Prorate
• Before
• After
The Tax Treatment option determines how to reduce the tax amount in relation to the line amount:
• Prorate: Proportionately reduce the net amount of the line and associated tax amounts.
• Before: First reduce the open tax amount, and then apply any remaining amount to the line.
• After: Reduce the open line amount, and then apply any remaining amount to the associated
tax.
Note: You must enable the Rounding Correction option for one of the line types in your Application
rule set. Receivables adjusts the line amount of the line type that has the Rounding Correction option
enabled to account for the rounding adjustment.

Recommendations for Receipt Processing:
SmartReceipts
SmartReceipts operates for:
• Manual Receipts
• Lockbox Receipts
• Spreadsheet Uploaded Receipts
During payment processing, Receivables matches the remittance reference information on your
receipts to open transactions, and either applies the receipt automatically or presents
recommendations for which transactions to use for a given receipt application.
In general, Receivables generates recommendations rather than applying receipts automatically when
a data entry error occurs, such as an incorrect invoice number, or when no transaction meets the
minimum requirements for automatic receipt application, as defined by your implementation.

Settings That Affect Recommendations for Receipt
Application
These settings affect recommendations for receipt application:
• AutoApply
• Match Receipts By Rule
• Document Reference Automatic Update
• Application Exception Rule Set
These settings affect recommendations for receipt application:
• AutoApply: Set the Use AutoApply option for a lockbox or at the Receivables system option
level for manual receipts. If you set this option, AutoApply automatically applies receipts and
presents transaction recommendations based on the AutoMatch rule set, and handles
exceptions based on the application exception rule set.
• Match Receipts By rule: The Match Receipts By rule identifies the document type to use to
match receipts to transactions during lockbox and manual receipt processing. You can set
Match Receipt By document references at the customer site, customer account, lockbox, and
Receivables system option level. Receivables searches these settings until it finds an exact
match or an approximate match. Six document types are available to match to receipts:
- Transaction number
- Balance forward billing number
- Purchase order number
- Sales order number
- Contract number
- Shipping reference, such as a waybill number or packing slip

• Document Reference Automatic Update: Use the Document reference automatic update for
matched receipts option at the customer site or customer account level to automatically
maintain the Match Receipt By rule. If Receivables matches and applies a receipt for a
customer or customer site based on a document reference different from the default setting
(or if no default setting exists), this new document reference becomes the Match Receipt By
rule for that customer or site.
• AutoMatch Rule Set: The active AutoMatch rule set determines how receipts are applied
automatically and transactions recommended for manual application. You can assign an
AutoMatch rule set at the customer site, customer account, lockbox, and Receivables system
option level. An AutoMatch rule set defines the minimum qualifying percentage score, based on
assigned thresholds, necessary to recommend transactions for receipt application. The rule set
also provides string handling assistance to search for transaction matches against reference
strings, such as an invoice number.
• Application Exception Rule Set: The active application exception rule set manages the handling
of over and under payments after receipt application.

Defining AutoMatch Rules
During receipt processing, Receivables applies receipts to transactions based on the transaction
information provided.
In cases where the transaction information provided doesn't exactly match the transaction numbers
on record, the AutoApply process attempts to find as close a match as possible:
• Either apply the receipt to the transaction automatically or
• Present one or more transactions as recommendations for manual receipt application.
In like manner, during lockbox processing it may happen that a lockbox contains incomplete or
inaccurate customer information.
• AutoApply process attempts to match a customer to a receipt and present one or more
customers as recommendations for the receipt.
• AutoMatch rule set provides information that is used by the AutoApply process to complete
the process of applying receipts to transactions.
The settings in the AutoMatch rule set provide these recommendations:
• Customer recommendations: The matching process recommends customers for lockbox

receipts that have invalid customer information.

• Transaction recommendations: When a match between a receipt and transactions does not
fall within the defined thresholds, the matching process recommends one or more
transactions for receipt application for both lockbox and manual receipts.
Note: For AutoMatch and Application Exception Rules, you must enable AutoApply in the Receivables
System Options.

Threshold Settings
Recommendations are based on matching threshold levels defined in the AutoMatch

rule set. These threshold settings determine the percentage level necessary to
consider a customer or transaction for receipt recommendation:
• Customer Recommendation Threshold
• Minimum Match Threshold
• Combined Weighted Threshold
• Days of Closed Invoices Threshold
The AutoMatch threshold settings have the following meanings:
• Customer Recommendation Threshold: The qualifying percentage necessary to add customer

information to a receipt. If the calculated score for a customer account number is above this
threshold, then the AutoApply process adds this customer information to the receipt. If the
calculated score is below this threshold, then the AutoApply process recommends customer
matches for manual update.
• Minimum Match Threshold: The qualifying percentage necessary to automatically apply a

receipt to a transaction. If the calculated score for one or more transactions is below this
threshold, the AutoApply process recommends transactions for receipt application, in order
of the highest percentage match.
• Note: The minimum match threshold must be less than the customer recommendation
threshold and the combined weighted threshold.
• Combined Weighted Threshold: The qualifying percentages that define the relative
importance of customer, transaction, and amount matches when deciding the final match
score. The sum of the qualifying percentages must equal 100%.
• Days of Closed Invoices Threshold: Determines which closed transactions to include in the
AutoMatch process. All transactions that were closed on or before the number of days
provided as the threshold value are considered for application or recommendation.

AutoMatch Calculation
The threshold qualifying percentages are compared to the resulting scores of each
customer account number or transaction number that is analyzed by the matching
process:
1. If applicable, remove characters and spaces from the number as defined by the
AutoMatch rule string handling.
2. Apply the formula (Levenshtein algorithm) to the resulting string to obtain the score.
This formula is:
1 - (number of changes required to make the recommended string match the
provided string / length of the larger string).
3. Compare the resulting score to the applicable threshold.
For example, transaction number 10010 is provided by lockbox for a receipt application. This number
does not exist, but AutoMatch finds the number AR10001. The recommendation for this number is
calculated in this way:
• The AutoMatch rule set string handling settings indicate that the first two characters are to be
removed from a string under consideration.
Receivables removes AR, leaving the number 10001.
• It takes one transposition (shifting the final 1 and the preceding 0) for 10001 to match 10010.
Therefore, the score for this match is (1 - 1/5) = 80%.
• The 80% score exceeds the Combined Weighted Threshold value of 70%, so the receipt is
automatically applied to transaction AR10001.
Note: An algorithm can also use an edit rather than transposition to shift numbers. In this example, an
edit change would require 2 steps rather than 1.

Defining Receipt Application Exception Rules
Use the Exception Rules section of the Create Receivables Application Exception Rule
Set page to indicate how to process each overpayment and underpayment condition.
Each exception rule consists of:
• A condition.
• The amount and percentage that applies to the condition.
• The action to take when the condition arises.
Each exception rule consists of a condition, the amount and percentage that apply to the condition,
and the action to take when this condition arises:
Action field contains the receivables activities that you have defined for Adjustment, Receipt Write-off,
or Refund. The underpayment or overpayment amount is accounted for in general ledger accounts
belonging to the applicable receivables activity.
The User Review Required option indicates whether the action is processed automatically or requires
manual review and approval.
• If an overpayment exists, the application exception rule indicates whether to refund the
amount to the customer, place the amount on account, write off the amount, or leave the
amount unapplied.
• If an underpayment exists, the application exception rule indicates whether to enable writing-
off of the remaining open balance amount on the transaction.
Exception rule examples:
• Over Payment >= 100 Refund: This means that after the receipt is applied, if the remaining
overpayment is greater than $100, then a refund is generated for the customer. The refund is
automatic, unless user review is required.
• Under Payment < 5 Write-off: This means that if a receipt application results in an
underpayment of less than $5, then the remaining amount is written off. The write-off is
automatic, unless user review is required.

Implementation Considerations for Lockbox
Manage Lockbox
Receipt Sources and Receipt Class: Receipt sources assign the receipt class, receipt methods, and
remittance banks for lockbox.
Lockbox Transmission Formats: Specify the lockbox transmission format in the Process Receipts
Through Lockbox: Import program. The transmission format ensures that data is correctly transferred
from the bank file into the AR_PAYMENTS_INTERFACE_ALL table.
Lockbox Batch Size: If you do not want the lockbox process to separate your lockbox submission into
multiple receipt batches:
• In the Batch Size field, enter a value larger than the number of receipts in the lockbox
transmission.
• Enable the Complete Batches Only option when you submit the lockbox transmission.

Receipt Match By and SmartReceipts
Settings for SmartReceipts:

• AutoApply Option
• Match Receipts By Rule
Use the Receipt Match By section of Lockbox to enter settings for SmartReceipts:
• AutoApply option: Enable this option both in the lockbox and in Receivables system options.
• AutoMatch Rule Set: Enter the AutoMatch rule set to use for customer and transaction
recommendations for receipt applications in the lockbox.
• Match Receipts By rule: Use this rule to identify the document type to use to match receipts
to open debit items: Transaction number, Sales order number, Purchase order number,
Balance forward billing number, Shipping reference, Contract number. Assign document
types to the Match Receipts By rules on customer and site profiles, lockbox records, and Cash
Processing Receivables system options.
During lockbox processing, Receivables attempts to match receipts to the reference numbers provided,
such as a transaction number. When a matching document is found, Receivables then looks for the
Match Receipts By rule to use. Receivables searches for a Match Receipts By rule in the following order:
Customer Site, Customer, Lockbox, and System Options.
If a rule is found that matches the document reference, Receivables matches and applies the receipt to
the transaction. If a rule is not found, Receivables applies the receipt using the AutoCash rule set
defined for the customer.
If the AutoCash rule set is unable to apply the receipt, Receivables assigns the receipt a status of
Unapplied. In addition, if no Match Receipt By setup exists anywhere in the system, Receivables also
assigns the receipt a status of Unapplied. You must then manually apply the receipt.

Summary
In this lesson, you should have learned to:

• Understand remittance banks and bank accounts.
• Describe receipt classes and receipt methods.
• Explain receipt sources.
• Define AutoCash rules.
• Define Application rules.
• Understand AutoMatch rules.
• Define Receipt Application Exception rules.
• Explain the implementation considerations for Lockbox.

19
Configuring Oracle Bill Management

Objectives

• Understand and use Bill Management features.
• Enable Bill Management.
• Configure Bill Management.
• Register external users.

Bill Management Overview
The Bill Management electronic bill presentment solution:

• Reduces the cost of billing and collections.
• Improves overall customer service.
Key Bill Management features:
• Real time account review and online payments.
• Analyze open and closed transactions
• Dispute monitoring and processing.
• A mobile-enabled interface.
Oracle Bill Management Cloud is an enterprise management solution for business-to-business and
business-to-consumer relationships.
• The solution provides self-service customer led bill management process through an easy-to-
use mobile enabled user experience with real time account review, dispute processing, and
online payments that are instantly reflected on the customer account.
• The resulting business process efficiency increases customer satisfaction and deliver cost
reductions by streamlining the overall accounts receivable operations.

Bill Management Account Overview Work Area
Features
• Review receivables transactions.
• Filter transactions by currency, type,
Account Overview feature and purchase order.
• Export outstanding transactions and
history.
• Review and print individual
transactions.
Infotiles and keyword

search criteria • Search and view related transactions.

Bill Management Setup Overview
Set up Oracle Bill Management to:

• Enable the various Receivables processes for billing.
• Make online payments.
• Define bill management system options to register bill management external users
and customer accounts.
• Process various payment options including:
– Payments processed using credit card information.
– User bank accounts details.
In Oracle Bill Management, setting up bill management is required to enable the various Receivables
processes for billing.
You can enable the Bill Management feature using the standard lookups available for Bill
Management.
• Navigate to: Others > Set Up and Maintenance > Setup: Financials > Define Lookups >
Manage Standard Lookups
• Navigate to: Others > Set Up and Maintenance > Search: Manage Standard Lookups
1. Search of the lookup type ARB_Features.
2. Add a lookup code BILL_MANAGEMENT to the lookup type.
3. Save the changes.

Practice 19-1 Overview: Using Bill Management
Demonstration
In this demonstration you are reviewing all of the Bill Management features including:
• Infotiles
• Transaction History
• Manage Disputes
• View Activities

Bill Management Configuration Steps Overview
Setting up bill management configuration steps.
Assign business units and reference data sets to Bill Management job roles to enable internal users to:
• Register and unregister customers.
• Review your customer accounts.
• View and print transactions.
• Dispute transactions.
Navigate to: Others > Setup and Maintenance > Setup: Financials > Receivables > User and Security >
Show: All Tasks > Manage Data Access for Users.
1. Click Manage Data Access for Users task
2. Assign the user or job roles.
3. Save your changes.
For additional information on assigning job roles, see Lesson 3, Security.

Register External Users
Use the Bill Management System Options to configure the Role Assignment for
External Users and other defaults.
Using Bill Management Registrations to register existing customers as external users so they can
perform these tasks:
• Review accounts.
• Make online payments.
• Print transactions.
• Dispute transactions (if authorized).
Navigate to: Others > Set Up and Maintenance > Search: Manage Bill Management Registration.
1. Search for the Account containing the contacts you want to register.
2. Select the Account Contact Email Address and click the Register User button.
3. The user is created in the PER_USERS table. An email is sent to access the application.
- The first email contains the subject “Oracle Cloud Applications-Welcome Email” and
asks the user to setup their own password.
- The second email contains the subject “Welcome to Bill Management” and includes
the URL link to access the application. Based on their implementation, the external
user should use this URL link to access the application.
4. The Self-service role is added to the Account Contact.

Setting Up System Options
Use the Manage Bill Management System Options page to set up system options for
Bill Management.
Navigate to: Others > Setup and Maintenance > Search: Manage Bill Management System Options.
On the Manage Bill Management System Options page:
1. Set Role Assignment for the External User field with the predefined Role “Customer Account
Payables Specialist” or any customer role created.
2. Set the Aging Method used to show the Invoice bucket lines in the Account Summary
Infotile.
3. Change the Transaction History Period in Months to recommended 24 months.
4. For Bank payments, set the Maximum Future Payment Days allowed.

Print Transactions
• Both internal and external users can review and print any transaction in Bill
Management.
• Only previously printed transactions delivered to customers are available for review in
Bill Management.
Printing a Transaction
To print a transaction:
1. Navigate to Account Overview Page.
2. Click on the specific transaction you want to review and print.
3. The invoice print image displays.
4. Click on the Print button to submit the invoice image for printing.

Review Balance Forward Bill Details Using Bill
Management
Use Bill Management to view opening balance, payments, current charges, and credits
and adjustments on balance forward bills.
• The Account Overview page contains a new Balance Forward Bills infotile with the
customer's balance forward bills.
• Click the Due Amount value of a balance forward bill to view the bill details including:
Beginning Payments Sum of current Sum of credit and

balance of the received in and late charges adjustments in the
balance forward current billing in the current current billing
bill cycle billing cycle cycle
Navigate to: Bill Management > Account Overview page > Balance Forward Bills.
The Transaction History includes two additional columns: Billing Number and Billing Date.
These columns identify balance forward bill number and billing date of each transaction included in a
bill.
Steps to Enable:
• The feature is available for users of Bill Management who receive balance forward bills.
• In the Manage Bill Management System Options page, enter in the Transaction History in
Months field the number of months to display for past balance forward bills.
Role Information:

Summary

• Understand and use Bill Management features.
• Enable Bill Management.
• Configure Bill Management.
• Register external users.

20
Configuring Oracle Assets

Objectives
After completing this lesson, you should be able to explain:

• Configure Assets.
• Manage asset books and categories.
• Understand configurations for leases.
• Describe depreciation setups.
• Manage tax books.

Implementing Assets
Consider these four implementation phases when planning your Assets

implementation:
1 2
Plan Implementation Set Up Assets
3 4
Convert Existing Asset Reconcile with previous

Information system
Implementing Assets requires:

• Planning and setting up Assets-specific information, such as: key flexfields, system controls,
fiscal years, calendars, categories, locations, depreciation rules, and asset books.
• Converting and reconciling existing asset information from and with the previous system.
Consider these four implementation phases when planning your Assets implementation:
• Planning the Implementation
• Setting Up Assets
• Converting Existing Asset Information
• Reconciling with the Previous System

Planning Your Implementation
When planning your implementation:

• Consider your organizational structure and business dimensions.
• Carefully evaluate your business needs so you can design and set up Assets to take advantage of
its flexible tools for recording and maintaining asset information.
• Ask the following questions:
- Ask about the company’s history.
- Obtain information about the company’s assets.
- Determine the conversion period.
- Decide on the Assets setups.

Inquiring About Your Company’s History
Before implementing Assets, ensure that you have answered the following questions:
• What accounting changes have occurred in the company's history?
• Have the calendar, fiscal year, or prorate rules changed?
• Has the company been acquired or have there been any mass adjustments?
• What are the future plans of the company?
• What is the strategic plan of the company?
• How may future events affect the accounting procedures of the company?

Obtaining Existing Asset Information
• Decide how to bring the information into Assets.

• Obtain and review the existing asset information and how the company is currently
maintaining its asset inventory.
• Determine the location of the data, how to access it, the type of format it is in, and
who has the authority to access the information.
• Use the Mass Additions interface table FA_MASS_ADDITIONS to import the
information into Oracle Fusion Assets.
• Utilize the Assets features of the Oracle Application Development Framework (ADF)
Desktop Integration.

Determining the Conversion Period
Determine the best time to convert your assets. For example, should you:
• Convert at fiscal year-end ?
• Convert in mid-fiscal period ?
Decide if it is convenient to convert at fiscal year-end because year-end numbers are easy to reconcile,
and year-to-date figures are correct in the new year.
If you convert in mid-fiscal period, use the previous asset system as well as Assets to report for the fiscal
period.

Define Fixed Assets Configuration
Required Optional
Manage Fixed Asset Key Flexfield Value Sets Manage Asset Keys
Manage Fixed Asset Key Flexfield Manage Bonus Rule
Manage System Controls Manage Ceiling
Manage Fiscal Years Manage Cash-Generating Units
Manage Asset Location Manage Asset Price Indexes
Manage Asset Calendars Manage Asset Distribution Set
Manage Prorate Conventions Manage Fixed Asset Profile Options
Manage Depreciation Methods Manage Fixed Asset Lookups
Manage Asset Books Manage Fixed Asset Descriptive Flexfields
Manage Asset Categories Manage Asset Category Aliases
Manage Asset Key Aliases
Manage Asset Location Aliases
8
Oracle Fusion Assets configuration consists of:

• Required Steps: Must be completed before you can account for your assets.
• Optional Steps: You need to perform optional steps only if you plan to use the related feature or
complete certain business functions.

Define Fixed Assets Configuration for Rapid
Implementation
Search for Define Fixed Assets Configuration for Rapid Implementation and use the
Define Assets for Rapid Implementation task list.
Navigate to: Others > Setup and Maintenance > Tasks panel > Search > Define Fixed Assets
Configuration for Rapid Implementation.
Use the Define Assets for Rapid Implementation task list to:
• Create a new Assets implementation.
• Update an existing Assets implementation.
• Upload Assets implementation information to Assets.

Prerequisite Setup
The following steps are prerequisites before implementing Assets:

• Oracle Fusion General Ledger
– Ledgers
– Currencies and Currency Rates
– Conversion Rate Types
– Cost Center as a segment in the chart of accounts (optional)
• Human Capital Management (HCM): Employees
• Oracle Fusion Payables: Suppliers
• Financials Common Module: Reference Data Sets
• Oracle Fusion Subledger Accounting: Accounting Methods
10

Creating a New Assets Implementation Spreadsheet
11
Use the Create Fixed Assets Configuration spreadsheet to rapidly implement the required tasks.
Note: You can use this task only when you implement Assets for the first time. Use the Update Fixed
Assets Configuration spreadsheet to update an existing Assets implementation.
• Review the instructions on the Rapid Setup instructions tab.
• Enter your categories, locations, and asset books on the appropriate tab.
Note: System controls, depreciation calendars, and prorate conventions, the category and location
structures, oldest date placed in service, and starting asset number are defined automatically.
• Validate your data.
• Generate your configuration file.
• Upload your configuration file.

Updating an Existing Assets Implementation
12
Use the Update Fixed Assets Configuration spreadsheet to update an existing Assets implementation.
• Review the instructions on the Rapid Setup instructions tab.
• On the tabs where you plan to make changes, click the Download button to import your existing
configuration data to the spreadsheet.
• Update the spreadsheet.
• Validate your data.
• Generate your configuration file.
• Upload your configuration file

Managing Assets Key Flexfields and Value Sets
You must define the following three key flexfields:
Asset Category Key Asset Location Key Asset Key Key

Flexfield Flexfield Flexfield
13
• Asset Category Flexfield: Groups assets by financial information.

• Asset Location Flexfield: Groups and tracks assets by physical location.
• Asset Key Flexfield: Groups assets based on non-financial information.
Value Sets
Before defining key flexfields, you must first define value sets for each segment you plan to use for your
flexfields.
Note: Assets flexfields are explained in later topics.

Location Key Flexfield Implementation
Considerations
14
Planning your location flexfield structure

• Choose the number of segments, the length of each segment, the name, and the order of each
segment in your Location flexfield.
• Define the Location flexfield structure based on the asset tracking requirements of your
enterprise.
• Important: Plan your flexfield carefully. Once you begin entering assets using the flexfield, you
cannot change it.

Location Key Flexfield Implementation Details
Defining your flexfield segments:

• You must define a state segment and up to six other location segments.
• Follow the considerations if you do business internationally.
• Optionally, include segments such as country, state, city, and site.
• Ability to track asset locations in more detail.
• Use abbreviations if the location names are too long.
15
You must define a state segment and up to six other location segments.
If you do business internationally, you should create a segment for Country to track the country an asset
is in.
If you track asset locations in more detail, for example, if you use barcodes, you can also add segments
for the building and room number.
The location name (all segments concatenated) appears on forms and reports, which display only a
limited number of characters. You may want to abbreviate some location segment values.

Category Key Flexfield Implementation
Considerations
16
Planning Your Asset Category Flexfield Structure

• Define the structure after reviewing your company’s business needs to ensure assets are
grouped according to depreciation rules.
• Define your Asset Category key flexfield so that you can create categories and group assets by
financial information in relevant categories.
• Plan your flexfield carefully. Once you begin entering assets using the flexfield, you cannot
change it.
Note: The combination of segment values and segment value separators must be 30 characters or less,
because the combination is used as a context field value for the Asset Category descriptive flexfield. For
example, VEHICLE.DELIVERY is a valid combination because it contains 16 characters, including the
segment separator.

Defining Your Flexfield Segments
• Organize category hierarchies so that valid subcategory values depend on a major

category value. For example, in the category Vehicle-Owned, the second segment can
be used as a minor segment.
• Define at least one subcategory segment to allow for distinctions within a major
category.
• Define up to seven segments for your Asset Category key flexfield.
17
Assets displays only a limited number of characters on its forms and reports. You can use only two or
three segments so that you can display all of them.
Because you must define depreciation rules for each category flexfield combination, more setup and
maintenance effort is required for more segments.

Managing Asset Locations
18
Asset locations track the physical location of assets. Assets can be reported on and transferred based on
their locations.
• Define locations based on the current and anticipated future assignments of assets.
• Ideally, use standardized location names or abbreviations where the names are too long, since
locations are used for grouping, tracking and reporting purposes.

Defining Asset Locations
Define location combinations by using Location flexfield segment values.
19
Navigate to: Others > Setup and Maintenance > Setup: Financials > Fixed Assets > Manage Asset
Locations.

Asset Key Flexfield Implementation Considerations
20
Planning Your Asset Key Flexfield Structure

• Define the Asset Key flexfield structure based on your asset tracking requirements.
• You can assign the same asset key to many assets to easily find similar assets.
• Asset key setup is required even though it is not required that you capture this information
during entry.
Note: Plan your flexfield carefully. Once you begin entering assets using the flexfield, you cannot
change it.

Defining Your Flexfield Segments
• Define up to ten segments.
• Required to set up the system controls.
21
If you choose not to track assets using the asset key, you must define at least one segment without
validation, because the Asset Key flexfield structure is required to set up the system controls.

Alias Support for Asset Key Flexfields
You can create and use aliases for asset key flexfield combinations, including
locations, asset categories, and asset keys.
22
Navigate to: Fixed Assets > Assets > Tasks panel > Add Assets.
You can use aliases for asset key flexfield combinations, such as asset physical locations or asset
categories. Using aliases can reduce data entry errors and improve the usability of asset flexfields. For
example, you can create an alias named HQ to represent the physical location of your company’s
headquarters. All the Assets transaction pages and spreadsheets support aliases for the asset key
flexfields.
Enabling Asset Key Flexfield Aliases
Navigate to: Others > Setup and Maintenance > Setup: Financials > Fixed Assets > Show: All Tasks >
Manage Asset Key Aliases Manage, or Asset Location Aliases, or Manage Asset Category Aliases.
You can enable theses aliases by using their respective setup tasks in the Functional Setup Manager.
These include the Manage Asset Key Aliases, Manage Asset Location Aliases, and Manage Asset
Category Aliases tasks.
.

Practice 20-1 to 20-3 Overview: Reviewing and
Defining Asset Key Flexfields
This demonstration and practices cover the following topics:
• Practice 20-1: Review Asset Key Flexfields demonstration.
• Practice 20-2: Create a New Category and a new Location.
• Practice 20-3: Define values for Asset Clearing and CIP Clearing accounts.
23

Managing System Controls
24
System controls provide information about the structure of your company.

Note: System controls setup is a one-time setup. Once you set up your system controls, you cannot
modify them.
When setting up system controls, you need to set up the following:
• Enterprise name
• Oldest date placed in service
• Flexfield structures
• Automatic asset numbering

Defining Your System Controls
25
Navigate to: Others > Setup and Maintenance > Setup: Financials > Fixed Assets > Manage System
Controls.
Manage System Controls
• Enterprise Name: The enterprise name establishes the name that appears on Assets reports.
• Oldest Date Placed in Service: The oldest date placed in service controls the following:
- The dates that are valid to place assets in service
- The date to begin your calendars
- Note: You can only update the oldest date placed in service before you assign any
calendars to depreciation books.
• Flexfield Structures: Define your company's Category, Location, and Asset Key flexfields
structures which are used to record transactions before defining system controls.
- Configure flexfield segments to capture data that represents the values of attributes.
- Define any number of segments for each flexfield, but Assets supports only one structure.
Note: The administrator must choose a structure for each key flexfield that will be used to
record transactions.
Automatic Asset Numbering: Define the starting asset number to begin automatically numbering your
assets.
Note: Some asset numbers may be skipped. Be aware of the rules for entering asset numbers manually

System Controls Implementation Considerations
Before setting up system controls, consider the following:

• Define certain flexfields before defining system controls.
• Define the enterprise name appropriately.
• Understand which type of dates the oldest date placed in service controls.
• Ensure that the starting number is appropriate.
26
Define your Category, Location, and Asset Key flexfields before defining system controls.
Ensure you define the enterprise name appropriately, because the enterprise name displays on all
reports.
Keep in mind that the oldest date placed in service controls the valid dates on which assets can be
placed in service and the date on which calendars begin.
Because automatic numbering of assets begins with the starting number defined in your system
controls, ensure that the starting number is appropriate.

Demonstration 20-4 Overview: Reviewing Asset
System Control Options
This demonstration covers the following topic:
• Reviewing the Manage System Controls page.
27

Managing Fiscal Years and Calendars
Defines Fiscal Year
Define Calendars
Prorate Calendar Depreciation Calendar
Assign to
Asset Books
28

Managing Fiscal Years and Calendars
You must first define fiscal years. You then define asset calendars based on those
fiscal years.
• Fiscal years group your accounting periods.
• Calendars are based on the fiscal years that you set up.
– Depreciation calendar: Determines the number of accounting periods in a fiscal
year.
– Prorate calendar: Determines what rate is used to calculate annual depreciation by
mapping each date to a prorate period.
29

Fiscal Year
A fiscal year is:

• A standard set of periods used to prepare annual financial statements for reporting
and tax purposes.
• Also referred to as a financial year or budget year.
• Normally a twelve-month period, but this varies from business to business and
country to country.
30

Defining Fiscal Years
Consider the following when defining fiscal years:

• Define the start date and end date for each of your fiscal years.
• Define at least one calendar for each fiscal year.
• Set up multiple fiscal years.
• Assign different fiscal years to your different corporate books.
31
• Define the start date and end date for each of your fiscal years starting from the earliest date
placed in service through at least one fiscal year beyond the current fiscal year.
• Define at least one calendar for each fiscal year to break the fiscal year into multiple reportable
periods, such as months.
• Set up multiple fiscal years and assign different fiscal years to your different corporate books to
meet the various reporting and tax requirements.
Note: At the end of each fiscal year, the Calculate Depreciation program automatically generates the
dates for the next fiscal year and calendars, if they are not defined.

Fiscal Year Implementation Considerations
Before defining fiscal years, consider the following:

• Prepare a list of all the assets that need to be entered.
• Sort the assets in the order of the date placed in service.
• Ensure the calendar for the tax book uses the same fiscal year name as the calendar
for its associated corporate book.
32

Asset Calendar
Calendars break down your fiscal year into accounting periods. Define your calendars
with as many periods as necessary for your reporting and tax regulation requirements.
Asset books:
• Must have a depreciation calendar and a prorate calendar.
• Can use the same calendar as both the depreciation and prorate calendar.
33

Defining Asset Calendars
• Initially set up all calendar periods.

• Set up at least one period before the current period.
Note: You can divide annual depreciation proportionately according to the number of
days in each period or evenly in each period.
34
• Initially set up all calendar periods from the period corresponding to the oldest date placed in
service to the last day of the current fiscal year.
• Set up at least one period before the current period. At the end of each fiscal year, Assets
automatically sets up the periods for the next fiscal year.
For example, to define a 4-4-5 calendar, set up your fiscal years, depreciation calendar, and prorate
calendar with different start and end dates, and fill in the uneven periods.

Multiple Calendars in Assets
Understand what each calendar determines:

• Depreciation calendar
• Prorate calendar
• Calculate Depreciation
35
• The depreciation calendar determines the number of accounting periods in your fiscal year.
• The prorate calendar determines what rate Assets uses to calculate annual depreciation by
mapping each date to a prorate period, which corresponds to a set of rates in the rate table.
• The Calculate Depreciation process uses the prorate calendar to determine the prorate period
that is used to choose the depreciation rate.

Calendar Implementation Considerations
Multiplebooks
Multiple books can
can share
share Tax books can have
thesame
the samecalendar.
calendar different calendars.
Corporate Corporate
Tax
Tax books can also share
calendars with their
Tax Tax corporate books
36
Before defining calendars, consider the following:

• Corporate books can share the same calendar.
• Multiple books can use a single calendar.
• Tax books can have different calendars than their associated corporate books.
• Depreciation and prorate calendars must be defined before defining asset books.
• Different calendars can be set up for reporting and tax purposes, depending upon statutory
requirements.

Calendar Implementation Details
• All calendar periods must be set up

from the period corresponding to the
oldest date placed in service to the last
day of the current fiscal year.
• At least one period must be set up
after the current period.
• Define calendars only after you have
finished defining system controls and
fiscal years.
37

Prorate Conventions
Prorate and retirement conventions:

• Determine how much depreciation to
take in the first and last year of an
asset’s life.
• Must account for every date in the
fiscal year for assets to depreciate
properly, because assets can be
acquired at any time in a given period.
38

Prorate Convention Considerations
Other considerations:
• The prorate convention and the date
placed in service determine the prorate
date.
• Assets uses the prorate date to
determine the prorate period in your
prorate calendar.
• Assets prorates the depreciation taken
for an asset in its first fiscal year of life
according to the prorate date.
39

Prorate Convention Examples
40
The following shows examples of prorate conventions and their prorate dates when the date placed in
service is 01-JUN-2016:
• Following Month convention: Prorate Date is 01-JUL-2016
• Mid-Month convention: Prorate Date is 15-JUN-2016
• Month convention: Prorate Date is 01-JUN-2016
• Half-Year convention: Prorate Date is 01-JUL-2016

Half-Year and Following Month Prorate Examples
Review these prorate conventions and examples:

• Half-year prorate convention.
• Following month prorate convention.
41
Example 1: Half-year prorate convention

- You use the half-year prorate convention. The prorate date of all assets using that
convention is the midpoint of your fiscal year, so assets acquired in the same fiscal year
take the same amount (half a year's worth) of depreciation in the first year.
Example 2: Following month prorate convention
- You use the following month prorate convention. The prorate date is the beginning of the
month following the month placed in service, so the amount of depreciation taken for
assets acquired in the same fiscal year varies according to the month they were placed in
service.

Retirement Conventions
Understand how retirement conventions are applied in these situations:

• If you do business in a country that requires you to use a different prorate convention
for retirements than for additions.
• If you retire the asset before it is fully reserved.
42
If you do business in a country that requires you to use a different prorate convention for retirements
than for additions, define retirement conventions to determine how much depreciation to take in the last
year of life, based on the retirement date.
If you retire the asset before it is fully reserved, then Assets uses the prorate date from the retirement
convention to determine how much depreciation to take in the asset’s last year of life.

Prorate Convention Implementation Considerations
• Initially set up all your prorate conventions in the correct sequence.

• Review your reporting authority’s depreciation regulations.
43
• Initially set up all your prorate conventions from the convention period corresponding to the
oldest date placed in service through the end of the current fiscal year.
Note: At the end of each fiscal year, Assets automatically sets up your prorate conventions for
the next fiscal year.
• Review your reporting authority’s depreciation regulations.
Note: Your reporting authority's depreciation regulations determine the amount of depreciation
to take in the asset's first year of life.

Prorate Convention Implementation Examples
Review these examples of how prorate conventions are applied:

• Regulations require that you prorate depreciation according to the number of months
you hold an asset in its first fiscal year of life.
• Regulations require that you prorate depreciation according to the number of days
that you hold an asset in its first year of life.
44
Example 1:
• Regulations require that you prorate depreciation according to the number of months you hold
an asset in its first fiscal year of life. In this case, your prorate convention has twelve rate periods,
one for each month of the year.
Example 2:
• Regulations require that you prorate depreciation according to the number of days that you hold
an asset in its first year of life. In this case, the fiscal year depreciation amount would vary
depending on the day you added the asset. Thus, your prorate convention contains 365 prorate
periods, one for each day of the year.

Aligning Prorate Convention and Prorate Calendar
Align the prorate convention with the prorate calendar.
Convention Prorate Calendar
Month 12 Periods
Mid-Month 24 Periods
Daily 365 Periods
45

Mid-Month Prorate Convention Example
46
In this example, you use the mid-month prorate convention.

Optional Implementation Steps
You can implement the following optional setup steps in Assets:

• Manage cash-generating units.
• Manage distribution sets.
• Manage profile options.
• Manage lookups.
• Manage descriptive flexfields.
• Manage asset keys.
47

Practices 20-5 to 20-8 Overview: Configuring Assets
These practices cover the following topics:

• Practice 20-5: Create a fiscal year by using the Manage Fiscal Years page.
• Practice 20-6: Create a monthly calendar by using the Manage Calendars page.
• Practice 20-7: Create a prorate convention by using the Manage Prorate Conventions
page.
• Practice 20-8: Create values for the description and retirement types fixed assets
lookups.
48

Managing Asset Books
49
In Oracle Fusion Assets, user access to the data is secured at the asset book level.
• Each user can view and update the assets only in the asset book to which they have
access. You can set up an unlimited number of independent asset books.
• Each book has its own set of depreciation rules, accounts, and calendars to organize
and implement your fixed assets accounting policies more effectively.
• An asset can have different financial information and depreciation rules in each book.
For example, you can make the asset cost in your tax book different from the cost in
the associated corporate book. Because the books are independent, you can run
depreciation for each book on a different schedule.
• When you define a tax book, you must specify an associated corporate book.
Note: After a book is created, use the Manage Data Access for Users setup task to provide
users access to the asset book.

Corporate Books
When defining asset books, remember that corporate books:

• Hold all asset information
• Are used to post journal entries for all accounting activity, including depreciation to
the relevant primary ledger in accordance with corporate policy and business
practices.
• Must be assigned to a primary ledger.
50

Asset Book Setup Part One
51
Navigate to: Others > Setup and Maintenance > Setup: Financials > Fixed Assets > Manage Asset Books
> Create.
To create a corporate book, enter the following fields:
• Name and Description: Use a name that represents your book correctly on reports.
• Book Class: Select Corporate. Other choice is Tax. When you select Tax, enter an associate
corporate book.
• Ledger: Select the ledger to record the asset transactions.
• Depreciation Calendar: Enter the calendar to use for depreciation. The Fiscal Year Name and
Prorate Calendar default in.
• Current Period: Enter the current period. The Oracle Fusion Assets system updates the current
period field each time the current period is closed and the next period is opened. Keep in mind
there can be only one open period at a time for each asset book.

• Divide Depreciation: Select the method for dividing the annual depreciation amount
over the periods in your fiscal year for this book.
- Choose Evenly to divide depreciation evenly in each period
- Choose By Days to divide it proportionally based on the number of days in each
period.
• Last Depreciation: Initially defaults to the current date. Assets updates this date when
you run depreciation.
• Last Depreciate Run Status: Shows the status of the last run.

Asset Book Setup Part Two
53
• Depreciate if retired in the first year: Select to depreciate an asset you purchase and retire in
the first year of the asset’s life.
• Allow amortized changes: Select if you want to allow amortized changes the asset book.
• Allow cost sign changes: Select if you want to allow the cost amount to change from a positive
to a negative amount, or from a negative to a positive amount.
• Allow impairment: Select if you want to allow the asset to be impaired. An asset is impaired
when the carrying amount of the asset exceeds its recoverable amount.
• Allow ledger posting: Select if you want to allow posting to the General Ledger.
• Allow physical inventory: Select if you want to allow physical inventory.
• Allow leased assets: Select if you want to allow leased assets.
• Use Payable invoice date as date placed in service: Select if you want to use the date on the
payables invoice as the date placed in service.

• Allow unallocated Payables invoice lines: Select if you want the Mass Additions
Create program in Oracle Payables to permit interfacing unallocated invoice lines to
Oracle Assets. These unallocated invoice lines must also satisfy all the mass additions
create criteria. Unallocated Payables invoice lines include:
- Unallocated charge lines (FREIGHT, MISCELLANEOUS) and tax lines
(NONREC_TAX).
- Discounts on capital project related lines will no longer be interfaced from Oracle
Payables. Instead, they are interfaced through Oracle Projects.
• Suspend automatic merge of Payables invoice lines: Select if you want Oracle Assets
to unmerge the invoice mass additions lines that were previously automatically merged
in Oracle Payables.
• Use NBV threshold for depreciation: Select if you want to use the net book value
threshold for asset depreciation.
• Capital Gain Threshold Years: Enter the number of years and months to use as the
minimum time you must hold an asset for Assets to report it as a capital gain when you
retire it. If you want Assets to report a capital gain for all assets when you retire them,
enter zero for the threshold.
• Inactive On: Enter a date to inactivate the book.
• Annual Depreciation Rounding: Select Always or With Restrictions to.
• Contest Value: Select to enter additional descriptive information.

Asset Book Accounts
Enter the account defaults for a book In the Account section of the Create Book page,
55
> Create.
In the Account section of the Create Book page, enter the Account Default . The segments in the
Account Default are used to create the account number for the other types of asset transactions.
Enter the account number that represent each of these asset transactions and is combined with the
other segments defined in the Account Default:
• Net Book Value Retired Gain and Loss
• Proceeds of Sale Gain and Loss and Sale Clearing
• Cost of Removal Gain or Loss
• Cost of Removal clearing
• Deferred Depreciation Expense and Reserve
• Revaluation Reserved Retired Gain
• Revaluation Reserved Retired Loss
• Non-Sales Gain

Asset Book Rules
Revaluations
Reference Data Groups
56
Navigate to: Others > Setup and Maintenance > Setup: Financials > Fixed Assets > Manage
Asset Books > Create.
Complete the asset book setup by entering the rules your asset book will use in operating
Assets:
Reference Data Groups: Enter the Reference Data Set Code that is used for each type of
object.
Revaluations: Select the following options:
• Allow revaluation - by Cost or Net book value: Select the Allow revaluation option to
allow revaluation for assets in this book. You can choose to allow cost revaluations, net
book value revaluations, or both.
• Revalue depreciation reserve:
- Yes: Oracle Assets revalues the accumulated depreciation balance at the start or
end of the period in which the revaluation transaction occurred. It calculates the
revalued accumulated depreciation as the difference between the revalued cost
and the revalued net book value.
- No: Assets revalues only the cost of the asset, and the accumulated depreciation
balance remains the same.

• Revalue YTD depreciation:
- Yes: Assets revalues the carrying cost of the asset at the start of the financial year
in which the revaluation transaction occurs and restates the year-to-date
depreciation.
- No: Assets revalues the carrying cost of the asset at the start or end of the period
in which the revaluation transaction occurs and doesn't restate the year-to-date
depreciation balance.
• Amortize revaluation reserve:
- Yes: Assets amortizes the revaluation reserve balance over the remaining life of
the asset. Assets calculates the periodic amortization amount when it calculates
the depreciation expense for the period.
- No: The revaluation reserve balance remains unchanged.
Note: Only revaluation, impairment, and retirement transactions can change the
revaluation reserve balance.
• Retire revaluation reserve:
- Yes: Assets retires the revaluation reserve balance when the asset is partially or
fully retired in proportion to the cost retired.
- No: he revaluation reserve balance remains unchanged.
• Include current period depreciation:
- Yes: Assets revalues the carrying cost of the asset at the end of the period in
which the revaluation transaction occurs.
- No: Assets revalues the carrying cost of the asset at the start of the period in
which the revaluation transaction occurs.

Revalue Full Reserved Assets
Revaluations
58
Revalue fully reserved assets: You can revalue fully reserved assets that depreciate under all
depreciation methods. If you revalue fully reserved assets that depreciate under life-based
methods, consider the following additional rules:
• Life Extension Factor: Not Required. When you revalue a fully reserved asset, you can
extend the asset life so its revalued carrying cost can be depreciated over one or more
periods. To determine the new asset life, Assets multiplies the original asset life by the
life extension factor. The new life is calculated from the date the asset was placed in
service. See the next slide, Revalue Fully Reserved Assets Without Extending the Assets
Life.
• Maximum Revaluations: Not required. You can limit the number of times you can
revalue an asset as fully reserved. Assets doesn't revalue a fully reserved asset if the
revaluation exceeds the maximum number of times you can revalue an asset as fully
reserved.
• Life Extension Ceiling: Not required. The life extension ceiling limits the amount of
depreciation you can back out when you revalue fully reserved assets. If your life
extension factor is greater than the life extension ceiling, Assets uses the life extension
ceiling to calculate the new accumulated depreciation and the depreciation adjustment.
It uses the life extension factor to calculate the new asset life, regardless of whether a
life extension ceiling exists.
• Allow capital fund accounting: Select this option to create accounting entries for
capital fund accounting and revalue assets with the net book value method as detailed
in the Statement of Recommended Accounting Practice (SORP).

Revalue Fully Reserved Assets Without Extending the
Assets Life
Revaluations
59
Navigate to: Others > Setup and Maintenance > Setup: Financials > Assets > Show: All Tasks > Edit Book
> Create
You can revalue assets that are fully reserved without extending assets life. Revalue assets using :
• Value type as either the Price Index or Percent
• Life extension faction of 1
Steps to Enable
1. Check the Revalue fully reserved assets option in the Edit Book page and enter 1 for Live Extension
Factor.
2. In the Create Revaluation page, select the value type of either Price Index or Percent and enter the
life extension factor.

Advanced Rules
60
Books > Search for asset book > Advanced Rules tab.
Advanced Rules:
• Allow group depreciation: Select if you want to allow group depreciation in this book. It enables
computing and storing depreciation at the group level.
• Allow CIP members: Select if you want to this book to allow construction in process (CIP) assets
as members of group assets.
• Allow CIP depreciation: Select if want to calculate depreciation for construction in process (CIP)
assets in this book.
• Allow member tracking: Select if you want the depreciation balance maintained at the group
member level in this book.
• Allow intercompany member: Select if you want the asset book to allow asset members from
different companies (balancing segment values) within a group.
• Recognize lease exchange rate gain or loss: Select if you want leases within this book to
recognize exchange rate gains and losses.

• Capitalization Threshold Amount: The low value of the asset cost range where assets
are capitalized and depreciated using the low value asset method. Assets below this
amount are expensed.
• Low Value Threshold Amount: The high value of the asset cost range where assets
are capitalized and depreciated using the low value asset method. Assets above this
amount use the normal category depreciation method.

Enabling the Revaluation and Advanced Rules Tab
If the Rules section of your book only does not display the Revaluation and Advanced
Rules tabs:
• Use the Manage Fixed Assets Lookups task to enable the tabs to display correctly.
62
Navigate to: Others > Setup and Maintenance > Setup: Financial > Fixed Assets > Manage Fixed Assets
Lookups.

Enabling the Revaluation Tab
To enable the Revaluation tab:

• Navigate to: Others > Setup and Maintenance > Setup: Financials > Fixed Assets >
Manage Fixed Assets Lookups.
• Search for: Lookup Type: ORA_FA_ALLOW_REVAL
• Click the Create (+) icon under the Financials Generic Lookup Type:
ORA_FA_ALLOW_REVAL
• Complete the fields as shown below:
63
Revaluation Fields
In the Financials Generic Lookup Type : ORA_FA_ALLOW_REVAL section, enter or complete the
following:
• Lookup code: XX Book Name (your book name)
• Reference Data Set: Common Set
• Display Sequence: 1
• Enabled: check the box
• Start Date: today’s date
• Meaning: XX Book Name
• Description: XX Book Name

Enabling Group Depreciation
To enable the Advanced Rules tab:

• Search for: Lookup Type: ORA_FA_ALLOW_GROUP
ORA_FA_ALLOW_GROUP
64
Advanced Rules Fields

In the Financials Generic Lookup Type : ORA_FA_ALLOW_GROUP section, enter or complete the
following:

Enabling Capitalization Thresholds
To enable the Advanced Rules tab:

• Search for: Lookup Type: ORA_FA_ALLOW_CAP_THRESHOLD
ORA_FA_ALLOW_CAP_THRESHOLD
65
Advanced Rules Fields

In the Financials Generic Lookup Type : ORA_FA_ALLOW_CAP_THRESHOLD section, enter or complete
the following:

Practice 20-9 Overview: Managing Asset Books
This practice covers the following topic:

• Creating a Corporate Depreciation Book
66

Tax Books
When defining asset books, remember

that tax books:
• Comply with statutory rules for
depreciating assets.
• Can use a different calendar than their
associated corporate book, if both
calendars use the same fiscal year.
• Can optionally be used to post journal
entries to either the corporate book's
primary ledger or to its secondary
ledger.
67
Data can be copied from the corporate book on a regular basis, excluding depreciation information.
Note: Use the Perform Periodic Mass Copy process to transfer assets and transactions from the
corporate book to the tax book.

Asset Books and Ledgers, Subledgers, and Business
Units
When defining asset books, keep in mind the asset books' relationship to ledgers,
subledgers, and business units.
• Asset books are linked to ledgers.
• Asset books are not directly linked to business units.
• Business units are assigned to primary ledgers.
• Business units can interact with corporate asset books assigned to the same ledger.
• Asset tax books provide alternative asset accounting.
EXAMPLE
68

Asset Books, Ledgers, Subledgers, and Business Units
69
In this example:
• The corporate book is populated by the Oracle Fusion Payables business units assigned
to the same primary ledger.
• The tax book is populated by Oracle Fusion Assets.
• The tax book uses alternate accounting.
• The tax book can post accounting entries to the corporate book's primary ledger or to
its secondary ledger, as required.

Asset Book Implementation: Considerations
Consider the following when defining asset books:

• Access to asset data is secured at the asset book level.
• Define asset books according to your depreciation and accounting requirements.
• Set the default accounts for retirement and deferred depreciation transactions at the
book level.
• Select the reference data set for each setup object to restrict their values during
transaction entry.
• Define tax book rules to copy transactions from the corporate book.
• Optionally, enable group assets, revaluation, and fixed asset capitalization thresholds
for your book and the associated configurations.
70

Defining Multiple Depreciation Requirements
71
In this example, your company has operations in the United States only, and you need to prepare
financial statements for reporting purposes. Additionally, your company must meet
depreciation requirements under federal and state laws.
Oracle recommends creating a corporate book and two associated tax books.

Defining Multiple Currency Representations
72
In this example, your company has operations in Singapore, and the company is a subsidiary of a US
company. Your company must prepare its financial statements in Singapore dollars (SGD) for reporting
purposes, and in United States dollars (USD) to fulfill the parent company's US generally accepted
accounting principles (GAAP) and consolidation requirements.
• Primary currency: SGD
• Reporting currency: USD
Oracle recommends creating a corporate book that is assigned to the primary ledger with the primary
currency SGD and the reporting currency USD.

Defining Multiple Currency Representations
When you define the corporate book for the primary ledger with reporting currencies:
• Assets automatically creates a reporting book for each reporting currency of the
ledger.
• Perform transactions only in the primary currency.
• View transaction details, run reports, and create accounting entries.
73
Assets automatically generates currency representations for the transactions in all the reporting
currencies.
You can view transaction details, run reports, and create accounting entries in both the primary and
reporting currencies.

Defining Multiple Accounting Representations
74
In this example, your company has operations in the United States. Your company needs to prepare its
financial statements under both US Generally Accepted Accounting Principles (GAAP) and International
Financial Reporting Standards (IFRS).
Oracle recommends creating a corporate book for the US GAAP primary ledger and an associated tax
book for the IFRS secondary ledger. Both the primary and secondary ledgers should use the same chart
of accounts and currency.

Implementation Questions
Recommendations and Best

Implementation Question
Practices
Can I create journal entries from the corporate book No. The corporate book can be associated only to the
to the secondary ledger? primary ledger.
Can I create more than one corporate book for a Yes. You can create an unlimited number of
ledger? corporate books for a primary ledger.
You can create journal entries and optionally post

How do I create journal entries for asset accounting them to the assigned primary ledger or secondary
activities in a tax book? ledger by setting the Allow ledger posting check box
to Yes.
75

Secondary Ledgers and Tax Book Considerations
Implementation Question Recommendations and Best Practices
No. Only secondary ledgers with the following settings

can be assigned to a tax book:
• The primary ledger must be assigned to the
associated corporate book.
• The subledger level accounting must be enabled for
Can I assign any secondary ledger to a tax book?
the secondary ledger.
• The secondary ledger must have the following Oracle
Fusion Subledger Accounting settings for Assets:
‒ Subledger Accounting Enabled: Yes
‒ Use Primary Ledger Amounts: No
76

Reference Data Sharing Across Asset Books
Assets contains a common set of predefined set-enabled objects to meet the business
needs of sharing reference data across books.
• Use reference data sets to share reference data across books and to restrict access to
reference data by book.
• Optionally, create new reference data sets to limit the access to certain setup objects
in one or more books.
Oracle Fusion Applications contains two predefined sets:
• Common
• Enterprise
You can create more reference data sets based on your business
and data sharing requirements.
77

Reference Data Sharing Overview
• Create reference sets across tables or lookup types.

• Share information and data processing options among the determinant types, such
as business unit or asset book.
• Create separate and common sets and subsets for each business unit or to share
across several business units depending upon its business requirement.
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Manage Reference Data Sets: Use this page to create the Set Code, Set Name, and Description fields
that can then be assigned to reference data.
Manage Set Assignments for Set Determinant Type: Use this page to assign the reference data sets
to relevant reference objects.
• Select Common Set to share it across the organization.
• For multiple assignments, you can classify different types of reference data sets into groups and
assign them to reference entity objects.
• The assignment takes into consideration the determinant type, determinant, and reference
group, if any.

Determinant and Determinant Types
• Determinant Type: The point of reference used in the data assignment process. You
can share the partitioned reference data based on a business context setting called
the determinant type.
• Determinant: The value that qualifies the selected determinant type.
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For example, when managing set assignments for the set determinant type, if you select Business Unit
as the determinant type, you must provide the name of the business unit as the corresponding
determinant.
Asset Book is the determinant type in Oracle Fusion Assets. An asset book:
• Records information about assets including their acquisition, depreciation, and retirement.
• Is tied to a ledger.

Set-Enabled Objects in Assets
The set-enabled objects are:

• Depreciation methods:
• Prorate conventions
• Bonus rules
• Depreciation ceilings
• Asset lookups:
– Queue names
– Asset descriptions
– Retirement types
– Unplanned types
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Method of Sharing:
• Assignment to one set only, no common values allowed used for:
- Prorate conventions
- Bonus rules
- Depreciation ceilings
- Asset Descriptions
• Assignment to one set only, with common values:
- Depreciation Methods
- Queue names
- Retirement types
- Unplanned types

Assignments to One Set Only with Common Values
• Most commonly used method.

• Allows defining reference data object instance across all sets.
• For example, Receivables Payment Types are assigned
to a:
– Common set that is available to all the business units. With the common set, you do
not have to explicitly assign transaction types to each business unit.
– Business unit–specific set of transaction types.
– At transaction entry, the list of values for transaction types includes transaction
types from the set assigned to the business unit, as well as transaction types
assigned to the common set that is shared across all business units.
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Assignments to One Set Only with No Common Values
• Simplest form.
• Allows assigning a reference data object instance to one and only one set.
• For example, Asset Prorate Conventions are defined and:
– Assigned to only one reference data set.
– Shared across multiple asset books, but all the values are contained in only one set.
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Reference Data Sharing: US Company Example
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In this example, your company is headquartered in the United States and has two subsidiaries. There are
three corporate books and your company wants to eliminate duplication of reference data.
Oracle recommends the predefined reference data set Common to share reference data across all the
books.

Reference Data Sharing: Multinational Company
Example
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In this example, your company is a multinational company with operations in the United States and
Japan. The company has two corporate books: US CORP and JAPAN CORP. Because the depreciation
methods used in these two countries are different, US depreciation methods should not be available to
JAPAN CORP and Japanese depreciation methods should not be available to US CORP.
Oracle recommends two reference data sets and segregating the methods.

Asset Categories
Use categories to group assets for transaction and reporting purposes.

Asset categories considerations:
• Lease rules.
• Group assets.
• Must be assigned to asset books with default accounts and depreciation rules.
• Use the default account values.
• Automatically default the depreciation rules to assets when they are added.
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Asset categories:
• Group assets that share financial accounts and usually depreciate using the same rules.
• Must be assigned to asset books with default accounts and depreciation rules.
• Use the default account values to account asset transactions in this category.

Managing Asset Categories
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In this graphic, assets are:

• Attached to asset categories
• Assigned to asset books
• Depreciated using a specified depreciation method

Defining the Create Category Header Section
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Categories.
Implementation considerations for setting up the Asset Category header section:
Description: Description of the category.
Category Type: Specify whether the category is Lease, Non-lease, or Leasehold improvement. You can
enter lease information in the Asset Details window only for assets assigned to a Lease category.
Ownership: Owned or Leased.
Property Type: Personal or Real. Also, you can setup Lookup values as property types.
Property Class: If you have assets in the United States, enter 1245 for personal property and 1250 for
real property.
Capitalized: Select this option if you want to charge items in this category to an asset account and if you
want to depreciate items in this category. If you are tracking items in the Oracle Assets application that
are expensed for financial purposes, leave this box unchecked. All expensed items that you want to track
in Oracle Assets must be added to an asset category that is not enabled for Capitalization.
Enabled: Select to allow using this category combination to create assets.

In physical inventory: Select this option if you want the asset in the category to be included
in physical inventory. Use the Descriptive Details section to override this check box for
individual assets.
Intangible: A non-physical asset like goodwill or a patent.

Asset Category Accounting Rules
Asset categories also contain:

• General Ledger accounts.
• Default depreciation rules.
• Tax book depreciation rules.
• Lease rules.
• Default subcomponent depreciation rules.
• Capitalization and low value threshold amounts.
• Group asset depreciation rules.
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Defining Default Rules for Depreciation
Define depreciation rules carefully for each category, because Assets automatically
defaults the rules to assets when they are added.
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Defining Oracle Fusion General Ledger Accounts
When defining General Ledger accounts, use the following guidelines:

• You cannot change balance sheet accounts once assets are added to the category.
• Define asset clearing accounts that are used in the processing of invoices from Oracle
Fusion Payables.
• If you have more than one book per ledger, enter a unique clearing account for each
book.
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Define the balance sheet accounts carefully, because they cannot be changed once assets are added to
the category.
If you have more than one book per ledger, best practice is to enter a unique clearing account for each
book.

Category Implementation: Considerations
When implementing asset categories,

define and organize the following
appropriately:
• Category flexfield.
• Category hierarchies.
• Depreciation rules.
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• Define the Category flexfield such that assets are grouped according to depreciation rules.
• Organize category hierarchies such that valid subcategory values depend on a major category
value.
• Ensure that the category is compliant with the chart of accounts.
• Set up default accounts and rules for each Category flexfield combination and for each book.
• Define depreciation rules with care for each category, because they will be automatically
defaulted to assets.
• Assign a category to an asset book before entering assets with that category in that book.

Practice 20-10 Overview: Managing Asset Categories

• Defining a category with a major category of Office Supplies and a minor category of
Printer.
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Managing Cash-Generating Units
• A cash-generating unit is the smallest identifiable group of assets that generates cash
inflows from continuing use.
• Define as many cash-generating units as necessary to:
– Group assets by cash-generating units.
– Calculate and report the impairment loss at the cash-generating unit level.
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Manage Cash Generating Units.
A cash-generating unit is largely independent of the cash inflows from other assets or groups of assets.

Cash-Generating Units Example
Problem Solution Implementation

You cannot estimate the The entity needs to estimate Create a cash-generating unit
recoverable amount of the the recoverable amount of the representing the entire mining
private railway because its cash generating unit to which enterprise so that the
value in use cannot be the railway provides service impairment loss can be
determined, and probably is (the mine as a whole). calculated for the mine as a
different from its value as whole and allocated to all
scrap. assets in that cash-generating
unit.
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Example: How to use cash-generating units for a mining enterprise.

• A mining enterprise owns a private railway to support its mining activities.
• The private railway can be sold only for scrap value and the private railway doesn't generate cash
inflows from continuing use that are largely independent of the cash inflows from the other
assets of the mine.

Managing Distribution Sets
Distribution sets enable you to automatically assign a predefined set of one or more
distributions to a new asset mass addition.
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Manage Asset Distribution Sets.

Defining Distribution Sets
When defining distribution sets, use the following guidelines:

• Define distribution sets to allocate percentages of asset units to different depreciation
expense accounts.
• Define one or more distributions in a set.
• Change the distribution information for a distribution set at any time.
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Note: If you change the distribution information for a distribution set, it does not affect assets already
assigned to that distribution set.

Managing Profile Options
Set profile options to specify how Assets controls access to and processes data, such
as:
• Number of requests you can run in parallel.
• Timing diagnostic message value.
• Amount of database information retained in a concurrent process.
• Cache reset value.
• Batch size used for bulk processing in mass processes.
• Book selected by default in Assets pages.
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Profile Options Settings
The following tables display profile option names and default values, as well as the
effect that each profile option has on your Assets setup:
Profile Option Default

Effect
Display Name Value
You can enter a number between 1 and 20 to specify the

Parallel Request maximum number of parallel requests you want to allow. If
1
Number you set a value that is greater than 1, you can run multiple
processes at the same time.
Batch Size 200 The value indicates the number of records in a batch.
Timing
No value (No) Enables printing of timing information.
Diagnostics
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Parallel Request Number Example: For example, if you set the value to 5, you can run multiple
Depreciation processes.
Batch Size Example: For example, if you use the default value of 200, each batch contains 200 records.
The value can be between 1 and 10,000.

Cache Sizing Profile Option
Profile Option
Default Value Effect
Display Name
Set a value from 0 to 25. The number you enter
controls the amount of information that can be stored
in the cache.
Cache Sizing Factor 25 A value of 0 retains only one record in the cache.
A value of 25 retains a large amount of data in the
cache.
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Cache Sizing Factor

In general, a small cache size works better for a very simple data structure. A large cache size works well
for a more complex data structure (for example, setup data that uses many depreciation methods,
bonus rules, depreciation ceilings, and retirement conventions).

Asset Profile Options
Profile Option Default

Effect of Enabling Effect of Disabling
Display Name Value
Depreciation Single No value (No) Cache is reset after every asset. Cache is reset after every 20 assets.
The default book appears as the You must select a book from the
Default Book None value in all Assets pages where menu in all Assets pages where the
the Book field appears. Book field appears.
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Managing Lookups
• Lookups are containers for the list items that appear in an application.
• Users select one of the items from such lists to enter a value on the application user
interface.
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Lookups in Assets
Oracle Fusion Assets comes with the following predefined lookups. You can define
additional lookups, if required, for your business requirements.
Lookup Type Lookup Name Description

Displays the descriptions assigned to the assets. Helps
FA_ASSET_
Asset Description standardize asset descriptions by ensuring that similar
DESCRIPTION
assets have similar descriptions.
FA_PROPERTY_TYPE Asset Property Type Classifies the property as real or personal.
Classifies the status of mass additions lines as new, on
FA_QUEUE_NAME Queue Name
hold, split, merged, cost adjustment, post, or posted.
Specifies the reason for retirement, such as stolen,

FA_RETIREMENT_TYPE Retirement Type
destroyed, retired, or scrapped.
Unplanned
FA_UNPLANNED_DEPRN Specifies the reason for additional depreciation expense.
Depreciation
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Managing Descriptive Flexfields
Use Assets descriptive flexfields to:

• Record additional information about assets.
• Collect information relevant to your business.
• Hold additional information for a new asset in a category.
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Use Assets descriptive flexfields to record additional information about assets that is not included in the
standard information on Assets pages.
For example, you can set up a descriptive flexfield for each asset category to collect information relevant
to your business, such as the license number for cars and the square footage for buildings.
When you assign a new asset to a category, you enter the additional information in a descriptive flexfield
For more information on defining descriptive flexfields, see the Descriptive Flexfield topic in the
Appendix B: Common Application Topics.

Asset Descriptive Flexfields
Assets provides the following descriptive flexfields:
Descriptive Flexfield Associated Assets Page

Asset Category Add Asset, Edit Source Line, Add Assets and Prepare Source Lines spreadsheets
Add Asset, Edit Source Line, Add Source Lines, Change Source Lines, Source Line
Assets Invoices
Retirement, Add Assets, and Prepare Source Lines spreadsheets
Bonus Rates Create Bonus Rule, Edit Bonus Rule
Bonus Rules Create Bonus Rule, Edit Bonus Rule
Book Controls Create Book, Edit Book
Calendar Types Create Calendar, Edit Calendar
Categories Create Category, Edit Category
Category Book Defaults Create Category, Edit Category
Ceilings Create Ceiling, Edit Ceiling
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Managing Descriptive Flexfields
Descriptive Flexfield Associated Assets Page

Convention Types Create Prorate Convention, Edit Prorate Convention
Fiscal Year Create Fiscal Year, Edit Fiscal Year
Flat Rates Create Depreciation Method, Edit Depreciation Method
Locations Manage Locations
Methods Create Depreciation Method, Edit Depreciation Method
Retirements Cost Retirement, Unit Retirement, Source Line Retirement
System Controls Manage System Controls
Transactions Add Asset, Edit Source Line, Preview Add to Asset, Change Financial
Details, Suspend Depreciation, Add Source Lines, Change Source
Lines, Transfer Source Lines, Change Category, Perform Unplanned
Depreciation, Transfer Reserve, Change Group Asset, Cost
Retirement, Source Line Retirement, Unit Retirement, Transfer Asset,
Adjust Units, Add Assets, and Prepare Source Lines spreadsheets
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Asset Keys
Asset keys are similar to asset categories; they enable you to group assets. However,
asset keys have no financial impact.
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Managing Asset Keys
• Define asset keys to group assets.

• Define asset key combinations.
• Assign the same asset keys to multiple
assets. to easily identify similar assets.
• Provide additional descriptive data to
group assets by project or other
functional group.
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Define asset keys to group assets or to identify groups of assets quickly.

Define asset key combinations. You must first define Asset Key flexfield segment values before defining
asset keys.
Assign the same asset keys to multiple assets to easily identify similar assets.

Practice 20-11 Overview: Provisioning Data Roles to
User Accounts
• Provisioning data roles for the asset book to your user account.
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In this practice you are an asset accounting manager at your company and will be assigning the Data
Role for the Asset Book to your User Account.

Overview of Asset Leases
Use the Asset Leases feature to:

• Manage your finance and operating leases.
• Comply with ASC 842 and IFRS 16 by creating right-of-use assets and lease liability
and the accounting.
• Calculate periodic interest expense for finance lease assets
• Calculate periodic lease expense for operating lease assets.
• Generate and transfer invoices for periodic lease payments to Oracle Payables Cloud.
• Terminate an asset lease or any of its right-of-use assets after reviewing its impact on
the liability balance.
• Change material details, such as lease term duration, or make payment schedule
changes after reviewing their impact on the liability balance, or both.
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Leasing is used by many organizations as a means of gaining access to assets, obtaining financing, and
reducing an organization’s exposure to the risks of asset ownership. Many organizations lease assets
including real estate, airplanes, trucks, ships, and construction and manufacturing equipment. Due to
the prevalence of leasing, it is important for users of financial statements to have a complete and
comprehensible picture of an organization’s leasing activities.
The two leading accounting standard setting bodies, International Accounting Standards Board (IASB)
and Financial Accounting Standards Board (FASB), published new lease accounting standards, IFRS 16
Leases and Leases (Topic 842) respectively. These two standards are in effect from January 2019.
Oracle Assets allows the lessee to comply with these new accounting standards beginning with Oracle
Fusion Financials Cloud Release 13. In Oracle Financials Cloud, a lessee can use Oracle Cloud Assets and
Oracle Cloud Payables together.

Setting Up Asset Book and Payables for Leases
Enable Allow leased asset for your asset book.
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> Edit.
You must enable the Allow leased assets option for your asset book in order to use the asset lease
feature.
Setting Up Payables for Leases
You must complete the following setup steps to create the lease payment invoices and make payments:
• Assign at least one business unit as the Payable Business Unit to a primary ledger.
• In Oracle Cloud Procurement, create at least one Supplier and site for each of your lessors in the
Suppliers work area.

Setting Up Asset Category for Leases
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Category > Search category > Edit.
You must set up the leased asset category and assign it to your asset book, and the Category Type must
be Lease.

Setting Up Asset Category Accounts
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Category > Accounts tab.
Accounts
Enter all lease default accounts:
• Lease Liability Account: Initial lease liability, periodic interest on lease liability, and periodic
lease payments are charged to this account.
• Lease Interest Expense Account: Only expense type accounts are allowed. For finance lease
assets, the interest on lease liability is charged to this account.
• Operating Lease Expense Account: Only expense type accounts are allowed. For operating
lease assets, operating lease expense that is calculated to allocate the cost of the lease over the
lease term is charged to this account.
• Gain or Loss on Leased Asset: Only expense and revenue type accounts are allowed. Gain or
loss arising from the reassessment of lease contract terms is charged to this account.
• Lease Clearing Account: Only asset type accounts are allowed. The excess of cost over the lease
liability of a leased asset is charged to this account. For example, initial direct costs incurred to
negotiate or arrange a lease are not included in lease liability, but they are included in the leased
asset’s cost. When you create invoices in Oracle Payables to make lease-related payments that
need to be included in the leased asset cost but not in the lease liability calculation, use this
account as the distribution account for the invoices.

Lease Exchange Rate Gain or Loss: Only expense and revenue type accounts are allowed. Required for
asset book with reporting currency. Gain or loss on change in the exchange rate used to account the
lease liability.
Default Rules
Specify default rules that are applied automatically when you create leases using the Create Lease page.
Payments such as variable lease payments and initial direct costs are normally not included in lease
liability and cost calculations. You must specify the lease payments to be excluded from the lease liability
and cost calculation in these fields:
• Payment Types Excluded from Liability
• Payment Types Excluded from Cost

Creating and Managing Leases
Create and manage your leases on the Manage Leases page.
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Navigate to: Fixed Assets > Assets > Tasks panel > Manage Leases.
Use the Manage Leases page to manage all of your asset leases and perform the following activities:
• Create new leases
• View pending lease transactions and post them
• View existing leases, asset information, and accounting entries
• Generate lease payment invoices
• Review lease payment invoices
• Transfer lease payment invoices to Oracle Payables
• Change financial terms, such as the lease term or payment schedule
• Terminate leases

General Lease Information
Use the Create Lease page to enter your asset lease general information.
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Navigate to: Fixed Assets > Assets > Tasks panel > Manage Leases > Create.
The general lease information includes:
• Lease Number: A unique identifier to track the lease in Assets
• Lease Description: A general description of the lease
• Category: A lease category which is automatically entered for the lease’s right-of-use assets
• Contract Number: Optionally enter the lease contract number, which need not be unique.
• Payables Business Unit: Select the payables business unit responsible to make lease payments.
• Lessor and Lessor Site: Select the supplier and supplier site corresponding to each lessor.
• Lease Start Date: Lease commencement date.
• Payment Frequency: Choose an interval from the list: monthly, yearly, quarterly, and half-yearly.
• Payment Option: Specify whether the lease payment is made in advance or arrears.
• Generate Payment Invoices: Specify whether the lease payment invoices are generated at the
lease level (one invoice per lease) or asset level (one invoice for each right-of-use asset).
Note: When you choose not to generate invoices, you must enter the invoices directly in Oracle Payables
using the correct distribution account.

Lease Financial Terms
• Use the Financial Terms section to enter the lease financial information.
• Asset level: Lease payments entered only in the Assets tab.
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Navigate to: Fixed Assets > Assets > Tasks panel > Manage Leases > Create > Financial Terms section.
Financial terms include the lease term, the lease classification, and the payment schedules. The financial
terms are specific to a book to allow multiple representations of an asset lease. For example, it is
possible classify a lease as an operating lease in the GAAP reporting book and as a finance lease in the
IFRS reporting book.
Coping Leases to Other Books
You must first create the lease in the corporate book then copy the lease to the associated tax book or
other corporate books sharing the same general ledger. It is not possible to create leases directly in a tax
book.
Note: You cannot create a lease for a ledger that has a reporting currency. You can only create leases
for a Payables business unit setup within a ledger that does not have reporting currencies available.
Assets calculates the lease term based on the information that you enter in the following fields:
• Noncancelable Term: Number of months that a lease cannot be cancelled by the lessee. Always
included in lease term calculation.
• Extendable Term: Number of months the lessee can extend the lease. Included in the lease term
only if you decide to extend the lease.
• Cancelable Term: Number of months the lessee has an option to terminate the lease. Included in
the lease term only if you decide not to terminate the lease.

Lessor Option Term: Number of months the lessor can extend or cancel the lease. Always included in
lease term calculation.
Exercise Options: Indicates whether you want to exercise the option to purchase, extend, or cancel the
lease.
Lease term = Noncancelable Term + Lessor Option Term + Extendable Term (Optional) + Cancelable
Term (Optional)
Lease Classifications
Leases are automatically classified as finance leases if any one of the following options is enabled. If
none of the options are enabled, the lease is an operating lease.
Purchase: Lessee decides to buy the leased asset at the end of lease term.
Major lease term: Lease term is 75 percent or more of the remaining economic life of the leased asset.
Substantial present value: Present value of the lease payments is 90 percent or more of the fair value of
the leased asset.
Ownership transfer: Ownership of the leased asset is transferred to the lessee at the end of the lease
term.
Specialized asset: Leased asset has no alternative use to the lessor at the end of the lease term.

Payment Schedules
• Lease level: Lease payments entered in the Recurring and Onetime tabs.
• Asset level: Lease payments entered only in the Assets tab.
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Navigate to: Fixed Assets > Assets > Tasks panel > Manage Leases > Create.
Lease-Level Payment Schedule
Many assets of an asset class or types are leased through a single lease contract with one lease payment
schedule for all assets included in the lease. The lease term, lease payment amount, and interest rate will
be same for all assets and there will not be any asset-specific terms in the contract. For this type of
lessee, you can either add one asset or you can add each leased asset as a separate asset in the asset
book.
Lease payments can be either recurring or onetime. Use the Recurring Payments tab and the Onetime
Payments tab to enter lease payment schedule information. If you are adding more than one asset,
Assets automatically divides the lease-level schedule that you entered into many asset-level schedules
based on the number of assets to add that you specified.
When asset-level schedules are created automatically from lease-level schedules, any changes that you
make to the lease-level schedule are automatically propagated to all asset-level schedules.
You can update the asset-level schedule when the lease payment amount changes for only one
particular asset. Any changes made directly to the asset schedule or any additional asset schedules that
were added directly in the Assets tab will make the lease-level schedule inactive, and make the Recurring
Payments and Onetime Payments tabs unavailable.

Asset-Level Payment Schedule
Many different assets are leased through a single lease contract for a specific period with each asset
having its own lease payment schedule. The lease payment amount and interest rate may be different
for each asset. For this type for lessee, you cannot have any lease-level schedules, and you can enter
only a separate payment schedule for each asset in the Assets tab.

Payment Types
• Recurring Payments
– Periodic lease payment
– Variable lease payment
– Other payments
• Onetime Payments
– Initial direct cost
– Advance lease payment
– Purchase price
– Residual value
– Termination penalty
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Navigate to: Fixed Assets > Assets > Tasks panel > Manage Leases > Create > Recurring Payments and
One Time Payments tabs.
Lease contracts normally have recurring and onetime lease payments. For example, a lease payment
that must be made on the first day of every month is a recurring payment, and the purchase price that
must be paid on the last day of the lease term is a onetime payment.
Recurring Payments: Amount payable on a specific date at a specific frequency throughout or for a part
of the lease term. The generated amortization schedule shows all recurring payments that must be
made during the lease term.
Onetime Payments: Amount payable at a specific date during the lease term.
Other payment information:
Leases are automatically classified as finance leases if any one of the following options is enabled. If
none of the options are enabled, the lease is an operating lease.
• Payment Date: Date when the lessor must be paid.
• Interest Due Date: Date when the interest on a lease liability is recognized for a:
- Finance Lease: Interest on a lease liability is recognized in the period in which the interest
due date falls.
- Operating Lease: The operating lease expense is recognized in the period in which the
interest due date of the periodic lease payment falls. For example, if the lease payment is
made on 1st January of every year and the interest on lease liability is calculated 31st
December of every year.

• Amount: Amount payable to the lessor.
• Number of Payments: For periodic lease payments, the number of payments is automatically
calculated using the lease term, lease payment frequency, and lease payment option.
• Interest Rate: Only one interest rate is allowed for all payments and you cannot have different
rates for each payment type.
• Exclude from Liability: Exclude the lease payment from the lease liability calculation.
• Exclude from Cost: Exclude the lease payment from the leased asset cost calculation.
You must enter a date for Interest Due Date if you do not enable the Exclude from Liability option.

Managing Depreciation Rules
Depreciate assets to decrease the value of an asset due to obsolescence or use.

• Use predefined depreciation methods.
• Use bonus depreciation.
• Use depreciation ceilings.
• Restrict or share depreciation elements for books.
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Use predefined depreciation methods or create your own custom depreciation methods.
Accommodate additional depreciation in the early fiscal years of an asset life using bonus depreciation.
Note: Bonus depreciation is frequently used in the United States for tax books.
Limit the amount an asset depreciates using depreciation ceilings.
Restrict or share depreciation elements for books by setting up reference data sets.

Elements of Depreciation
Prorate Convention
Prorate Calendar
Asset Books
Depreciation Calendar
Depreciation Method
Depreciation Ceilings Depreciation

Units of Measure
Investment Tax
Credits Optional
Elements
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Depreciation Calculation Impact

Depreciation Calculation is Affected by the Prorate Date:
• Assets prorates the depreciation taken for an asset in its first fiscal year of life according to the
prorate date.
• Assets calculates the prorate date when you initially enter an asset.
• Assets bases the prorate date on the date placed in service and the asset prorate convention.
Example of Prorate Conventions
If you use the half-year prorate convention:
• The prorate date of all assets using that convention is simply the midpoint of your fiscal year. So
assets acquired in the same fiscal year take the same amount (half-a-year's worth) of
depreciation in the first year.
If you use the following month-prorate convention:
• The prorate date is the beginning of the month following the month placed in service, so the
amount of depreciation taken for assets acquired in the same fiscal year varies according to the
month that they were placed in service.

• Your reporting authority’s depreciation regulations determine the amount of
depreciation to take in the asset's first year of life. For example, some governments
require that you prorate depreciation according to the number of months that you hold
an asset in its first fiscal year of life. In this case, your prorate convention has 12 rate
periods, one for each month of the year. Other reporting authorities require that you
prorate depreciation according to the number of days that you hold an asset in its first
year of life. This means that the fiscal year depreciation amount would vary depending
on the day that you added the asset. Thus, your prorate convention contains 365
prorate periods, one for each day of the year.
• Calculation basis: Assets calculates depreciation using either the recoverable cost or the
recoverable net book value as a basis. If the depreciation method uses the asset cost,
Assets calculates the fiscal year depreciation by multiplying the recoverable cost by the
rate. If the depreciation method uses the asset net book value, Assets calculates the
fiscal year depreciation by multiplying the recoverable net book value as of the
beginning of the fiscal year, or after the latest amortized adjustment, by the rate.
• Prorate period: Assets uses the prorate date to choose a prorate period from the
prorate calendar. For life-based methods, the prorate period and asset age then
determine which rate Assets selects from the rate table. The Calculate Depreciation
process calculates the asset age from the date placed in service as the number of fiscal
years that you have held the asset.
If two assets are placed in service at different times, but have the same depreciation
method and life, Assets uses the same rate table, but may choose a different rate from
a different column and row in the table. Flat-rate methods use a fixed rate and do not
use a rate table.
• Depreciation rate: For life-based depreciation methods, Assets uses the depreciation
method and life to determine which rate table to use. Then, Assets uses the prorate
period and year of life to determine which of the rates in the table to use. Note that the
life of an asset has more fiscal years than its asset calendar life if it is placed in service
during a fiscal year. Flat-rate depreciation methods determine the depreciation rate
using fixed rates, including the basic rate, adjusting rate, and bonus rate.

Basic Depreciation Calculation
Prorate
Convention Prorate
Calendar Prorate
FOL Month May Period
Apr 1
15
Prorate Date Get
Date Placed in Rate
Service
Journal R = 20%
Entry
Depreciation
Expense per
period Rate Table
Depreciation Calendar,
Divide Depreciation flag, Annual Multiply by Cost or
and Depreciate When Depreciation Net Book Value
Placed in Service flag
126
Prorate Date
• Fusion Assets prorates the depreciation taken for an asset in its first fiscal year of life according
to the prorate date.
• Oracle Assets calculates the prorate date when you initially enter an asset. The prorate date is
based on the date placed in service and the asset prorate convention. For example, if you create a
following month prorate convention, the prorate date would be the beginning of the month
following the month placed in service.
Depreciation Rate
• Oracle Assets calculates depreciation using either the recoverable cost or the recoverable net
book value as a basis.
• Oracle Assets uses the prorate date to choose a prorate period from the prorate calendar.
• For table–based methods, the prorate period and asset age then determine which rate Oracle
Assets selects from the rate table. The depreciation program calculates asset age from the date
placed in service as the number of fiscal years that you have held the asset.
• Flat–rate methods use a fixed rate and do not use a rate table.

• For table–based depreciation methods, Oracle Assets uses the depreciation method
and life to determine which rate table to use. Then, it uses the prorate period and year
of life to determine which of the rates in the table to use.
• Flat–rate depreciation methods determine the depreciation rate using fixed rates,
including the basic rate, adjusting rate, and bonus rate.
Calculate Annual Depreciation
• Calculated and table–based methods calculate annual depreciation by multiplying the
depreciation rate by the recoverable cost or net book value as of the beginning of the
fiscal year.
• Flat–rate methods calculate annual depreciation as the depreciation rate multiplied by
the recoverable cost or net book value, multiplied by the fraction of year the asset was
held.
Allocate Annual Depreciation Across Periods
• After calculating the annual depreciation amount, Oracle Assets uses your depreciation
calendar, the divide depreciation flag, and the depreciate when placed in service flag to
determine how much of the fiscal year depreciation to allocate to the period for which
you ran depreciation.
Spreading Depreciation Across Expense Accounts
• Finally, Oracle Assets allocates the periodic depreciation to the assignments you made
for the asset. Oracle Assets does this according to the fraction of the asset units that is
assigned to each depreciation expense account in the Assignments window.

Defining Depreciation Methods
Assets has many predefined depreciation methods. You can define additional
methods if necessary.
Method Type Description Typical Usage
Calculated (straight- For straight-line depreciation, the Calculate Use when depreciation must be
line) Depreciation program calculates the annual spread evenly across the life of the
rate by dividing one by the life in years. asset.
Flat-rate For flat-rate depreciation methods, the Use when the rates for depreciation
Calculate Depreciation program depreciates are decided by the statute.
the asset over time using a fixed rate. Specify Example: Statutory compliance
either the recoverable cost or the recoverable based on corporate and tax laws
net book value to be used in the calculation.
128
You can use the Assets predefined depreciation methods or create additional depreciation methods.

Table-based For table-based methods, the Calculate Use when depreciation needs to be
Depreciation program uses a rate table accelerated and rates are based on a
to determine the annual depreciation schedule.
rate. Example: Use a table-based method when
you use the Modified Accelerated Cost
Recovery System (MACRS) to depreciate
assets.
Formula-based For formula-based methods, you Use when any of the predefined methods
can define specific formulas to cannot be used due to special
circumstances.
derive annual depreciation rates
Example: Use a formula-based method
for your assets. when you have a short fiscal year in your tax
books.
129

Production Depreciate the asset cost by actual use Use when the depreciation calculation
or production for each period. depends on how much you use the asset
rather than passage of time and bases
depreciation
130

Using the Life-Based Method
Life-Based Year 1 Year 2 Year 3

60% 30% 10%
Table: Oracle Assets obtains the annual depreciation rate from a rate table.
Calculated: For straight–line depreciation, the Depreciation program calculates the annual
depreciation rate by dividing the life (in years) into one.
131
Using the Life-Based Method

Use a life–based method to depreciate the asset over a fixed time using specified rates. There
are two types of life–based methods:
• Table: Oracle Assets gets the annual depreciation rate from a rate table.
• Calculated: For straight–line depreciation, the depreciation program calculates the
annual depreciation rate by dividing the life (in years) into one. Calculated methods
spread the asset value evenly over the life.
You can accommodate new depreciation methods using rate tables instead of formulas. Add
the appropriate rates to create a new method at any time.
Oracle Assets uses asset recoverable cost or net book value, salvage value, date placed in
service, prorate convention, depreciation method, and life to calculate depreciation for life–
based methods. Oracle Assets, using rates from a table or calculated rates, depreciates assets
with life–based depreciation methods to be fully reserved at the end of a fixed lifetime.

Life-Based Method Terms
Term Definition
Prorate period The period where a prorate calendar maps a prorate date (Prorate
convention assigns a date placed in service to a prorate date.)
Depreciation Each prorate period corresponds to a rate table per fiscal year of asset life.
Annual Depreciation Total annual depreciation = Depreciation rate x depreciable basis

Depreciable basis = Cost or Beginning net book value – Salvage value
Depreciation expense Annual depreciation allocated from the service date or prorate date to
per period fiscal year end, based on the Depreciate When Placed in Service flag.
132

Using the Flat-Rate Method
Year 1 Year 2 Year 3
Flat-Rate 33% 33% 33%
Basic Rate or Adjusted Depreciation Rate:
Adjusted rate = Basic rate × (1 + Adjusting rate)

Bonus Rule: Depreciation rate = Adjusted rate + Bonus rate
Enter a bonus rule if your country allows additional depreciation in early years of asset life.
133
Flat-rate depreciation methods allocate the cost or net book value of an asset over time by using a fixed
rate. The flat-rate methods that use the net book value as the depreciable basis are also called
diminishing-value methods. Using these methods do not fully reserve an asset, but it decreases the
annual depreciation expense over time.
Calculating Annual Depreciation
• Determine the fraction of the year the asset was held by dividing the number of periods after the
prorate period, by the number of prorate periods per year. Make this fraction proportional by the
number of days in each prorate period if dividing depreciation by days.
• Annual depreciation = Depreciation rate × [Asset cost or Net book value (less salvage value)] ×
the fraction of the year the asset was held.
• Use the Depreciate When Placed in Service flag to determine the manner in which depreciation
expense is spread across depreciation periods in the depreciation calendar.
Adjusting Rate
In some countries, the flat–rate consists of a basic rate and an adjusting rate, or loading factor. These
rates vary according to your reporting authority’s depreciation regulations.

When you add an asset, you can select a basic rate and an adjusting rate. Oracle Assets increases
the basic rate by the adjusting rate to give you the adjusted rate. This is your flat–rate for the fiscal
year.
Depreciation Rate = Basic Rate x (1 + Adjusting Rate) + Bonus Rate
Bonus Depreciation
For reporting authorities that allow additional depreciation in the early fiscal years of an asset
life, you can assign an additional bonus rate on top of the flat–rate. Oracle Assets adds the
bonus rate to the adjusted rate to give you the flat–rate for the fiscal year.

Using the Units-of-Production Method
Prorate
convention Enter production
Nov
amounts
21 Dec
1
Date placed in
service Prorate date
Rate = Production/Capacity
Depreciation expense
per period
X
Multiply by
depreciable basis
135
Units-of-production depreciation methods allocate the cost of an asset by the quantity of resource
extracted or used each period. This method differs from other methods because it disregards the
passage of time and bases depreciation on how much you use the asset.
Calculating Depreciation Rate
Depreciation rate = Production this period/Capacity
Calculating Depreciation Expense per Period
Depreciation expense for the period = Depreciation rate × Depreciable basis of an asset
• Notice that this is the depreciation expense for a period and not for the fiscal year, because
depreciation is based on the production amount for a period.
You cannot enter production amounts for an asset in the corporate book before its prorate date or for a
period in which you have run depreciation.

Bonus Rule Uses
Bonus rules can:

• Help you calculate additional depreciation as required under special provisions in
certain countries.
• Have different bonus rates for each year of the asset’s life. You can modify the rate at
any time for current and future fiscal years.
• Be used with corporate books as well as tax books.
• Expedite your investment allowance deductions for property, plant, and equipment
investment costs by claiming it as bonus depreciation.
136
Bonus rates let you increase the annual depreciation expense for assets using flat-rate, straight-line,
table-based, and formula-based depreciation methods.

Defining Bonus Rules
When defining bonus rules, you can:

• Charge bonus expense and reserve to an account that is different from the normal
depreciation expense and reserve.
• Set up negative bonus rates to amortize bonus reserve.
• Claim your investment allowance deduction as bonus depreciation in the period of
acquisition.
Note: After assigning a bonus rule to an asset, the rule cannot be removed. If you need
to remove a bonus rule, set up a bonus rule with a 0 rate and assign it to the asset.
137
To create a bonus rule:

Navigate to: Others > Setup and Maintenance > Setup: Financials > Assets > Show: All Tasks > Manage
Bonus Rules > Create.
Investment Allowance Deduction as Bonus Depreciation
You can claim your investment allowance deduction as bonus depreciation in the period of acquisition.
• Specify your one-time bonus depreciation period over the entire fiscal year along with its
recapture duration in years.
• Allocate your entire bonus depreciation to the current open period and recapture it within the
specified 5 year duration.
• Calculate your standard depreciation from the net amount.
Automatically recapture your bonus depreciation if the asset is fully retired before the specified
duration. Specify the optional non-sale gain account in the Manage Asset Books page. It is used to
recapture your investment allowance or bonus depreciation as required by accounting standards.
Set up the recapture year accounting rule default for the category book in the Manage Asset Category
page.

Navigate to: Others > Setup and Maintenance > Setup: Financials > Fixed Assets > Manage
Asset Categories.
Steps to Enable
You must opt in to enable this feature. For more information on how to opt in, refer to the
Oracle Applications Cloud Using Functional Setup Manager guide.
Points to Consider
• Specify the optional non-sale gain account in your Manage Asset Books page. It is the
account used to recapture your investment allowance or bonus depreciation as
required by the accounting standards.
• Use the Manage Asset Categories page to set up the recapture year accounting rule
default for the category book.
Role Information
This feature is enabled by default for the following:
• Asset Accounting Manage job
• Asset Accountant job

Defining Bonus Rules
139
This graphic shows an asset with a cost of $36,000. It uses a straight-line depreciation method of 3
years, and a bonus rule of 10 percent.
• Normal annual depreciation: $12,000
• Bonus annual depreciation: $3,600
• Total annual depreciation: $15,600

Depreciation Ceiling Uses
Using depreciation ceilings, you can limit the annual depreciation expense for certain
types of assets.
There are two types of depreciation ceilings:
• Depreciation expense ceilings limit the annual amount of depreciation expense you
can take on an asset.
• Depreciation cost ceilings limit the recoverable cost of an asset.
140

Defining Depreciation Ceilings
There are two types of allowed depreciation limits:

• The annual amount of depreciation expense.
• The recoverable cost of an asset.
Example: For tax purposes, the depreciation amount for luxury cars in the United
States is limited to $11,060 for the first year for assets that were placed in service after
12/31/2009 and before 1/1/2011.
141

Run Depreciation Process
Run Depreciation:
Run Depreciation: New Additions
Initial Status Only
Next
Close
Period
Period?
Opened Yes
No
Yes
Ready to Create
Journal Entries
142
Navigate to: Fixed Assets > Assets > Depreciation infotile > Calculate Depreciation.
Clicking Calculate Depreciation submits the Depreciation Calculation Job.
Run depreciation to process all assets in a book for a period. Each asset book must have depreciation
run individually. If you have assets that have not depreciated successfully, these assets are listed in the
log file created by Oracle Assets when you run depreciation.
Closing a Depreciation Period
• When you run depreciation, Assets gives you the option of closing the current period if you select
the value of Close Period parameter as Yes.
If all of your assets depreciate successfully, Oracle Assets automatically closes the period and
opens the next period for the book.
• Select the value of Close Period parameter as No if you do not want to close the period.
• Once depreciation has been processed for an asset in the current open period, you can perform
any transactions on those assets and the depreciation for those assets only with transactions will
be automatically rolled back.
Note: Ensure that you have entered all transactions for the period before you run depreciation. Once the
program closes the period, you cannot reopen it.

Tax Books
When defining asset books, remember that tax books:

• Are used to comply with statutory rules for depreciating assets. Data can be copied
from the corporate book on a regular basis, excluding depreciation information.
• Can use a different calendar than their associated corporate book, if both calendars
use the same fiscal year.
• Can optionally be used to post journal entries to either the corporate book’s primary
ledger or to its secondary ledger.
143
Note: Use the Perform Periodic Mass Copy process to transfer assets and transactions from the
corporate book to the tax book.

Creating a Tax Book
Assets in Independent Asset Books
FURNITURE.DESKS Straight-
Corporate
line 5 years MID-
book Asset #325
MONTH
Monthly
VEHICLE.OWNLUXURY Straight-line
calendar
4 years MID-MONTH
Asset #843
Tax FURNITURE.DESKS MACRS

book 5 years HALF-YEAR
Asset #325
Quarterly VEHICLE.OWNLUXURY MACRS 4

calendar years HALF-YEAR
Asset 843
144
• Create tax books before you add and depreciate assets.

• Set up a new tax book to comply to tax laws and to take advantage of optimal tax strategies.
• Set up multiple tax books that are associated for each corporate book.
• Define independent tax depreciation books for each reporting authority.
• Create a separate federal tax book and state tax book.
• Copy assets into each book and depreciate these according to each book’s depreciation rules.
- Several authorities can use the same book. For example, some states use information from
the United States Federal tax book instead of requiring a separate book.

Asset Books Regions
Define Asset Books
Create Book Accounting Rules Natural Accounts Tax Rules
Reference Data Group
5 Regions
145
Before you can define a tax asset book, you must:

• Set up the corporate asset book that the tax book is associated with.
• Complete each region for every tax book you define even if the information will be used or not.
For example, in defining a tax book, you must complete the natural accounts regions even if you
do not intend to generate journal entries for the book.
The following information includes some special considerations to follow when setting up a tax asset
book.
Create Book Region
• Choose the Tax book class. You must associate a Tax book with a previously setup Corporate
book.
• Your tax book can be assigned to the primary ledger of the associated corporate book without
posting to GL or to a secondary ledger setup for corporate book's ledger with posting to GL.
• The enhancement is that the tax book can be set up for a secondary ledger with different COA,
currency, and calendar.

Use the prorate calendar with the smallest period size or resolution required for determining
your depreciation rate. For example, use a monthly prorate calendar in a tax book that uses a
quarterly depreciation calendar to allow finer control of the annual depreciation amount for
some monthly prorate/method combinations.
Tax Rules Region
• Check Allow Group Asset Additions to allow adding group assets into the Tax Books.
• You can Allow Cost/Expense Ceilings in a depreciation book; however, you cannot
apply a cost ceiling and an expense ceiling to the same asset in a depreciation book.
• Check Allow CIP Assets to automatically add CIP assets to your tax book when you add
them to your corporate book.
• If Allow Mass Copy into this tax book, choose whether to copy additions, adjustments,
retirements, and/or salvage value.
- Corporate book periods must map exactly into tax periods for Mass Copy. For
example, three corporate months must fit into each tax quarter.

Practice 20-12 Overview: Creating a Tax Book

• Creating a tax book.
147

Prerequisites for Setting Up Tax Book Asset
Categories
Setup category flexfield.
Setup account segment values and combinations.
Setup asset books.
Setup QuickCode values.
Setup prorate conventions.
Setup depreciation methods.
148
Before you can add assets to a newly defined tax asset book, you must assign existing asset categories
to the tax book.
Consider the following when setting up asset categories for tax asset books:
• You can optionally enter either a depreciation expense or cost ceiling.
• Check Straight Line for Retirements if you are setting up an asset category with a 1250 property
class in a tax book. Fusion Assets uses a straight–line depreciation method in determining the
gain or loss resulting from the retirement of 1250 (real) property.
- If you check Straight Line For Retirements, enter the straight line depreciation Method and
Life you want to use for the Gain From Disposition of 1250 Property Report. This is the
default method for your asset in the Retirements window and in the tax book if you use
mass copy.

Entering Information in Tax Books
Corporate Book
Initial Mass Copy Periodic Mass Copy Manual Entry
Tax Book Tax Book Tax Book
149
Use Mass Copy to automatically copy your assets and transactions from your corporate book
to your tax books.
• You can create as many tax books as you need, maintain your asset information in your
corporate book, and then update your tax books with assets and transactions from your
corporate book.
• You must allow Mass Copy and choose whether to copy additions, cost adjustments,
retirements, and salvage value for your tax book in the Book Controls window before
you can run mass copy.
• You also specify which corporate book mass copy uses as the source.
• You cannot copy assets from one corporate book into another corporate book.
• If you choose to copy adjustments:
- Assets copies cost adjustments from the associated corporate book if the
unrevalued cost in the corporate book before the adjustment matches the
unrevalued cost in the tax book.
- Assets copies both adjustments that are ADJUSTMENT type in the tax book and
adjustment transactions that create a new ADDITION type and updates the
ADDITION/VOID in the tax book.
• Use Initial Mass Copy to initially populate your tax book by adding existing assets to a
tax book.

• Use Periodic Mass Copy each period to keep your tax book up to date with your
corporate book.
You can also enter assets and transactions into the tax book manually.

Practice 20-13 to 20-14 Overview: Managing Asset
Categories and Access for Your Tax Book
These practices covers the following topics:
• Practice 20-13: Managing asset categories for your tax book.
• Practice 20-14: Authorizing tax book access.
151

Populating the Tax Book Using Initial Mass Copy
Fiscal 2002
Fiscal calendars (Current year)
Corporate book
1999 2000 2001 Copy
DEC - 01 Fiscal 2002

Tax book (Initial period) (Not yet open)
152
• Use Initial Mass Copy to initially populate your tax book by adding existing assets to a tax book.
• Initial Mass Copy copies all the assets added to your corporate book before the end of the current
tax fiscal year into the open accounting period in your tax book.
• When using Initial Mass Copy for the first time in your tax book, you can run it as many times as
necessary for the first period to copy all existing assets. When you rerun the process, Initial Mass
Copy only looks at assets which it did not copy into the tax book during previous attempts,
preventing any duplicated data.
• The current fiscal year in your tax book determines which assets Initial Mass Copy copies into
your tax book.
- Example: If the current fiscal year of your tax book is 2001, Initial Mass Copy copies all
assets into your tax book as they appeared at the end of 2001 in your corporate book, even
if 2002 is the current fiscal year of your corporate book.
- The fiscal year must be closed in the corporate book.
- Only run Initial Mass Copy for the first period of your tax book. For following periods in your
tax book, run Periodic Mass Copy.
• Initial Mass Copy does not copy assets retired before the end of that year or assets added after
the end of that year.

• You do not need to copy any adjustments or partial retirements you performed before
the end of the fiscal year.
• When you close this initial period, Fusion Assets calculates the net book value of your
assets that have zero accumulated depreciation in the tax book, and opens the next
period.

Summary

• Configure Assets.
• Manage asset books and categories.
• Understand configurations for leases.
• Describe depreciation setups.
• Manage tax books.
154

A
Additional Resources
Lesson Objectives

• Find additional application resources
• Use the Oracle Help Center to find additional information
• Access helpful video content to learn more about specific features
Oracle Financials Cloud: Financials Implementation for 20C A - 2

Oracle Cloud Implementation Resources
Classroom and Other Resources:

• Oracle Financials Cloud: Enterprise Structures and General Ledger Implementation
Student guide (this guide and its companion course)
• Oracle Cloud Applications Help in the Applications
• Oracle Fusion Technology Library on OTN
• My Oracle Support (MOS)
• Oracle Fusion Cloud Library
• Oracle Fusion Technology Library on OTN: (http://www.oracle.com/technetwork/index.html)

• My Oracle Support (MOS): (https://support.oracle.com/ ) including these documents:
- Getting Started with Oracle Fusion Applications: Common Implementation, Article ID
1387777.1 on Oracle Support
- Oracle Fusion Applications: Financials Reporting (Document 1458904.1)
• Oracle Help Center: (https://docs.oracle.com/en/) including these Oracle Financials Cloud
books:
- Getting Started with Your Financials Cloud Implementation
- Implementing Enterprise Structures and General Ledger
- Security Reference for Oracle Financials Cloud
- Creating Analytics and Reports
- Using Analytics and Reports

Oracle Help Center: docs.oracle.com
Oracle Help Center is:

• Central hub for all documentation and tutorials.
• Organized by major product categories including Cloud, Applications, Middleware, and
Database.

Cloud Application Services Pages
Links to Get Started, What’s New and application families.

Financials Home Page
The Financials Home Page in Oracle Help Center gives you access to:
• The ability to select your update.
• List of help topics by task.
• Links to APIs & Schema, videos and books (guides).
• Option to start your subscription.
• Links to the new features.

Video Subject Areas on the Oracle Help Center
Link to the Video Area in Oracle Help Center

• Get Started • Use Receivables Credit to Cash
• Use General Ledger • Implement
• Use Accounting Hub • Configure and Extend
• Use Subledger Accounting • Analyze and Report
• Use Payables invoice to Pay • Use Other Oracle Financial Cloud
Products
Navigate to the videos: Oracle Help Center (https://docs.oracle.com/en/) > Featured Products >
Financials Cloud Applications (SaaS) > Videos.
Use General Ledger includes the following videos:
• Create journal approval rules.
• Create an allocation rule and generate allocations
• Manage intercompany reconciliation.

Reference Guides
• File Based Data Import includes links

to:
– Spreadsheets templates
– Load and import processes
• Tables and Views includes:
– Columns
– Primary and Foreign Keys
– Indexes
• SOAP (Simple Object Access Protocol)
Web Services
Navigate to: Oracle Help Center (https://docs.oracle.com/en/) > Applications > Fusion Cloud Apps link
> Financials link > Books. The guides are in the Development section.
• File Based Data Import (FBDI) is used to load data into Oracle Cloud Applications from
external sources, such as legacy systems and third-party applications. The File Based Data
Import for Oracle Financials Cloud Guide includes links to:
- Spreadsheets used to load data into Oracle Cloud Applications from external
sources, such as legacy systems and third-party applications. The spreadsheet
templates help to structure, format, and generate the data file according to the
requirements of the target application tables.
- File-based load process to load the data files into the interface tables.
- Application-specific data import processes to transfer data from interface tables to
the application tables in your Oracle Cloud Applications.
• Tables and Views for Oracle Financials Cloud Guide includes:
- The tables with the basic information about the table columns, primary and foreign
keys, and indexes.
- The views, columns, and query details that are associated with each view.

• SOAP (Simple Object Access Protocol) Web Services for Oracle Financials Cloud Guide
include:
- Business Object Services relationships, operations, and security
- Service Data Objects relationships and attributes
Note: Use SOAP web services to integrate with or extend Oracle Applications Cloud. Through web
services, you can integrate heterogeneous applications within the enterprise or expose business
functions to Oracle Cloud partners and customers over the Internet.
• REST (Representational state transfer) Services for Oracle Financials Cloud Guide include:
- A quick start how-to that walks you through a simple request example.
- Use cases that provide real-world solutions with code examples.
- Detailed descriptions for each REST resource.
- A list of all REST Endpoints.
Note: You can use Oracle REST APIs to view and manage data stored in Oracle Applications Cloud.

Friendly Search
Navigate to: Oracle Help Center (https://docs.oracle.com/en/) > Applications and type a word or
phrase in the Search box. You can:
• Enter a simple search entry: Just type your topic in the field.
• Review a comprehensive view of search results: Results show the guide as well as the topic
with direct links to the topic.
• View the number of results and context displayed.
• Refine the Search task pane to reduce the number of results.
• Follow the breadcrumbs that appear at the top of topics you select to allow easy return to the
list of results.

Summary

• Find additional application resources
• Use the Oracle Help Center to find additional information
• Access helpful video content to learn more about specific features

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Oracle Financials Cloud:

Managing Foundation Tax Configurations

After completing this lesson, you should be able to:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 2

Oracle Financials Cloud: Financials Implementation for 20C 12 - 3

Oracle Financials Cloud: Financials Implementation for 20C 12 - 4

Oracle Financials Cloud: Financials Implementation for 20C 12 - 5

These tiers are discussed in further detail throughout this lesson.

Oracle Financials Cloud: Financials Implementation for 20C 12 - 6

Party Who am I and Who Are My Customers or Suppliers?

Place Where Do I Operate?

Product What Products Do I Buy or Sell?

Process What Is the Type of Business I Conduct?

Oracle Financials Cloud: Financials Implementation for 20C 12 - 7

To determine how to set up your tax configuration, you must:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 8

• Manage Tax Regimes • Manage Tax Statuses

Oracle Financials Cloud: Financials Implementation for 20C 12 - 9

US Sales and Use Tax County Dekalb Standard 7%

City Atlanta Exempt 0%

GST Alberta Standard 5%

GST Manitoba Standard 7%

HST Alberta Zero 0%

VAT United Kingdom Standard 20%

VAT United Kingdom Reduced 5%

VAT United Kingdom Zero 0%

Oracle Financials Cloud: Financials Implementation for 20C 12 - 10

Minimize your effort in creating the setup by using:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 11

Oracle Financials Cloud: Financials Implementation for 20C 12 - 12

The following types of places are supported for tax purposes:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 13

Oracle Financials Cloud: Financials Implementation for 20C 12 - 14

The specific exchange rate table that is used to convert

Oracle Financials Cloud: Financials Implementation for 20C 12 - 15

Oracle Financials Cloud: Financials Implementation for 20C 12 - 16

Oracle Financials Cloud: Financials Implementation for 20C 12 - 17

Oracle Financials Cloud: Financials Implementation for 20C 12 - 18

Party Procure-to-Pay Party

Oracle Financials Cloud: Financials Implementation for 20C 12 - 19

Define a tax status:

This is the appropriate level to:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 20

This is the appropriate level to define:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 21

Set up tax rates for:

This is the appropriate level to:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 22

Oracle Financials Cloud: Financials Implementation for 20C 12 - 23

When setting up tax rates, you must consider:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 24

Oracle Financials Cloud: Financials Implementation for 20C 12 - 25

Oracle Financials Cloud: Financials Implementation for 20C 12 - 26

The other controls and defaults to consider are:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 27

Oracle Financials Cloud: Financials Implementation for 20C 12 - 28

Oracle Financials Cloud: Financials Implementation for 20C 12 - 29

Oracle Financials Cloud: Financials Implementation for 20C 12 - 30

• Use the following workbooks to streamline the organization

Oracle Financials Cloud: Financials Implementation for 20C 12 - 31

The Implementation Workbook includes these worksheets:

Oracle Financials Cloud: Financials Implementation for 20C 12 - 32

Task Spreadsheet to Use

Oracle Financials Cloud: Financials Implementation for 20C 12 - 33