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Receivables Reconciliation

Discussion in 'Oracle Financials' started by sureshraja, Nov 30, 2012.

  1. sureshraja

    sureshraja Active Member

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    DOCUMENTATION


    New convergence R12
    Compensation (AP AR Netting)


    Author: XX
    Creation date: 30 may 2007
    Last updated: 30 November 2012
    Version: V1.0
    Apps release: R12



    Copy number _____
    Document control

    Change records

    Date Auteur Version Modifications

    30 mai 2007 BBB 1.0 Document creation




    Contents
    Document control ii
    Introduction 4
    Setup steps 5
    Create a Netting agreement 7
    Create a batch 10
    View Proposed AP/AR Netting Amounts 12
    Review and Settle the Netting Batch 13
    View Final Netting Report 15
    Technical considerations 16
    Opened and closed Issues 17
    Opened issues 17
    Closed issues 17

    Introduction

    The Payables and Receivables netting feature enables the automatic netting of Payable and Receivable transactions. You can predefine a netting agreement that incorporates the netting business rules and transaction criteria needed to run the netting process. The netting process automatically creates the Payables payments and Receivables receipts required to clear a selected number of Payables and Receivables transactions.

    Netting Example



    Setup steps

    1. The first step in setting up an Agreement is to create a netting bank account using Cash management responsibility.
    2. Since the netting process basically mimics the application of receipts and payments, the netting process is required to go through the entire process; however, it will be internal.
    3. Therefore, companies will need to setup a cash account specifically for netting, where it will be used as somewhat of a clearing account.
    This account also needs to be associated with AP/AR Netting Receipt class using the Receivables responsibility.
    ²
    4. The bank account used in the agreement must be associated to the receipt class ‘AP/AR netting’

    5. The ‘Multiple Currency Receipts’ checkbox should be checked to allow receipt creation in foreign currencies.


    6. Check the ‘Allow payment of unrelated transactions’ checkbox when setting up AR System Options. The AR System Option “Allow Payment of Unrelated Transactions” which uses TCA Party Relationships must be considered when setting up Customers as Trading Partners. If the system option is checked then there is no issue when selecting Customers for netting. However, if the system option is unchecked and more than one customer is being selected, then only customers with paying relationships can be selected. Hence, after the first customer is selected, only customers that have a paying relationship with the first customer should appear in the LOV

    7. When creating customers, select 'Account Details' icon. Go to 'Communication' tab and click on 'Create Contact' button. When creating a contact, define an e-mail address as that appears on the "Approver E-mail" field.





    Create a Netting agreement

    A netting agreement controls how a group of trading partners net Payables and Receivables transactions. You can 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.
    General Ledger Setup Prerequisites

    • Define a netting control account.
    • Define the exchange rate types if using multi-currency netting.

    Cash Management Setup Prerequisites

    • Define a netting bank account.
    • Define the bank account at the legal entity level.
    • Define the netting control account.
    • Enable the Multi Receipt Currency check box for each netting bank account. This option lets you create receipts in foreign currencies.

    Receivables Setup Prerequisites

    • Before multiple customers are netted, you must set up a paying relationship for the customers.
    • Associate the bank account used in the netting agreement with the AP/AR Netting receipt class.
    • Enable the Allow Payment of Unrelated Transactions Receivables System Option.
    See: Transactions and Customers System Options, Oracle Receivables Implementation Guide.

    To create a netting agreement:

    1. Select the Netting Agreement tab.

    2. In the Netting Agreements page, select the Create Agreement button.

    3. In the Create Netting Agreement: Business Rules page, enter the required information and any needed optional information. The following fields are optional:
    • Trading Partner Reference - Enter any desired reference.
    • End Date - Enter a date. Leaving the field blank results in no term limit.
    • Trading Partner Approval Required - If you want to require approval by the trading partner, check the check box. Checking the check box displays the required Approver Name list of values and the No Response Action drop-down list.
    Each trading partner approver must have an email address defined.
     No Response Action
     Reject - Treat a non-response from the approver as a rejection and reject the batch.
     Approve - Treat a non-response from the approver as if it was an approval.

    4. In the Netting Preferences region, enter the required and optional criteria needed to create the desired netting agreement.

    5. In the Payables Invoice Types region, if the Select only Invoices matched to Purchase Orders with Outsourced Assemblies drop-down list is displayed, select one of the following:
    • Yes - Only invoice lines that are matched to purchase order lines with outsourced assembly items are selected for netting.
    • No - Only invoice lines that are matched to purchase order lines with non-outsourced assembly items are selected for netting.
    • Disregard - Select all Payables invoices for netting without regard to outsourced assembly items.

    6. Select the invoice type of the invoices that are available for netting. At least one invoice type must be selected.

    7. In the Receivables Transaction Types region, select the transaction type of the invoices that are available for netting. At least one transaction type must be selected.

    8. In the Trading Partners region, enter values for the trading partner priorities and select the suppliers and customers that are available for netting.
    • The priority value determines the order in netting transactions The customer transaction with the highest rank is netted first. If all customers have a priority of 1, then there is no priority for selecting transactions and they are ordered based on the Netting Order rule.
    • If you choose to prioritize the customers for netting, then the priority must be entered in sequence and as unique whole numbers, such as; 1, 2, and 3.
    • Site - If you select a supplier but do not select a specific site, the application includes all the suppliers' sites for netting.
    • Location - If you select a customer but do not select a specific location, the application includes all the customers' locations for netting.



    Create netting agreement – rules




    Create netting agreement – trading partners


    Create netting agreement – review




    NOTE: You can only update an agreement when there is no netting batch on it. Delete all existing batch which point to your netting agreement if you want to update it
    Create a batch

    The netting batch process uses the predefined information from the netting agreement, together with the information defined in the netting batch, to select the netting business rules and transactions for netting. You can optionally review the selected transactions and remove any that should not be a part of the netting batch. After the transactions are submitted for netting and approved by the trading partner, if required, the netting process begins. The netting process reconciles and clears the selected transactions for both Payables and Receivables.

    Netting Process

    The main component of the netting process includes the following:
    • Create Netting Batch - You enter the netting parameters and the application builds the desired netting batch.
    • Review and Modify Netting Batch - Optionally, you can review, add or remove transactions from the netting batch.
    • Submit Netting Batch - Netting compares the Payables and Receivables balances to determine the receipt and payment information.
    • Submit Trading Partner Approval - Optionally, send the Netting Proposal Report to your trading partner for review and approval of the netting batch. Send and receive netting batch approval notifications to the trading partner.
    • Settle Netting Batch - Netting creates the Payables payment and creates and applies the Receivables receipt which clears the balances in Payables and Receivables.
    • Netting Batch Details - After a netting batch has been cleared, you can review the details online, which includes the netted transactions as well as the corresponding payment and receipt information. You can also run the Final Netting Report.

    To create a netting batch:

    1. In the Netting Batch page, click the Create Batch button.

    2. In the Create Netting Batch page, enter the required and any necessary optional information. A description for selected fields include the following:
    • Netting Agreement - You can select a single netting agreement or leave it blank to select all the netting agreements. If all the netting agreements are selected, the transaction selection processes occurs as follows:
    i. All active agreements within the operating unit are included.
    ii. All transactions are included that are due on or before the transaction date.
    iii. The transaction selection processes occurs by trading partner priority; then within trading partner, by the netting rules.
    iv. If all trading partners are priority 1, then the transactions are processed based on the netting rules; and within the netting rules, in the supplier alphabetical order.
    • Transaction Due Date - The netting process selects all transactions that are due on or before the date based on the invoice's payment terms. The date can be one of the following:
    • Payables Pay Through Date - Selects all approved, unpaid, and validated invoices that have a due date on or before the pay through date. If an invoice has a payment schedule with one or more payment dates, only those with a payment date on or before the transaction due date is selected.
    • Receivables Due Date - Receivables calculates the due date from the invoice date and payment terms assigned to this invoice. If a transaction has installment payments with multiple dates, only the payment with a due date that is due on or before the transaction date is selected.
    • Settlement Date - The date netting occurs.
    • GL Date - The date entered here supersedes the GL date defined on the transaction.
    • Response Date - The date by which the trading partner must respond to workflow approval.
    • Exchange Rate Type - The exchange rate type used for the netting batch.
    • The list of available exchange rate types depends on the netting agreement selected. If a netting agreement is selected and it applies the Use Single
    • Currency netting currency rule, you can select a User exchange rate. If a netting agreement is not selected, the exchange rate is Spot, Corporate.
    • Submits Batch Without Review - If set to Yes, the batch is submitted for Trading
    • Partner Approval or Netting Settlement without review. If set to No, you can review and modify the netting batch.


    Create a batch




    View Proposed AP/AR Netting Amounts

    View Proposed AP/AR Netting Amounts online
    View the details of the receivables and payables transactions selected for possible netting. In the header portion of this screen, the total dollar amounts of the AR and AP transactions selected are shown, as well as the proposed netting amount.
    Click on the subtabs to view the receivables and payables transactions. You should see the transaction created above in step 1 listed under the Receivables Transactions subtab.
    The initial Payables and Receivables transactions are selected for netting, and the netting amount is determined. The amount is determined as follows:
     If Receivables has a larger outstanding balance than Payables, then the final netting amount is the sum of the Payables open selected transactions.
     If Payables has a larger outstanding balance than Receivables, then the final netting amount is the sum of the Receivables open selected transactions.
     If there is no outstanding balance in Payables or Receivables, then netting does not occur.
    • (H) Return to Netting Batch

    View Proposed AP/AR Netting Report
    • (I) View Report

    Field Vision Operations

    Template Proposed Netting Report
    Locale French : France
    Format HTML





    • (B) Run
    This submits a process that creates the reports. It may take a few seconds to complete. Click on the Run button again until it displays on the screen
    Selecting any of the other report outputs (PDF, RTF and EXCEL) will output the report in the respective format.
    • (H) Return to netting batch
    Review and Settle the Netting Batch

    The application automatically selects the transactions for netting based on the parameters entered in the netting batch setup and those entered in the predefined netting agreement. When all of the transactions available for netting have been selected, the application orders the transactions based on the netting order rule and the priority of the trading partners entered in the netting agreement.

    Review the netting batch
    • (I) Update next to your netting batch
    You can review the transactions selected before submitting the netting batch; also review data under the Payables Transactions tab.In this optional process, you can review, remove, or add transactions before submitting the netting batch.
    The initial Payables and Receivables transactions are selected for netting, and the netting amount is determined. The amount is determined as follows:
    • If Receivables has a larger outstanding balance than Payables, then the final netting amount is the sum of the Payables open selected transactions.
    • If Payables has a larger outstanding balance than Receivables, then the final netting amount is the sum of the Receivables open selected transactions.
    • If there is no outstanding balance in Payables or Receivables, then netting does not occur.
    The Payables and Receivables transactions are selected and locked. No updates are allowed to these transactions while netting is in process.
    Note: Receivables transactions cannot be locked during this step if trading partner approval is required or it is set to Yes. These transaction can only be locked after receiving the trading partner's approval.
    In this optional process, you can review, remove, or add transactions before submitting the netting batch. The Review and Modify Netting Batch process is included in the netting process if the Review Netting Batch field is set to Yes in the netting batch parameters. If the Review Netting Batch field is set to No, this step is unavailable and Submit Netting Batch is the next process available
    You can review the transactions selected before submitting the netting batch. The Netting Proposal report is created, which lists all the transactions selected for netting. If trading partner approval is required, a copy of this report is sent to the trading partner approver.

    Submit the netting batch
    • (B) Submit
    Returns you to the Netting Batch search page
    The Finalize Netting Batch process creates a Payables payment and a Receivables receipt to offset the Payables and Receivables balances due to netting.
    • Query your completed netting batch
    The batch is complete when the status is ‘Complete’. This could take a few minutes depending on how large the batch is. There are three processes that are submitted.
    When completed, the netting process will have created the Payables payment (without payment method) and created and applied the Receivables receipt (with AP AR Netting Receipt source) which clears the balances in Payables and Receivables.

    View netted amounts
    View the ‘Receipt Number’ and ‘Netted Amount’ for each AR transaction.
    View the ‘Payment Number’ and ‘Netted Amount’ for each AP invoice transaction.
    • (H) Return to Netting Batch
    View Final Netting Report

    View Final Netting Report

    • (I) View Report

    Field Vision Operations
    Template Final Netting Report
    Locale French : France
    Format HTML
    • (B) Run
    This submits a process that creates the reports. It may take a few seconds to complete. Click on the Run button again until it displays on the screen
    Selecting any of the other report outputs (PDF, RTF and EXCEL) will output the report in the respective format.
    • (H) Return to netting batch










    Technical considerations



    • FUN_NET_AGREEMENTS_ALL stores general information about Netting Agreements.
    • FUN_NET_AR_TRX_TYPES_ALL stores information about the Customer Transaction Types that are included in a Netting Agreement. Each Agreement can have multiple Customer Transaction Types.
    • FUN_NET_AP_TYPES_ALL stores information about the Invoice Types that are included in a Netting Agreement. Each netting agreement can have multiple invoice types.
    • FUN_NET_CUSTOMERS_ALL stores information about the customers that are included in a netting agreement. Each agreement can have multiple customers.
    • FUN-NET_SUPPLIERS_ALL stores information about the suppliers that are included in a netting agreement.
    • FUN_NET_BATCHES_ALL stores information about netting batches
    • FUN_NET_AR_TXNS_ALL stores information about receivables trxns included in a netting batch.
    • FUN_NET_AP_INV_ALL stores information about Payables trxns included in a netting batch

    Opened and closed Issues

    Opened issues
    ID Question Answer Who Excepted Date











    Closed issues
    ID Question Answer Who Resolution Date
     
  2. Bharat

    Bharat Community Moderator Forum Guru

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    Hi Suresh,

    Does this relates to Receivables Reconciliation Concept?