Accounts Payables

                                        Options
Options are controlling features at operating unit level. There are 3 types of options in AP.
                      1. Financial Options  
                      2. Payables Options
                      3. Payables system setup
Financial Options:
Use the Financials Options window to define the options and defaults that are shared across the modules like Oracle Payables, Oracle Purchasing, and Oracle Assets. You can define defaults in this window to simplify supplier entry, requisition entry, purchase order entry, invoice entry, and automatic payments.
Payables Options:
Payable Options is used to set control options and defaults used throughout Payables. You can set defaults in this window that will simplify supplier entry, invoice entry, and automatic payment processing.
Payables System Setup:Use the Payables System Setup window to define supplier control options and defaults. Although you need to define these options and defaults only once, you can update most of them at any time to change controls and defaults for suppliers and future transactions.

Payment Terms.

Payment terms will be determine in how many days the payment should be made(Due Date), discount Date and Discount amount.

Distribution Set.

It is used to automatically enter distribution for an invoice. There are two type of distribution Sets.
Full Distribution Set: It is used to determine accounting and percentages of amount for each distribution line. When we select distribution set at invoice header, the system will automatically create line at distribution level with accounting and amount as per the percentage mentioned.
Skeleton Distribution Set: Here, it is used to determine accounts but percentage should be left blank. Where we need to enter amount of each distribution line at the time invoice creation.

Standard Invoice

It is positive amount invoice. It is regular Invoice, which is used to record for good or services purchased from the supplier.Accounting Entry:
                   Expenses A/c .......................Dr
                                To Liability A/c......................Cr.

Debit Memo.

Debit Memo is raised by Customer itself, at the time purchase returns. It is negative amount invoice which is used reduce the supplier liability.Accounting Entry:
                    Liability A/c..................Dr.
                                 To Expenses A/c ...............Cr

Credit Memo.

Credit Memo is raised by supplier and send to the customer. It is used at the discounts received or any price differences. It is a negative amount invoice which is used reduce supplier liability.Accounting Entry:

                    Liability A/c..................Dr.                  
                                    To Expenses A/c ...............Cr.

Mixed Invoice.

We can enter positive or Negative amount in mixed invoice, As standard invoice, debit memo and credit Memo Invoices.

Prepayment

It is advance payment that we pay to the supplier to supply the goods/ services. There are two types of Prepayments, they are Permanent and Temporary. In case of Permanent Prepayment it acts like deposit with the suppliers. It will be adjusted only after converting Permanent Prepayment to Temporary Prepayment. In case temporary prepayment we adjust the prepayment amount at the immediate invoice received. The following are the different statuses in the invoice.
Never validated ( Before Validation of Prepayment Invoice) Unpaid ( After Validation of Prepayment Invoice and when payment is not made) 
Permanent ( Permanent Prepayment) (After Payment to Prepayment Invoice) 
Available ( Temporary Prepayment) (After Payment to Prepayment Invoice) 
Fully Applied. ( In case Prepayment Amount is applied fully to a Standard Invoice) 

Accounting entries:

Prepayment Invoice:          
                   Prepayment A/c..........Dr
                                To liability a/c...................Cr
For Payment to Prepayment Invoice
                   Liability A/c ............Dr
                                To Cash A/c.......................Cr.In Case Of Standard Invoice
                   Expenses A/c .............Dr
                                To Liability A/c...................Cr
Apply the Prepayment to Standard Invoice
                  Liability A/c ...........Dr
                                To Prepayment A/c .............Cr

Withholding Tax Invoice

If customer want to withhold the tax amount charged by supplier in the invoice, and customer want to pay the tax amount directly to tax authorities instead of paying to supplier. For that System automatically create a withholding tax invoice. In this case tax authority would be a supplier.

Setup Steps:
Step: 1 Enable WHT at payable optionsStep: 2 Define WHT special calendars
Step: 3 Define Supplier as tax authority
Step: 4 Create WHT code and group
Step: 5 Assign WHT group at payables options
Step: 6 Enable WHT at supplier header and site level and assign WHT Group
Step: 7 Create Standard invoice
Step: 8 Query WHT invoice for cross verification purpose.
Accounting Entries:
When WHT applied to Standard invoice    
                Expenses A/c ................................Dr
                              To Liability A/c .........................Cr
                              To Withholding Tax A/c ..............Cr
For Withholding Tax Invoice ( Auto Generated)
                WHT Expenses A/c ....................Dr
                              To WHT Payaables/Liability A/c................Cr

Retainage Release Invoice.

This invoice is used to hold some portion of amount from the supplier Payment.The remaining will be paid to supplier only at the completion of the total work.Setup Steps: 
1. Enter Retainage Account at Financial Options. 2. Enter Retainage Percentage (%) at Supplier level in Invoice Management Tab. 
3. Create Complex Service Agreements PO in Purchasing Module. 
4. Create a Standard Invoice by matching with above created Complex Service Agreement PO. 
5. Make Payment for above Standard Invoice. 
6. When Contract the is completed, Release the Retainage Percentage amount by creating Retainage Release Invoice by matching with the PO. 
7. Make payment for Retainage Invoice. 
Accounting Entries:
When Invoice is matched with Standard Invoice:
            Accrual A/c.........................Dr.    
                  To Liability A/c .............Cr.
                  To Retainage A/c............Cr (Pick from Finacial Options)
For Making Payment for Standard Invoice:
           Liability A/c........................Dr
                  To Cash Clearing A/c.........Cr
When Retainage Invoice is Created:
           Retainage A/c.......................Dr
                  To Liability A/c ....................Cr.
For Making Payment to Retainage Invoice:
            Liability A/c....................... Dr
                   To Cash Clearing A/c..............Cr.

Expenses Report Invoice

An Invoice which is used to reimburse the business related expenses which are incurred by employees.Setup Step:
Step 1: Define Expenses Report Template (Expenses report template is used to list out all the expenses items which are reimbursed by organization employee).
Step 2 : Assign Expense template created in the payable options.Step 3: Enter Expenses Report Invoice. 
Step 4: Run Expenses Report Export Program.
Step 5: Now go to the Supplier Window, You can see employee is created as supplier automatically by the system. Now, Query your employee and update Payment details as " Check".
Step 6: Now again run the same Report " Expenses Report Export" Report.
Step 7: Now Query you expenses invoice in invoice window which is automatically created by the system and validate it and make payment for the expense Invoice.
Accounting Entries:
For Expenses Invoice
                   Expenses A/c....................Dr.
                               To Liability A/c.........Cr.
For Payment to Expense Invoice
                   Liability A/c .......................Dr
                              To Cash A/c.................Cr.

Interest Invoice

An invoice which is created by system automatically to record the interest charges on late payment where due date has crossed. In such a case, System will create one more invoice for only the interest portion amount apart from the standard invoice.

Setup Steps:
Step 1: Define "Interest" tab at payables Option.
Step 2: Enable "Create Interest Invoices" in payables system setup Options.
Step 3: Enable "Create Interest Invoices" at supplier " Invoice Management" Tab.
Step 4: Define Interest Rates.
Step 5: Query the Standard invoice with old date where due date is crossed, Validate the invoice.
Step 6: Make payment for the Standard invoice, at that system will show a note "Invoice is past due" and " Interest is due on this Invoice".
Step 7: Query the interest Invoice in invoice work bench to check the interest Amt.
Accounting Entry:
Interest Invoice entry while making Payment.   

               Interest Expenses A/c..............Dr
               Liability A/c.............................Dr
                                  To Cash A/c........................Cr.

Zero Payments:

If you cancel an invoice, In such case there is no need pay any amount, but system will shows zero balance, to eliminate the zero balance, we need to create dummy bank A/c and Dummy Check's and to make payment for the cancel invoices to eliminate the zero balance.

Difference between ETF and Wire ?

ETF: System create an instruction file with details of invoices and Payments. The same file will be send to bank for Payment. It method is used at the time of domestic Payments.
Wire: It is manual process of sending instructions to bank. System will not generate any instruction file. It method is used at the time of international Payments.

Pay On Receipt:

Under pay on receipt method invoice will be created by system automatically when we create receipt.
Setup Steps:Step: 1 Enable pay on receipt at Supplier from Purchasing Module
Step: 2 Create purchase order
Step: 3 Receive the goods
Step: 4 Query the invoice in the invoice work bench.

Refund.

Refund is nothing but get back the money from the supplier. Refund activity can be done with reference to Debit Memo or Credit Memo.
1) In Invoice Workbench, Create Credit Memo or Debit Memo with Match action as Invoice with negative amount.2) In Payment Workbench, Select Payment type as " Refund" , Suplier Name, and click on Enter and Adjust Invoice, Select the above created Debit or Credit Memo.
Accounting Entry:
At Invoice Workbench Level:     

               Liability A/c ........................Dr.
                         To Expenses/ AP.....................Cr.
At Payment WorkBench Level:
             Cash Clearing A/c .................Dr.
                         To Liability A/c.......................Cr.

Reissue

It is used cancel the old payment Document and create payment Document in payment workbench. Reissue concept is used when we cancel the cheque and reissued a new cheque to the supplier, for such cases we used reissue concept to change Old payment document number to new payment Document.
1) In Payment Workbench, Query the payment Document which you want to reissue, Click on Action button and enable reissue and give the payment date and New Payment Document Number, Click on Ok Button.
2) Now query with the New payment Document and check it.Accounting Entry:
For Old Payment Document No:         

                Cash Clearing A/c .....................Dr.
                            To liability A/c .................................Cr.
For New Payment Document No:
                Liability A/c................................Dr.
                            To Cash Clearing A/c........................Cr.

Holds.

Holds are used to prevent further action on invoices. Action Like validating, Payment and create accounting. There are two types of Holds.
                      1) Manual Hold.

                      2) System Hold.
Manual Hold: In case of Manual Hold, Hold will be manually placed by the user and manually released by the user after settlement.
Setup Step's:
1) Define reason for the hold with name and Description.
2) Define Invoice hold release reason with name and description.
3) Now Query the invoice, Go to hold Tab, and place the hold manually and validate the invoice.
4) Give Release hold by select release hold name and validate the invoice.
System Hold: In case of System Hold, Hold will be automatically placed by the system at the time of validation. We can't release system hold, Unless the error is rectified.

Debit Memo from RTS Transaction

RTS means " Return to Supplier" nothing but Purchase Returns. Debit Memo from RTS Transaction feature is used to create debit memo automatically by system when we return goods to supplier.Setup Step:
1) Enable "Create Debit Memo from RTS Transaction" at supplier & Supplier Site level.
2) Return goods to Supplier in purchasing Modules.
3) Ensure concurrent request completed normal check Debit Memo invoice in payables module. 

Automatic offset Method

It is used to create multiple liabilities in payables in such a way that all balancing segment values of debit and credit are equal. There are three type of automatic offset Method
                  1) Balancing Account.              
                  2) Natural Account.
                  3) None
Balancing: The balancing segment part accounting will be picked from Invoice Distribution a/c and rest all code combination will be picked from Supplier Liability a/c.
Natural Account: The natural a/c part accounting will be picked from Supplier Liability a/c and rest all code combination will be picked from Invoice Distribution a/c.
None: It means automatic offset method is not applicable.