Payment Process Request (PPR) Statuses in Payment Manager Concept- Oracle payables

1) New: This status indicates that the PPR has been successfully submitted for processing, and the AutoSelect program is digesting the criteria provided by the user on the header of the PPR in preparation of the automatic selection the invoices and memos related to that criteria.
2) Selecting Invoices: This status indicates that the AutoSelect program is selecting the eligible invoices/memos for the payment batch based on Due Date, Discount Date, Pay Group, and other criteria provided by the user on the header of the PPR
3) Cancelled – No Invoices Selected: If no invoices or memos met the selection criteria provided by the user on the header of the PPR, the PPR is automatically terminated and the status changes to this status.
4) Invoices Selected: After selecting the documents (invoices/memos), they are locked to prevent other checkruns from selecting the same documents
6) Invoices Pending for Review: This status will only appear if you selected the "Stop Process for Review After Scheduled Payment Selection" option on the Processing tab of the PPR header. This status means that the PPR process has stopped, and is waiting for you to review the invoices and memos that were selected for payment (and make any changes to the batch, as needed). Click on the Take Action icon to be taken to the Review Proposed Payments window
7) Calculating Special Amount: This status will only appear if you selected the "Calculate Payment Withholding and Interest During the Scheduled Payment Selection" option on the Processing tab of the PPR header. This status means that interest and withholding tax are being calculated and applied, as necessary, to the invoices and memos selected for this payment batch
8) Assembling/ Assembled Payments: An "interim" status, it appears after the calculation for interest and withholding has been completed, and the Build Payments program is starting. It may appear again later after the user provides any required bank account and PPP information for the invoices/memos ("documents") selected.
9) Infomation required – Pending Action: This status appears if you did not provide a default Internal (Disbursement) Bank Account and/or PPP on the header of the PPR. In that case, you need to click on the Take Action icon to be taken to a form where you can decide which internal bank account and PPP should be used for each invoice and memo selected for payment
10) Pending proposed Payment Review: This status will only appear if you selected the "Stop Process for Review After Creation of Proposed Payments" option on the Processing tab of the PPR header. In this case, the system is waiting for you to review (and modify, if needed) the proposed payments for this batch. Click on the Take Action icon to be taken to the "Review Proposed Payments" window
11) Formatting: This status indicates that the proposed payments have been turned into payment instruction files. At this point, you will want to click on the Show link to view the new associated payment instruction file(s). Each payment instruction file with have their own PI Reference Number. If you have both electronic and paper ("check") payments involved in this payment batch, you will see a payment instruction file for each type of payment method
12) Confirmed Payment: Once the payment instructions have been transmitted/printed and confirmed, the Status of the PPR changes to this status to indicate a successfully completed payment batch (PPR)
13) Terminated: If the user terminates a PPR anytime prior to confirmation of the payments (using the Terminate icon), the status will change to "Terminated", and the PPR is permanently closed.


The following concurrent Program gets fired during PPR process.

1 .Payment Process Request Program

2. Scheduled Payment Selection Report

3. Build Payments

4. Format Payment Instructions

5. Record Print Status

Retainage Release Invoice Concept and it's Accounting Entry - Oracle Payables

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.

Withholding Tax Invoice Concept

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

Zero Payment Concept and it's Setup's in Payables Module

If you cancel an invoice (or) Invoices with offsetting credit or debit memos. In such case there is no need pay any amount, but system will show these invoices in Invoice Aging Report as they are not paid. If you create dummy bank A/c and Dummy Check's and  make payment to those invoice, those invoices will no longer appear in Invoice aging Report.

Set up for zero Payment: 

1. Create a Zero Payment bank, bank branch and bank account.

2. Enable the Allow Zero-Amount Payments option in zero payment bank account.

Process for Zero Payment:
1. Create Standard Invoice in Payables with Some "X"Amount.
2. With the same negative "X" amount create credit memo and match to the standard invoice.
3. Run invoice aging Report. You can see both Standard and Credit memo invoices.
4. To eliminate the same. Make Payment to the above Standard Invoice and Credit Memo.
5. Now, Re-run invoice aging Report. Standard invoice and credit memo invoice will not appear in the Report.

Distribution Set Concept in Oracle Payables

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.

Pay On Receipt/ Self Billing

Under Pay on Receipt/Self Billing method invoice will be created by system automatically when we create receipt.
Setup Steps:

Step: 1 Enable Pay On as 'Receipt' and Invoice Summary Level as 'Receipt'  at Supplier site in Purchasing tab
Step: 2 Create purchase order and in Terms tab select Pay On as 'Receipt'.
Step: 3 Receive the goods (Receipt Process).

Step: 4 Deliver the goods (Receiving Transaction Process).

Ensure Payables Open Interface Import Program Request completes with normal status.

Step: 5 Query the invoice in the invoice work bench.

Prepayment Concept, Prepayment Statuses, Accounting Entries for Prepayment Concept.

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.
1. Never validated ( Before Validation of Prepayment Invoice)
2. Unpaid ( After Validation of Prepayment Invoice and when payment is not made)
3. Permanent ( Permanent Prepayment) (After Payment to Prepayment Invoice)
4. Avaliable ( Temparory Prepayment) (After Payment to Prepayment Invoice)
5. Fully Applied. ( In case Prepayment Amount is applied fully to a Standard Invoice)
Accounting Entries:
For 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

Automatic offset Method

This feature is used to create offset credit side liability a/c's in payables in such a way that all balancing segment of debit should be equal to credit. There are three type of automatic offset Method
          1) Balancing Account.
          2) Natural Account.
          3) None
Balancing: If you are select balancing as your automatic offset method, To create offset credit lines, Payables picks the balancing segment part accounting from Invoice Distribution lines a/c and remaining code combination will be picked up from Supplier Liability a/c.
Natural Account: If you are select natural as your automatic offset method then to create offset credit lines, The system will pick natural a/c part from Supplier Liability a/c and remaining code combination will be picked from Invoice Distribution a/c.
None:If you are select none as your automatic offset method. It means automatic offset method concept is not applicable.
Illustration:
Invoice “123” is created on Supplier “ABC” for an amount of Rs.10000/-. The invoice distribution accounts given as 01-001-0001-0001-000 The liability account defined at the supplier site is “01-002-0002-0002-000”.
The current accounting entry is
Account Combination                             Debit              Credit
01-001-0001-0001-000                           10000
01-002-0002-0002-000                                                   10000
For Balancing automatic offset method the desired accounting entry will be as follows
Account Combination                             Debit               Credit
01-001-0001-0001-000                           10000
01-002-0002-0002-000                                                   10000
For Natural automatic offset method the desired accounting entry will be as follows
Account Combination                             Debit               Credit
01-001-0001-0001-000                           10000
01-001-0002-0001-000                                                   10000

Payment Manager

Payments also can be processed as individual payments or through batch. Batch payments are automation. Automation means if we give instruction to system, system will make payment automatically. In 11i we called it as "Batch Payment and now in R12 the process is modified and named as "Payment Process Request". There are various stages of Payment Process Request. They are: 

                        1. Selection

                        2. Build

                        3. Format

                        4. Confirmation.

The Following are Pre-requiste steps required to submit Payment Process Request.

                       1. XML Template.

                       2. Payment Format.

                       3. Payment Method. 

                       4. Payment Documents.

                       5. Payment Process Profile.

Note: Bank, Bank Branches and Bank Account is created.

Now let us the see how the Payment Process Request works. Navigate to payment manager window.

Navigation: Payments --> Entry --> Payment Manager.

Now Click on "Submit Single Payment Process Request"

The Following window appears, Now Enter your criteria to pick all your invoices for which you wish to make a payment and click on Submit button.

Now click on Payment attributes tab and give the details like

                   1. Payment Date.

                   2. Disbursement Bank Account.

                   3. Payment Document. 

                   4. Payment Process Profile.

                   5. Payment Exchange Rate Type.

Now Click on "Processing" tab and give the instructions to how to process the payment. and click on "Submit" button.

The following confirmation message will appear.

Now submit the "Payment Process Request" Name in search criteria and click on "Go" Button, The following screen will appear. You can observe the change in “Payment Process Request" Status from "New" to "Invoice Pending Review". 

In the Main window,
Navigation: View --> Request --> Find.

You can observe " Scheduled Payment Selection" is running.

As we have checked “Stop Process for Review After Scheduled Payment Selection” while submitting the process, Now you can see the status as “Invoices Pending Review”. Now, Coming back to the OAF page and Click on the "Start Action" Icon as shown below to review the Selected Invoices for Payment.

Now review the selected invoices and at this point, you can remove the invoices the you don’t wish to pay now or can add new invoices. I have removed all the invoices, Except one invoice. (Invoice No: 9013, Invoice Amount: 60000, Trading Partner: Amrit Sales Corp).

System will ask for confirmation. If you want remove the invoices click on "Yes" or else click on "No" button

Now, You can see in the below screen, for which invoices payment can be made. 

Click on "Submit" Button

Click on "Refresh" button, You can see the status as "Calculating Special Amounts"

Now come back to Request window, and see "Build Payment" program is running.

Again click on "Refresh" button in OAF Page, As we have checked “Stop Process for Review After Creation of proposed payment Selection” while submitting the process, Now you can see the status as "Pending Proposed Payment Reveiw".

Review the invoices that are build for payment and click on " Start Action" Icon

After reviewing the invoice that are build for payment. Click on " Go" Button

Now Shift to Request window, You can obeserve "Format payment Instruction" Request has been Submitted.

Again Shift to OAF Page, Click on "Refresh" Button. You can see the PPR status as " Formatting"

Now click on "Show" button we can see the PPR Status as " Formatted Ready for Printing". Click on " Start Action" Icon

In printer column select "No Print" and click on "Print" Button.

Now come to " Payment Intructions" Tab enter your PPR name in search criteria and click "Go" You can see the status as "Submitted for Printing".  

Click on " Take Action" Icon

Click on "Continue" Button

 The system will through an "Warning" Message.

Click on " Apply" Button

Confirmation message will pop up and Payment is applied to the invoices. 

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.