Early Payment Discount In Account Receivable

Early Payment Discount

Example
customer order received for item A and we have scheme for item A if user order item A we will give him discount of 200 $ on each items but only in case if he pay in 3 days how it will be handled ?

Solution Example:

Payment Terms
Receivables lets you define standard payment terms for your customers to specify the due date and discount date for their open items. Payment terms can include a discount percent for early payment and you can assign multiple discounts to each payment term line. For example, the payment term ‘2% 10, Net 30′ indicates that a customer is allowed a two percent discount if payment is received within 10 days, after 10 days, the entire balance is due within 30 days of the transaction date with no applicable discount. You can define proximal payment terms to pay regular expenses such as telephone bills and credit card bills that occur on the same day each month. You can also create split payment terms for invoice installments that have different due dates.

You can use payment terms to determine the amount of each installment. Receivable lets you either distributes tax and freight charges across all installments, or allocates all freight and tax amounts in the first installment of a split term invoice. You can use prepayment payment terms to indicate which business transactions require prepayment for goods and services. Receivables displays the active payment terms you define as list of values choices in the Customers, Customer Profile Classes, and Transactions windows.

To define a payment term:

1. Navigate to the Payment Terms window.
2. Enter the Name of this payment term.
3. Select the Prepayment check box if you are defining a prepayment payment term.

Receivables feeder systems, such as Oracle Order Management, can optionally implement business processes around prepayment payment terms to indicate that a particular business transaction requires the capture of funds before the delivery of a product or service.

4. To associate a credit check with this payment term, check the Credit Check box. Oracle Order Management uses this information to determine when to place an order on hold. In Oracle Order Management, if the profile for an address does not have credit checking limits defined in a particular currency but the customer does, then the order passes credit check. If the address does not have limits in the currency and neither does the customer, then the order is compared to the customer limit in that currency.

5. If you do not want to let your customers take discounts for partial payments on items associated with this payment term, then uncheck both the Allow Discount on Partial Payments check box
as well as the check box for the Discount on Partial Payment system option.

6. Enter the Installment Option for items assigned to this payment term. This indicates how Receivables will allocate the freight and tax charged to transactions using this payment term. Choose ‘Include tax and freight in first installment’ to include all tax and freight charges in the first installment. Choose ‘Allocate tax and freight’ to distribute tax and freight charges across all installments.

7. Enter the Base Amount for this payment term. The default is 100, but you can change it. The base amount is the denominator for the ratio Receivables uses to determine the amount due for installments of invoices to which you assign this payment term. The sum of the relative amounts for all of the payment schedules that you define for these payment terms must be equal to the value that you specify as a base amount.

8. If this payment term uses proximate terms, enter a Cutoff Day for inclusion in the monthly billing cycle. You can either enter a Day of the Month or select the Last Day of Month checkbox. Select the Last Day of Month check box to create a payment term to use with a consolidated billing invoice that includes all transactions created during the month that you specify.

If you are using the Consolidated Billing Invoices program, then you must enter values for the Day of Month and Months Ahead fields in the Due region of the Payment Schedule. Consolidated Billing does not use the Days or Date fields in the Due region. Customers who use payment terms where the value for the Cutoff Day is greater than the value in the Due: Day of Month field should not enter a value of 0 in the Months Ahead field. This will result in the following erroneous scenario:

Cutoff Day = 25
Day of the Month = 15
Months Ahead = 0
in this example, a consolidated billing invoice that is created on January 25 will be due before its creation date on January 15. To avoid this scenario, you must enter a value that is greater than 0 in the Months Ahead field.

9. If you want transactions assigned to this payment term to be printed before the due date, enter a number of Print Lead Days. Receivables will print this transaction x number of days before the due date, where x is the number of days you enter here.

10. Enter the Discount Basis you want Receivables to use when calculating discounts for your invoices.

Choose one of the following discount methods

Invoice Amount: Choose this option to calculate the discount amount based on the sum of the tax, freight charges, and line amounts of your invoices.

Lines Only: Choose this option to calculate the discount amount based on only the line amounts
of your invoices.

Lines, Freight Items and Tax: Choose this option to calculate the discount amount based on the amount of line items, freight, and tax of your invoices, but not freight and charges at the invoice header level.

Lines and Tax, not Freight Items and Tax: Choose this option to calculate the discount amount based on the line items and their tax amounts, but not the freight items and their tax lines, of your invoices.

11. Enter a range of Effective Dates for this payment term. If you do not enter an end date, this payment term will be active indefinitely.

12. Enter a line number for the installment term that you are defining in the ‘Seq’ field. Enter a higher number for each installment term with a later due date. For example, if you create terms with 50% due in 15 days and 50% in 30 days, enter ‘1′ in this field for the first line and ‘2′ for the second line.

13. Enter the Relative Amount for this payment term. This is the numerator of the ratio that Receivables uses to determine the amount due for this installment of these payment terms. The sum of the relative amounts for all of the payment schedules that you define for each payment term must be equal to the base amount for this term.

14. Enter the number of Days after the invoice date that payment is due for this installment term (optional). For split payment terms, this number indicates the number of days after the invoice date that an installment is due.

15. Enter the Date on which payment is due for this installment term (optional). If you do not complete this field, enter a value for either Due Days or both Day of Month and Months Ahead.

16. If you are defining proximate terms, enter the Day of Month that payment is due for this installment term. For example, if payment is due on the fifteenth of each month, enter ‘15.’

17. If you are defining proximate terms and you entered a value for Day of Month, enter the Months Ahead to which these installment terms of the proximate terms refer.

For example, if you entered ‘15′ for Day of Month and you enter ‘2′ here, an invoice dated in May will have a due date of July 15.

18. Save your work. To assign discounts to each payment schedule line of your payment term

Entering Discount Information
Receivables lets you assign discounts to your payment terms. You can also assign multiple discount line terms to each installment of your payment terms. For example, you might give your customer a 10% discount if they pay within 10 days, but only a 5% discount if they pay 11 to 20 days after the invoice date.
Discounts do not apply to Automatic Receipts. If you use the automatic receipts feature to create your Bills of Exchange and Direct Debits, Receivables will not calculate discounts, even if your customers pay before the due date.

Prerequisites
Define payment terms
To assign discount information to a payment term:
1. Navigate to the Payment Terms window.
2. Query or enter the payment term.
3. Choose Discounts.
4. Enter the discount percentage and number of Days for this payment term. For example, to give customers using this payment term a two percent discount if payment is received within ten days, enter ‘2′ and ‘10′ respectively.
5. To limit the period of time that the discount for this installment’s discount line will be active, enter the Date, day of the Month, and the number of Months Ahead for this discount’s expiration date. Receivables uses these values to calculate the discount date during invoice entry.
6. Save your work.

Source: – Metalink, Receivable User Guide

Period Close Checklist In Oracle Account Receivables

Complete manual payments and adjustments for the period (including cleanup of ‘Out of Balance’ batches)

Check and Complete final Receivables Interface from Order Management

Complete manual invoices, DEBIT Memos and credit memos

Run your final Auto Invoice process

Correct ALL Auto Invoice rejects and re-run

Clear all receipts from Cash Management

Apply receipts against Invoices and Debit Memos

Review the Unapplied Receipts Register

Reconcile receipts

Apply Credit memo to Debit Memo and Invoices

Approve or reject ALL Pending Adjustments

Complete or delete ALL ‘Incomplete’ invoices

Complete or delete ALL ‘Incomplete’ credit memos

Correct and post ALL open Lockbox batches (If Lock Box Implemented)

Print Dunning (Reminder) Letters (Optional)

Run Journal Entries Reports

Review Journal Entries reports for ‘unusual’ accounts and correct as needed

Run Period End Reports

Balance to the Aged Trial Balance

Post to the General Ledger using the period start date through the period end date – verify that ALL steps completed successfully.

Close the period – verify that there are no items in error

Open the next period and the next Future period

Post Journal Entries (In General Ledger)

Balance to the General Ledger (for the key accounts)

Reference

Why Don’t My AR and GL Numbers MATCH BY Cathy Cakebread

Metalink

Oracle Account Receivable user Guide

e business Suite Diagnostics Period / Year End Close Note:402237.1

How to Find Applied and Unapplied Credit memos in Oracle Application 11.5.10.2

how-to-find-applied-and-unapplied-credit-memos-in-oracle-application-115102

Account Receivable to General Ledger Transfer

Source Oracle Account Receivable User Guide

Tables Used in Auto Invoice Master Program

When the Auto invoice program is run, data is populated into the tables listed below.

1. RA_BATCHES_ALL

2. RA_CUSTOMER_TRX_ALL

3. RA_CUSTOMER_TRX_LINES_ALL

4. RA_CUST_TRX_LINE-GL_DIST_ALL

5. RA_CUST_TRX_LINE_SALESREPS_ALL

6. AR_RECEIVABLE_APPLICATIONS_ALL

7. AR_PAYMENT_SCHEDULES_ALL

8. AR_PAYMENT_SCHEDULES_ALL

9. RA_INTERFACE_ERRORS_ALL

Query to check Invoices in Error

SELECT ria.line_type, ria.description, ria.currency_code, ria.amount,

ria.trx_date, ria.quantity, ria.quantity_ordered, ria.sales_order,

ria.sales_order_line, ria.sales_order_date, ria.inventory_item_id,

riea.interface_line_id, riea.MESSAGE_TEXT, riea.org_id

FROM ra_interface_errors_all riea, ra_interface_lines_all ria

WHERE riea.interface_line_id = ria.interface_line_id

AND riea.org_id = ria.org_id

What is Trading Community Architecture in Oracle Application 11i

Oracle Trading Community Architecture (TCA) is a data model that allows you to manage complex information about the parties, or customers, who belong to your commercial community, including organizations, locations, and the network of hierarchical relationships among them. This information is maintained in the TCA Registry, which is the single source of trading community information for Oracle E-Business Suite applications. These applications, as well as TCA itself, provide user interfaces, batch data entry functionality, and other features for you to view, create, and update Registry information (Source Overview Oracle® Trading Community Architecture User Guide)

The parties in TCA could be one of following four types:

1. Organization e.g. Dawlance
2. Person e.g. Ahmad Bilal
3. Group e.g. IEEE Consortium
4. Relationship e.g. Ahmad Bilal at Dawlance.

Following are main components of Oracle TCA

1. Contacts
2. Locations
3. Party Layer
   1. Sites
   2. Relationships
4. Account Layer
5. Customer Accounts

Main Tables in TCA

1. HZ_PARTIES
2. HZ_LOCATIONS
3. HZ_PARTY_SITES
4. HZ_CUST_ACCT_SITES_ALL
5. HZ_CUST_SITE_USES_ALL
6. HZ_CUST_CONTACT_POINTS

Oracle Cash Management and Oracle Receivable

For Cash Management to work with Oracle Receivables, we need to establish the following in Cash Management:

· Set of Books

· Banks

· Receipt sources

· Receipt class (optional)

· Receivable activities (optional)

Set of Books

Set of Books must be assigned as system options in Oracle Receivables for each operating unit. We must also select these Sets of Books as the Sets of Books in the Oracle Cash Management System Parameters form.

Banks

We must configure bank accounts for banks that will be reconciled using Oracle Cash Management. We must mark the bank accounts with an account use of Internal—but not Customer or Supplier. We must also have the cash clearing, bank charges, and bank errors accounts set up in the GL Accounts alternative region of Bank Accounts. For remittance bank accounts, we need to assign the cash account and remittance account.

Receipt Sources

We need to define at least one receipt source that will be used for assigning numbers to receipt batches.

Receipt Class

If we are planning to create miscellaneous receipts or payments from Oracle Cash Management, we need to set up a receipt class for them. Miscellaneous payments are negative receipts, and are generated in Oracle Receivables, not Oracle Payables. The receipts class setup for this purpose utilizes a manual creation method and is set to not require remittance.

Receivable Activities

To create miscellaneous receipts or payments from Oracle Cash Management, we must set up a receivable activity.

A receivable activity set up for this purpose requires an account type of either bank or miscellaneous cash. For the miscellaneous cash type, we must either enter an account or select a distribution set.

Accounts Receivable Profile Options

For the Accounts Receivable values the following are the most critical profile options and used to control Oracle Receivable functionality

AR: Allow Transaction Batching – If you enter small volumes of manual transactions, it is not necessary to use batches for transactions. If you enter high volumes, you should use batching for transactions. You should always use batching for receipts since you get immediate feedback of what you have done and any potential problems.

AR: Cash Allow Actions – As part of the cash application process, the applier has the option to create adjustments (write-offs) and charge backs if you set this option to Yes. I recommend that you do that, you can always control the amounts they write-off using approval limits.

AR: Cash – Default Amount Applied – Always set so the default is the amount remaining on the receipt, not the amount remaining on the invoice. If you allow the receipt amount to default to the invoice balance, this allows you to apply more than you really have.

AR: Change Customer Name – In reality customers change their names and this is a valuable feature but, I recommend that you set it “Yes” only after to have been live for a few weeks. This is a good way to keep novice users from overlaying good names with invalid names, until the know what they are doing.

AR: Close Period – Run Collections Effectiveness – I recommend that you set this option to “No.” Most users do not use this report and it will just slow the close process.

AR: Update Due Date – Allow change to due date. In rare instances it is desirable to change the due date on an invoice (for example, you have negotiated this with the customer). By setting this profile option to “Yes,” you have the option of doing this. What this really does is to allow you to make your aging look better. Consider whether or not this is desirable in you business situation.

AR: Use Invoice Accounting For Credit Memo – In most cases, if you know the original invoice, it is desirable to offset the accounts that were used for the invoice when creating the related Credit Memo. This option allows you to do that.

How and When COGS account hit for transactions

Inventory Interface generates the cost of goods sold account for transactions when passing the transactions to Oracle Inventory. Receivables Interface generates a receivable account, a revenue account, a tax account, a freight account, and others, but not the cost of goods sold account. Ship confirm and pick release do not generate any accounts.

Account Receivable Profile Options

In this post i will share some interesting information about Oracle Receivable Module.this information gather form different sources (metalink,Google and my personal experience as well)
I will update this information as i got any further assistance from any source

AR: Allow Overapplication in Lockbox

This profile option controls how AutoLockbox handles receipts when the payment amount is greater than the balance due for a transaction. When a payment exceeds the balance due, AutoLockbox closes the transaction and leaves a negative balance due for the item if both of the following are true:

• AR: Allow Overapplication in Lockbox is set to Yes

• the open debit item’s transaction type has Allow Overapplication set to Yes

If either of these are not true, AutoLockbox applies only enough to close the transaction and leaves the remaining receipt amount unapplied.

This profile option can be set by the system administrator at the site, application, and responsibility levels but cannot be updated by the user.

AR: Allow summary table refresh

Set this profile option to Yes if you want to allow the data contained within the transaction summary and open balance tables to be initialized or reset.

After the tables are populated, changes that occur to transaction balances are updated in the summary tables via business events.

Use this profile option for added security to ensure that the summary tables are refreshed only when necessary.

This profile option can be set by the system administrator or user at the application level.

AR: Allow Update of Existing Sales Credits

This profile option determines whether a user can update existing sales credits or if additional sales credit records need to be created to maintain an audit trail.

AR: Always Default Transaction Balance for Applications

This profile option determines the default amount applied value that displays in the Applications window, whether you enter applications directly or by using the Search and Apply feature. The default value includes discount amounts, where applicable.

If you set the profile option to Yes, then the default amount applied is the remaining transaction amount.

If you set the profile option to No, or if a null value exists, then the defaulting rule is:

1. If the unapplied receipt amount is greater than or equal to the transaction, then the default amount applied is the remaining transaction amount.

2. If the unapplied receipt amount is less than the remaining transaction amount, then the default amount applied is the unapplied receipt amount.

3. If the unapplied receipt amount is negative, then the default amount applied is the remaining transaction amount.

This profile option can be set by the system administrator at the site, application, responsibility, and user levels. The user can also update this profile option.

AR: Application GL Date Default

This profile option determines how Receivables determines the default GL Date when you apply receipts. Choose one of the following values:

• Later of Receipt GL date and Invoice GL date: Choose this value to use either the receipt GL date or the invoice GL date, whichever is later, as the default GL date for your receipt applications. This is the default value.

• Later of Receipt GL date, Invoice GL date, and Current date: Choose this value to use the receipt GL date, the invoice GL date, or the current date, whichever is later, as the default GL date for your receipt applications.

This profile option can be set by the system administrator at the site, application, and responsibility levels but cannot be updated by the user.

AR: AutoInvoice Gather Statistics

This profile option determines if the AutoInvoice Master program analyzes and gathers information about the interface tables each time AutoInvoice is run. Analyzing tables ties up system resources.

If the value for this profile option is set to Yes, or is null, AutoInvoice analyzes the interface tables and gathers statistics.

If the value is set to No, AutoInvoice does not analyze the interface tables.

This profile option can be set by the system administrator at the site, application, responsibility, and user levels. The user can also update this profile option.

AR: Bank Directory Source

This profile option is used by iReceivables for bank account transfer payments that make use of the Automated Clearing House (ACH) network. The profile option provides iReceivables with access to the E-Payment routing directory via the Federal Reserve Financial Services web site, a local file downloaded from this web site, or both. iReceivables uses the E-Payment routing directory to derive the name of the bank or financial institution from the routing number that a customer enters to pay an invoice using an ACH bank account transfer.

This profile option can be set by the system administrator at the site, application, responsibility, and user levels but cannot be updated by the user.

AR: Bank Directory URL

This profile option is used by iReceivables to identify the URL in Oracle iReceivables that will host the Federal Reserve Financial Services web site. This profile option is set when the AR: Bank DIrectory Source profile option is set to Web Services or Web Service First then Local.

This profile option can be set by the system administrator at the site level but cannot be updated by the user.