Early Payment Discount In Account Receivable

Early Payment Discount

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.

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)


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


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


Tables Used in Auto Invoice Master Program

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










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


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.


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.