How Does the Landed Cost Management Impacts the Accounting Flow in a Procure To Pay Cycle

What are the accounting entries in a Procure to Pay cycle when the PO shipment is enabled for Landed Cost Management?

1. Receive the PO with estimated landed cost calculated

- Receiving Inspection a/c DR @ Estimated Landed Cost

- AP Accrual a/c CR @ PO Price inclusive of Non-Recoverable tax

- Landed Cost Absorption a/c CR @ (Estimated Landed cost – PO Price inclusive of Non-Recoverable tax) (This a/c is defined in Receiving options)

• These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools > View Accounting
• These entries get created in rcv_receiving_sub_ledger

2. Deliver the PO to Inventory destination

For Standard Costing organization

- Material Valuation a/c DR @ Std Cost

- Receiving Inspection a/c CR @ Estimated Landed Cost

- Purchase Price Variance a/c DR @ difference between Std Cost and Estimated Landed Cost

For Average Costing organization– Material Valuation a/c DR @ Estimated Landed Cost

- Receiving Inspection a/c CR @ Estimated Landed Cost

• These entries can be viewed from Inventory > Material Transactions > Distributions
• These entries get created in mtl_transaction_accounts

3. Invoice validated and actual landed cost calculated

Once the Actual Landed Cost is calculated, LCM will populate this information in cst_lc_adj_interface with rcv_transaction_id corresponding to the receipt to which the invoice is matched. Then the adjustment entries would get created as given below on running the Landed Cost Adjustment Processor

Landed cost Adjustment – Receiving 

- Receiving Inspection a/c DR @ difference between Actual LC and Estimated LC

- Landed Cost Absorption a/c CR @ difference between Actual LC and Estimated LC

Landed cost Adjustment – Delivery (Standard Costing)

- Receiving Inspection a/c CR @  difference between Actual LC and Estimated LC

- Purchase Price Variance a/c DR @ difference between Actual LC and Estimated LC

• These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools > View Accounting
• These entries get created in rcv_receiving_sub_ledger

Landed cost Adjustment – Delivery (Average Costing)

- Receiving Inspection a/c CR @ difference between Actual LC and Estimated LC

- Landed Cost Absorption a/c DR @ difference between Actual LC and Estimated LC

Average Cost Update (Average Costing)

- Material Valuation a/c DR @ difference between Actual LC and Estimated LC

- Landed Cost Absorption a/c CR @ difference between Actual LC and Estimated LC

If this Average cost update happens for updating the item cost with the difference between Actual and Estimated landed cost for an item which has 0 or negative on-hand quantity, then the accounting entries would be as follows:

- Material Valuation a/c DR @ 0

- Landed Cost Absorption a/c CR @ difference between Actual LC and Estimated LC

- Landed Cost Variance a/c DR @ difference between Actual LC and Estimated LC (This a/c is defined inventory > Set up > Organization > Parameters)

• These entries can be viewed from Inventory > Material Transactions > Distributions
• These entries get created in mtl_transaction_accounts
• The link between the Receiving transaction and Average Cost update is done through txn_source_line_id. Rcv_transaction_id of deliver transaction is stamped as txn_source_line_id in mtl_material_transactions for the LCM adjustment transaction which has the transaction type as Average Cost Update.

4. Create accounting for item invoice

- AP Accrual a/c DR @ PO Price

- Tax a/c DR @ tax rate

- Liability a/c CR @ Invoice Price including tax

- LCM:Invoice Price Variance a/c DR @ difference between PO Price and Invoice Price (This IPV a/c is defined in Receiving options)

- LCM:Exchange Rate Variance a/c DR @ difference between receipt exchange rate and Invoice exchange rate (This ERV a/c is defined in Receiving options)

5. Create accounting for charge invoice

- Default Charge a/c DR @ invoice price (This charge a/c is defined in Receiving options)

- Liability a/c CR @ invoice price

6. Perform Return transaction or negative correction after invoice is accounted and actual landed cost is calculated

Return to Vendor /Negative Correction

- Receiving Inspection a/c CR @ Actual Landed Cost

- AP Accrual a/c DR @ PO Price + Non-Recoverable Tax

- Landed Cost Absorption a/c DR (Actual Landed Cost – {PO Price+Non-Recoverable Tax})

• These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools > View Accounting
• These entries get created in rcv_receiving_sub_ledger

Return to Receiving/Negative Correction (Standard Costing)

- Material Valuation a/c CR @ Std Cost

- Receiving Inspection a/c DR @ Actual Landed Cost

- Purchase Price Variance a/c CR @ difference between Std cost and Actual Landed Cost

Return to Receiving/Negative Correction (Average Costing)

- Material Valuation a/c CR @ Actual Landed Cost

- Receiving Inspection a/c DR @ Actual Landed Cost

• These entries can be viewed from Inventory > Material Transactions > Distributions
• These entries get created in mtl_transaction_accounts

7. Raise a Debit Note

- AP Accrual a/c CR @ PO Price

- Tax CR @ tax rate

- Liability a/c DR @ Invoice Price including tax

- Invoice Price Variance a/c CR @ difference between PO price and Invoice Price

Note:

1. Estimated and Actual Landed Cost are always inclusive of PO price and Non-Recoverable tax.

2. Landed Cost Absorption account need not be having zero balance at the end of this procure to pay cycle in LCM enabled organization. It will be zero only if default charge a/c defined in Receiving options is same as the landed cost absorption a/c and Actual landed cost is same as the Estimated landed cost.

3. Accounting entries for Expense POs and Shopfloor destination POs has no impact as Landed Cost Management is not applicable for Purchase Orders with Expense and Shopfloor destination.

4. Landed Cost Management has no impact on the Encumbrance Accounting as the PO gets reserved at PO price and it gets reversed at PO price only even though the actual charge account get hit at landed cost.

5. Retroactive Pricing is not supported in LCM enabled organization and hence retroactive price update program will not create the retroactive price adjustment entries in Receiving subledger for the receiving transactions created.

AP Questions and Answers

1) What has changed?

1.    The receipt class set up (in AR) has changed requiring the Oracle Payments ‘Payment Method’ to be attached to this kind of payments.

2.    Payment attributes of transactions will be stored in a centralized transaction payment-extension entity owned by Oracle Payments.

3.    In release 12, Oracle Payments owns the data model where all third party payment instruments are stored (these are instruments like customer credit cards and supplier bank accounts).

2) What happens during the Transaction Entry and Authorization ?

A) During the Transaction Entry

The following are captured in iReceivables during the transaction entry ( paying the Invoice in iReceivables) for the funds capture.

• Payment method
• Payment instrument
• Payment attributes

These values are passed on to Oracle Payments before the Authorization & Settlement API’s are

Called.The transaction authorization information is stored in Payments and linked with the extension entity, this is

no longer stored in AR tables.

B) During Authorization 

Oracle Payments mandates that authorization is invoked before a transaction can be settled in Oracle Receivables. Oracle Payments will enforce that the settled amount is equal to or less than the authorized amount.

Based on the payment method passed to the Authorize API, Oracle Payments will perform different functions that depend on the nature of that payment method. For example, for payment methods in the credit card category, Oracle Payments will attempt to validate the credit card and reserve the transaction amounts for settlement. For payment methods in the bank account transfer category, Oracle Payments will not attempt to reserve the funds, but will try to validate the bank account information.

Flow Chart :

1.Create Payee (Customer) —> 2.Create Transaction (Pay the Invoice) Receivables / iReceivables —-> 3.Authorize Transaction —> 4.Settle Transaction Oracle Payments

3) What is the set up required ?

In Oracle Payments:

A (funds capture) payment method may be set up or a seeded payment method used. It is required for funds capture within Oracle Payments to set up a funds capture process profile, a payment system, and a payee (the definition of the internal organization that will receive the funds, also known as the first party payee).

Set up Oracle Payments, if you intend to use the Pay Invoice function for credit

cards or for bank account transfers using the ACH network.

In Receivables:

Define Receipt Class and Payment Method

If you are using the Pay Invoice function, define at least one receipt class and payment

method for each iReceivables payment instrument that you intend to use:

• Bank account transfers using Receivables direct debit.

• Credit card payments using Payments.

• ACH bank account transfers using Payments.

In iReceivables:

Go the iReceivable Setup Responcibility > System Parameters  and select the ‘Credit Card Receipt Method’ and

‘Bank Account Payment Method’  defined above . These would default to the receipts created from iReceivables.

Note:

iReceivables does not support cross-currency payments. Though a user can still pay invoices with a credit card

or bank account that has a different currency from that of the invoice, the receipt created in iReceivables

will have the same currency as the invoice.

4) What are the Oracle Payment API’s used ?

Name	Function
IBY_FNDCPT_COMMON_PUB	Common structures and constants for all funds capture APIs
IBY_FNDCPT_SETUP_PUB	Set-up APIs for funds capture entities- payer, payment channels, instrument assignments, etc.
IBY_FNDCPT_TRXN_PUB	Funds capture transactional APIs
IBY_EXT_BANKACCT_PUB	External bank account APIs
IBY_CREDITCARD_PKG	Create, Update, Check if it exists and Querying attributes.

How to disable Create Online Accounting in Payables

(1) Log on to System Administrator Responsibility

(2) Navigate Applications->Menu

(3) Query up Menu “AP_APXINWKB_MENU”

(4) In the child records of AP_APXINWKB_MENU, you should see “Invoice Accounting”

(5) Uncheck the grant checkbox for “Invoice Accounting”.

(6) Log on to Payables Responsibility

(7) Create a invoice and approve it.

(8) Click on the Actions button.

(9) You should see “Online Accounting” checkbox disabled.

R12 Internet Expenses FAQs

Internet Expenses

1. Why isn’t the Tax Code Defaulting on the Details Page in Internet Expenses?

– To implement the solution, please execute the following steps: 1. Login to a payables manager responsibility for the Operating Unit with this issue. -Navigate: Setup -> Tax -> E-Business Tax Home 2. For Task Name ‘Create Application Tax Options’, click ‘Go To Task’ -Click ‘Create’ -Enter the Operating Unit -Enter Application Name ‘Internet Expenses’ 3. Enter the Defaulting Order -Defaulting Order 1 should be ‘Expense Report Template’ -Apply 4. Ensure Defaulting Order Use Status is ‘Active’ 5. Bounce the Apache server

2. Why is the Expense Report Rejected by Expense Report Export Due to the Error ‘Supplier Type Is Invalid’?

– To implement the solution, please execute the following steps:: 1. Login to a Payables Manager responsibility 2. Navigate: Setup -> Lookups -> Purchasing 3. Query Type ‘VENDOR TYPE’ 4. Ensure Code ‘EMPLOYEE’ is not end-dated and is enabled.

3. Why is the Employee Created Automatically as Supplier Even Though the Option is Unchecked?

Cause: Bug 6632886 R12: AUTOMATIC CREATION OF EMPLOYEE AS SUPPLIER OPTION IS IGNORED — To implement the solution, please execute the following steps:: One-off patch 6745049 includes the fix for Bug 6632886 R12: AUTOMATIC CREATION OF EMPLOYEE AS SUPPLIER OPTION IS IGNORED. Refer to the patch readme for complete pre-requisite information. (This patch is available through controlled release. Please contact support for assistance with obtaining the patch.) Alternately apply the latest Rup patch identified in Note 423541.1.

4. Why does Expense Report Export Program Fail Due to Ora-06510: Apps.Ap_web_export_er?

Cause: The issue is caused because one expense report was rejected with “No Exchange Rate”. To implement the solution, please execute the following steps: 1. Define a valid exchange rate for the rejected expense report date and currency. 2. Re-run Expense Report Export program. 3. Migrate the solution as appropriate to other environments.

5. Why isn’t the Custom Calculate Amount Called when Returning to Cash and Other Expenses Page?

Cause: Bug 6862323 12.0.4 – CALCULATE AMOUNT CLIENT EXTENSION WITH POLICY SCHEDULE NOT WORKING — To implement the solution, please execute the following steps: 1. The fix for this bug is included in one-off Patch 6862323 R12.OIE.A: Calculate Amount client extension with policy schedule not working. Refer to the patch readme for pre-requisite information. (This patch is available through controlled release. Please contact support for assistance with obtaining the patch.) 2. Bounce the Apache server after the patch is applied.

6. Why is the APXXXEER GL Account on First Line Nulled when Moving to Second Line?

Cause: Bug 6153249 Account is spacing out after first entry in manual expense report. The fix for this bug is included in APXXXEER.fmb 120.106 / 120.101.12000000.5, available in the latest Rup patch identified in Note 423541.1.

7. Why does the Oie-Allocations Project Expenditure Org Field Appear to be Limited to 30 Char?

Cause: Bug 6135815 R12 OIE-ALLOCATIONS. PROJECT EXPENDITURE ORGANIZATION FIELD LIMITED TO 30 CHARS The fix for this bug is included in Patch 6251856.

8. Why isn’t the Pay Group from the Expense Reports Tab of Payables Options used for Automatically Created Suppliers?

Cause: Bug 5890829 ISSUE WITH EXPENSE REPORT SUPPLIER SETUP. Due to bug 5890829, when a Supplier is created automatically for an Employee by the Expense Report Export program, the Supplier is being created with the Pay Group from ‘Payables System Setup’ instead of from the Expense Reports tab of the Payables Options form. — To implement the solution, please execute the following steps: The fix for this bug is included in one-off Patch 5890829 12.OIE.A: PAYGROUP AND PAYMENT TERMS ARE NOT BEING DEFAULTED CORRECTLY DURING AUTOMATIC CREATION OF SUPPLIER. Please review the patch readme for complete information.

9. Why isn’t Definition Taxcodeid Of Type Attribute Found In Cashandotherlinesvo?

Cause: unpublished Bug 6147311 Error Page Upon Press Next To Cash And Other Expenses Page The fix for this bug is included in CashAndOtherListCO.java 120.63.12000000.2 and CashAndOtherListCO.java 120.64 This bug fixed in R12.OIE.A.delta.3, patch 6250306. (Please contact support for assistance with obtaining the patch.) Workaround: Do not personalize Tax related items in the personalization page. Disable self service personalization, log into application and remove all personalization related to Tax code.

Difference between Match and Quick Match

PO Default :

Enter PO Default as the invoice type if you know th purchase order you want to match to, but you do not know to which purchase order shipments or distributions you want to match. When you enter a PO Default invoice in the Invoice Workbench, Payables prompts you to enter the purchase order number and automatically enters the supplier name, supplier number, supplier site, and the purchase order currency for the invoice currency. When you choose the Match button,Payables will retrieve all purchase order shipments associated with the specified purchase order. You can then match to any shipment or distribution.

Quick Match:

Enter Quick Match as the invoice type if you want to match an invoice to all shipments on a purchase order. When you enter a Quick Match invoice in the Invoice Workbench, Payables prompts you to enter the purchase order number and automatically enters the supplier name, supplier number,supplier site, and the purchase order currency for the invoice currency. When you choose the Match button, Payables automatically matches to each shipment. You can choose to complete the match or override the matching information. 

iRececivables Uptake Of Oracle Payment

About the Integration:

Oracle Payments is a new product in release 12. The product known as iPayment will no longer exist in release 12, however all functionality that existed in it is contained within Oracle Payments.

The objective of the new product is to give any deploying company a highly configurable and robust solution to disburse and receive payments. Oracle Payments is a fundamental part of the Oracle Applications architecture, and is provided with multiple products that require support for payment processing services.

Oracle Payments provides the infrastructure needed to connect other products with third party payment systems and financial institutions. The product supports a number of payment features. Some features support just disbursement, some just capture, and other features are common to both.

In iReceivables we can pay for the customers invoices . After selecting the payment method ( Bank Transfer / Credit Card Payment) a receipt would be created in AR . In earlier releases for the capture of funds the iPayments extensions were used .

iReceivables would now call the Oracle Payment API’s for the funds capture. This is entirely in the background and there are no visible changes in the iReceivables user interface because of this integration.

R12 How to get Payment Method Defaulted In Supplier Creation page?

1. To ensure correct Setup, please perform the following:

a) Go to Setup > Payment > Payment Administrator > Payment Methods

b) Choose Payment Methods and then press Go To Task

c) Query for your Payment Method which you want to be defaulted and then press Go Button

d) Press Update (Not Update Usage Rules)

e) Under (Usage Rules) region you will find (Automatically assign Payment Method to all Payees) Check Box,Click on this Check Box to enable that option and then press Apply Button

2)Also follow the following setup steps in

a (1):

a) Go to Setup> Payment> Payment Administrator > Disbursement System Options and then press Go To Task

b) Under (Enterprise Level) region press View Settings

c) Under (Disbursement System Options: Enterprise-wide) you will find the option (Default Payment Method), press Update Button

d) There are two Options:

> Based Only on Payment Method Defaulting Rules Setup

> Override Defaulting Rules when Default Method Set for Payee

> Please choose the first option (Based Only on Payment Method Defaulting Rules Setup) and then press Apply Button 3) Retest your issue again and feed us back if your issue is resolved.

How Payables Payment Terms Logic Works ?

How Payment Terms Work And What Is The Functionality Of Payment Terms When ?

The Payment Terms defined works on three basic fields on which you have entered/defined information.

The below combinations along with Invoice date defaults your Invoice Due Date.

In the Define Payment terms screen

Method 1)

---------

Invoice Date and No of Days entered in Payment term Days field

a)Days

Say, Invoice date is 28-Nov-2001 then if you enter 60 days then due date will

be 27-Jan-2001. It means it calculates no of days from the Invoice date.

Method 2)

---------

Invoice Date + Cut Off day + Day of month with Months ahead.

1) Cut-off Day

2) Day of Month with Months ahead

For example :

If you enter Payment Terms like this:

Cut of day 31 (Last day of a Month) Means even though invoice is 28th 1st what so ever, it calculates from the last day of month.

Day of a month  29

Months ahead    2   ( Two Months)

If invoice is dated 28-Nov-2001, with the above setup you get Due date as 29-Jan-2001 as due date.

It will always calculate from the End of Nov ie 30th Nov and Then it takes Two Months here it gives you always 29th of Second month from Invoice date.

ie

Invoice Date            Due Date

28-Nov-2001             29-Jan-2002

28-Dec-2001             28-Feb-2002

28-Jan-2002             29-Mar-2002

So on and so forth.

Either you give 29th or 30th what so ever, once you give the Day of Month you will get only that day as due date after Months specified in the Months ahead field.

This is how application works and desinged to work.

Please refer documentation for the following terms

Cutoff Day.

Days.

Day of Month

Months Ahead.

Further,

In case, you have  two invoice payment terms which you are not able to define in AP and the due dates are not defaulting as expected;

The two terms are:-

(1) 60 DAYS END OF MONTH go to month end and add 60 days

E.G: invoice dated 28 NOV, due date is 29 JAN

(2) 90  DAYS END OF MONTH go to month end and add 90 days

 E.G: invoice dated 28 NOV,  due date is 28 FEB

How would you define these?