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Oracle Fusion Applications Accounts Payables
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2. Purpose:
This document provides an overview of features and enhancements included in Oracle Fusion Applications 11gR1 Release 11.1.1.5.0
and applicable updates. It is intended solely to help you assess the business benefits of upgrading your existing Oracle Products to
this release, or implementing completely new Oracle developed products, and planning your I.T. Projects.
Disclaimer:
This document in any form, software or printed matter, contains proprietary information that is the exclusive property of Oracle. Your
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This document is intended to outline our general product direction. It is intended for informational purposes only and solely to assist you
in planning for the implementation and upgrade of the product features described. Release information contained in this document
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Due to the nature of the product architecture, it may not be possible to safely include all features described in this document without
risking significant destabilization of the code.
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4. Agenda
⢠Procure-to-Pay Overview and Prerequisite Setups
⢠Key Implementation Considerations
⢠Function and Data Security
⢠Business Units and Shared Service Centers
⢠Invoicing
⢠Integrated Imaging Solution
⢠Multiple Invoice Entry Methods
⢠Match Options and Match Approval Levels
⢠Tolerances and Holds
⢠Invoice Approval
⢠Centralized Tax Engine
⢠Multiple Accounting Representations
⢠Payment Processing Options
⢠Payables to Ledger Reconciliation Report
⢠Additional Resources
4
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5. Procure-to-Pay Overview
Requisition
⢠Identify requirement
⢠Authorize purchase
request
Purchase
Goods/Services
⢠Negotiate/select
vendor
⢠Receive shipment
notice
⢠Request/receive/
evaluate quotation
⢠Receive goods
⢠Create purchase
order
5
Receive
Goods/Services
⢠Inspect goods
⢠Ensure goods
match PO quantity
Record
Invoice
Issue
Payments
⢠Record invoice
⢠Schedule payment
⢠Match invoice to
purchase order or
receipt
⢠Pay supplier
⢠Approve invoice
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6. Oracle Fusion Payables
Detailed Business Processes and Activities
Set Up Procurement
⢠Define Payables
Manage Payments
⢠Prepare and Record Payments
⢠Record Accounting for Payments
6
Manage Invoices
⢠Receive and Process Invoices
⢠Submit Invoices
⢠Approve Invoices
⢠Audit Invoices
⢠Record Accounting for Invoices
Manage Accounts
Payable Balances
⢠Analyze Accounts Payable Balances
⢠Close Payables Period
⢠Manage Accounts Payable Disputes
Copyright Š 2011, Oracle and/or its affiliates. All rights reserved. Oracle Proprietary and Confidential
7. Prerequisite Setups
Payables Prerequisites
⢠Required prerequisites enforced through Functional Setup Manager
7
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8. Prerequisite Setups
Setup Task Lists
Define Common Application
Configuration for Financials
Define Common
Financials Configurations
Define Invoicing and Payments
Configuration
8
ď§ Define Synchronization of Users and Roles from LDAP
ď§ Define Implementation Users
ď§ Define Enterprise Structures for Financials
ď§ Define Ledgers
ď§ Define Business Units
ď§ Define Facilities for Financials
ď§ Define Resource Organization Information
ď§ Define Security for Financials
ď§ Define Approval Management for Financials
ď§ Define Transaction Taxes
ď§ Define Supplier Configuration
ď§ Define Payables
ď§ Define Disbursements
ď§ Configure Payment System Connectivity
ď§ Define Payments Security
ď§ Define Subledger Accounting Rules
ď§ Define Cash Management and Banking Configuration
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9. Payables Setup
Financials Implementation Project
Payables setup available with Financials and Procurement offering
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10. Payables Function and Data Security
⢠Function security implemented using Job Role and data security using
Data Roles
⢠Three predefined job roles to meet Payables job functions:
â Accounts Payable Specialist, Accounts Payable Supervisor, and
Accounts Payable Manager
â Payables job roles are configured to maintain segregation of duties for
managing suppliers, creating invoice, force approving invoice and
creating payment
⢠Generate data roles for business units using seeded data role template
⢠Predefined job roles and the assigned duties can be customized using
Oracle Identity Manager (OIM) and Access Provisioning Manager (APM)
Refer to Oracle Fusion Financials Security Implementation and
Configuration Considerations for more details.
10
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11. Payables Function and Data Security
Duty Role
AP
Specialist
AP
Supervisor
AP
Manager
Payables Administration Duty
ďź
Payables Invoice Creation Duty
ďź
ďź
Payables Invoice Inquiry Duty
ďź
ďź
ďź
Payables Invoice Processing Duty
ďź
ďź
Payables Invoice Hold Resolution Duty
ďź
ďź
Payables Invoice Management Duty
ďź
ďź
Payables Payment Creation Duty
ďź
Payables Payment Processing Duty
ďź
ďź
Payment File Management Duty
ďź
ďź
Disbursement Process Management Duty
ďź
ďź
Disbursement Data Management Duty
ďź
ďź
Subledger Accounting Duty
ďź
ďź
Mass Asset Additions Creation Duty
ďź
ďź
Payables Period Close Duty
ďź
Payables Balance Analysis Duty
ďź
Payables Withholding Tax Reporting Duty
ďź
Payables to Ledger Reconciliation Transaction Analysis Duty
ďź
Accounts Payable Period Status Management Duty
ďź
11
App. Implementation
Consultant
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13. Business Units and Shared Service Centers
Business Unit
Unit of an enterprise that performs one or many business functions that can
be rolled up in a management hierarchy
⢠Can support one or many business functions
⢠Can process transactions on behalf of many legal entities
⢠Assigned to one primary ledger
â Ledger assignment is mandatory for BUs with business functions that
produce financial transactions
Refer to Oracle Fusion Financial Enterprise Structures Implementation
and Configuration Considerations training for more details.
13
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14. Business Units & Shared Service Centers
Shared Service Centers
⢠Share services to reduce cost and enforce company policies and
procedures consistently
⢠Shared Service Centers modeled using business units in two ways:
Service Provider Model
â Define relationships between business units for a business function,
identifying one business unit in the relationship as a service provider
and others as clients
Business Unit Data Security
â Allow shared service center personnel to process transactions for
other business units
(This is referred to as Multi Org Access Control in the Oracle EBusiness Suite)
14
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15. Business Units & Shared Service Centers
Business Functions in Procure-to-Pay Flow
⢠Requisitioning - Raises requisitions for products or services needed for day to day activities
⢠Procurement - Processes requisitions, negotiate supplier terms and manage relationships
⢠Payables Invoicing â Processes supplier invoices and financially responsible for purchasing transactions
Request
Source
Buy
Request
Pay
Buy
Pay
BU 1
BU 1
Shared
BU 2
Service
BU 3
BU 2
Central Sourcing, Local Execution
Decentralized
Request
Source
Buy
Request
Pay
BU 1
Source
Buy
Pay
BU 1
Automated
financial
reconciliation
Shared
Service
BU 2
Shared
Service
Automated
financial
reconciliation
BU 2
Complete Shared Services
15
Source
Separate Procurement and Invoicing Service Providers
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16. Business Units & Shared Service Centers
Shared Service Centers: Best Practice
⢠Centralize Procurement function using service provider model
â Negotiate supplier terms for multiple client business units
â Sharing and usage of supplier sites and centrally authored catalog content
â Process requisitions from multiple Requisitioning BU
⢠Consolidate Payables operations from multiple business units into single
shared service center using data security
â Centralize invoice receipt by having suppliers send invoice directly to AP
department instead of Buyers to ensure timely processing
16
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17. Business Units & Shared Service Centers
Procurement via Subsidiary â Implementation Consideration
Purchase Orderâs Sold-to BU can be different from the Requisitioning BU to
facilitate buying through subsidiaries
⢠Set up subsidiaries in some countries to meet legal requirements even
though the primary operations are located elsewhere
⢠Take advantage of favorable tax regime
Vision Services buying goods
via subsidiary Vision Germany
17
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19. Integrated Imaging Solution for Invoice Entry
Third Party Solutions versus Oracleâs Imaging Solution
Third Party Solutions
⢠Bolt on capabilities disjoint from core
ERP application, operating in a
peripheral fashion, using proprietary
technologies
Oracleâs Imaging Solution
⢠Fully integrated âout-of-the-boxâ solution
supporting the entire lifecycle of invoice
processing from scanning, recognition,
image routing to invoice entry and approval
⢠Components from different vendors for ⢠Integrated solution installed and maintained
scanning, data extraction, storage and
by a common provisioning framework, with
workflow require dedicated IT staff to set minimal configuration and setup needed
up, integrate and maintain, resulting in
higher cost of ownership
⢠All components certified and supported by
⢠Disparate platforms, certification and
Oracle
release cycles increase the risk of
incompatibility and maintenance
overhead
19
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20. Integrated Imaging Solution for Invoice Entry
Process Flow
Scanning
Field Office 1
ODC
Field Office 2
ODC
Field Office 3
ODC
Shared Services
Exception Handling
OFR Verifier
Forms Recognition
OFR
Image Repository
IPM
Image Routing
BPEL
AP Specialist 1
Invoice Entry
20
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AP Specialist 2
Invoice Entry
21. Integrated Imaging Solution for Invoice Entry
Oracle Document Capture (ODC)
Capture
Recognize
Route
Enter
Approve
⢠Digitize paper invoices to industry standard image formats with built-in
deskew, despeckle and black border removal features
⢠Support for enterprise class scanners and leading high-volume
document scanning interfaces: ISIS and Kofax Adrenaline/VirtualReScan
⢠Flexible implementation options for scanning invoices at multiple field offices
21
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22. Integrated Imaging Solution for Invoice Entry
ODC â Implementation Considerations and Recommendations
⢠Request suppliers to send invoices to one central location for scanning or decentralize ODC at
each invoice receipt location
â Consider legal requirements which may require invoices to be processed and stored in the
same country as receipt
⢠Install ODC on machine with at least dual CPU cores at 2 GHz and 4 GB RAM
⢠When evaluating hardware scanning throughput, plan for 60% efficiency of maximum throughput
to account for image quality review
⢠Enable Adaptive Thresholding on scanners to remove background colors and gradients for pure
black-and-white images
⢠Use TIFF image format with CCIT Group IV compression at 300 DPI for optimal balance
between scan quality and image size
â JPEG format not recommended due to lossy compression
⢠We recommend less than 25 images per batch to avoid delay caused by recognition exceptions
⢠To optimize high volume scanning we recommend you implement ODC commit server to
schedule the export of images to OFR import directory every 15-20 min
22
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23. Integrated Imaging Solution for Invoice Entry
Oracle Forms Recognition (OFR)
Capture
Recognize
Route
Enter
Approve
⢠Intelligent data extraction without using supplier-specific templates
⢠Pre-configured to capture attributes regardless of location on the invoice
⢠Self-learning intelligence to improve scan accuracy over time
⢠Flexibility to define rules such as format masks for invoice and PO number
⢠User-configurable validation of image data against Payables and
Procurement system
23
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24. Integrated Imaging Solution for Invoice Entry
OFR Runtime Service (RTS) â Implementation Considerations
⢠OFR RTS runs in the background as a server process. Multiple RTS instances can
run on a server
⢠Each RTS instance can perform one of following :
â Import, Export and Cleanup of image batches
â OCR, Classification and Extraction
⢠Designate 1 RTS instance for Import/Export/Cleanup for every 2-4 instance of RTS
running data recognition
⢠Number of RTS instances running on a machine must not exceed the number of
CPU cores available
⢠RTS instance dedicated to data recognition can process up to 250 invoices per hour
â Each additional instance can achieve near linear scalability depending on scan
volume, document complexity and the number of attributes validated
Hardware Recommendations
⢠A quad CPU core server with minimum 8 GB RAM so more OFR RTS instances can
be dedicated to the resource intensive recognition task
â You can either use a single server with enough CPU cores or scale by setting up
multiple OFR RTS servers (slave server)
24
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25. Integrated Imaging Solution for Invoice Entry
OFR Designer and Verifier â Implementation Considerations
OFR Designer
⢠A client tool for configuring implementation details (known as a âprojectâ) and its
initialization (INI)
â A pre-configured initialization (INI) file is installed as part of Fusion Applications to
be used for customizing your project
â Modify the project and the .ini file on site to update the Fusion Applications
database connection information, OFR Import/Batch/Export folder locations and
any additional data validation to be performed
OFR Verifier
⢠Quality assurance application that detects image batches with invoices failing
recognition or validation. Payables specialist reviews and re-submits batches after
correcting exceptions
â Verifier instance should be co-located with the OFR Batch folder to minimize image
loading time
⢠We recommend using remote desktops or Citrix accounts for OFR Designer and
Verifier since number of users using these will be limited and also to centralize
installation and maintenance
25
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26. Integrated Imaging Solution for Invoice Entry
Imaging and Process Management (IPM)
Capture
Recognize
Route
Enter
Approve
⢠Common image repository where invoice images are stored and then routed to
payables specialists
⢠Flexibility to attach configurable storage and security policies to content
E.g. You can configure storage device, duration of storage, and users who can
access and view invoice images
⢠Embedded image viewer within Fusion Payables application allowing payables
specialists to review and annotate images
26
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27. Integrated Imaging Solution for Invoice Entry
IPM â Implementation Considerations and Recommendations
⢠We recommend IPM image repository to be co-located with IPM Input Directory to
minimize network traffic when transferring images
⢠Average size of a black-and-white invoice image saved in TIFF format with CCIT
Group IV compression at 300 DPI is 40 KB per page
â We recommend scanners with Adaptive Thresholding technology to remove gray
scaling, otherwise the image size can go up to 300 KB per page
â Use this sizing information along with estimated invoice volume to determine the
amount of storage needed for IPM
27
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28. Integrated Imaging Solution for Invoice Entry
Image Routing â Implementation Considerations
⢠Payables provides a default image routing rule based on invoice amount to specific seeded
users that must be modified for your application users
⢠Configure image routing rules to achieve desired specialization within the Payables department
using Worklist application
â Routing can be based on supplier, PO prefix, invoice number prefix to ensure invoice entry
by right group of AP specialists
⢠Configure routing rules to assign invoice to a user group instead of individual specialists to
achieve optimal load balancing and to avoid task re-assignment
28
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29. Multiple Invoice Entry Methods
Manual Invoice Entry
Automated Invoicing
ďźInvoice Scanning and Imaging
ďźERS (Self-Billing) Invoices
ďźRobust Workbench with
Sophisticated Matching
ďźReturn to Supplier (RTS)
ďźSpreadsheet Invoice Entry
ďźOpen Interface
Self-Service Invoice Entry
ďźSupplier Portal
Payables Invoicing
ď§ Foreign Currency Conversion
ď§ PO/Receipt Matching
ď§ Prepayment Application
ď§ Automatic Tax Calculation
(Sales, Use, VAT, and
Withholding Taxes)
ď§ Invoice Validation
ď§ Invoice Approval
ďźExpense Reports
ďźCustomer Refunds
ďźIntercompany Invoices
Electronic Invoices
ďźWeb Service
ďźB2B Invoice
ď§ Online or Batch Accounting
ď§ Multiple Accounting
Representations
29
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30. Multiple Invoice Entry Methods
Considerations
Type
Implementation Consideration
Supplier Portal Invoice Entry
⢠Have suppliers enter their own invoices and inquire on PO agreements,
invoices and payment s to reduce paper and transaction processing costs
Automate invoice creation for payment of goods upon receipt in Logistics
Evaluated Receipt Settlement
Spreadsheet Invoice Entry
Open Interface
30
⢠Best suited for inventory purchases as ERS can work if there is a PO
⢠POs should include all costs to produce and ship the product, including
freight charges and miscellaneous charges
⢠POs must have firm pricing that should not be affected by unexpected
charges
⢠For invoices having similar lines to utilize spreadsheet features like copy/
paste, drag/drop, hide/unhide cells etc.
⢠Not ideal for payables specialist performing high volume invoice entry in a
shared service center
⢠For importing invoices into Payables from other sources
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31. Invoice Approval
Implementation Considerations and Recommendations
Standard Invoices
â˘
â˘
â˘
â˘
Allow few selected users to force approve on exception basis
Define different approval rules for PO matched and unmatched invoices
Setup position, job and supervisory hierarchy depending on approval needs
Consider implementing approval before validation to reduce days payable
outstanding (DPO) or alternatively require validation before approval to ensure
data accuracy
⢠Consider auto-approving specific invoices that need little review
E.g. If your utility bill invoices are always under $500, consider setting up an
auto- approval
⢠Supplier Portal Unmatched Invoices
⢠Require approval for non-PO matched invoices entered by suppliers
⢠Payment Requests
⢠For expense report and customer refund payment requests, you need not
configure approval rules as upstream transactions are pre-approved
31
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32. Invoice Approval
Rule Configuration
Invoice Approval Rules
⢠Defined in Worklist application
⢠Data driven conditions having effective
dates and priorities
⢠Can be activated or de-activated
Example Rule
⢠Invoice type âStandardâ
â For amount greater than 2000,
require approval by Manager
â For amount less than 2000, require
approval by Supervisor
⢠Invoice type âPayment Requestâ
â Auto-approval
⢠Others
â Supervisory one level approval
32
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33. Match Approval Levels
⢠Enforce internal control and fiscal discipline to ensure that payment is made
only for goods and services ordered or received
Invoice
PO
2-Way
PO
Receipt
PO
Receipt
Invoice
3-Way
4-Way
33
Inspection
Invoice
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34. Match Approval Levels
Implementation Considerations
34
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35. Tolerances and Holds
Implementation Considerations
Supplier Sites
Invoice
PO
Atlanta
⢠Prevent payment for invoices
violating policies by defining
tolerances
⢠Define tolerances centrally and
apply them to multiple supplier sites
⢠Define percentage or amount based
matching tolerances for goods and
services
Receipt
Paris
35
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36. Invoice Processing
Implementation Considerations and Recommendations
Implementation Considerations
Setup Tasks/
Implementation Step
Setup default accounts to speed
transaction entry and implement internal
control
⢠Common Options for Payables and Procurement
⢠Supplier Configuration
⢠Distribution sets
Implement early pay discounts with
multiple discount dates to avoid missing
discount period
⢠Payables Invoicing Options
⢠Payment Terms
Apply available prepayments during
invoice entry
⢠Payables Invoicing Options - Show available
prepayments during invoice entry
Schedule invoice validation and create
accounting to process daily
⢠Schedule Create Accounting process to run daily
36
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37. Oracle Fusion Tax
Centralized Tax Engine
Tax Setup
⢠Quickly set up tax with pre-seeded content
⢠Adapt to changing tax rules with dateeffective tax content
⢠Simulate tax changes with Tax Simulator
Tax
ďź Sales and Use Tax
ďź Recoverable & Non-Recoverable Tax
ďź Deferred Tax
Tax Calculation
â˘Automatically and accurately calculate tax
â˘Allow certain individuals to override tax
calculation
ďź Tax on Freight
ďź Duty Tax
ďź Tax on Intercompany Movements
ďź Inclusive or Exclusive Tax
Tax Reporting
â˘Standardized and simplified reporting using
BI Publisher
ďź Offset Taxes
â˘Modify/extend reporting templates
Refer to Oracle Fusion Tax Implementation and Configuration
Considerations training for more details.
37
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38. Subledger Accounting (SLA)
Multiple Accounting Representations
Single invoice can create multiple accounting
representations in multiple currencies
Payables
Invoice
Centralized
Centralized
Accounting
Accounting
Dr
Reporting
Currency
Cr
SSC France
(Secondary Ledger)
Refer to Oracle Fusion Subledger Accounting
Implementation and Configuration
Considerations training for more details.
38
French Fiscal
Plan Compatible
Std Calendar
EUR
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40. Payment Processing Options
Implementation Considerations and Recommendations
⢠Use Single Payment for off-cycle payments such as during period close and
supplier inquiries on due payments
⢠Optimize check run frequency based on organizationâs size to aid in availing
early pay discounts and to avoid off-cycle single payments
⢠Schedule Cash Requirements Report to run before Payment Process
Request to forecast cash needs
⢠For employee expense reimbursement based on expense policy consider
Payment Process with straight through processing.
â Results in prompt payment for invoices based on policy and strict payment terms
Refer to Oracle Fusion Payments Implementation and Configuration
Considerations training for more details.
40
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41. Analyze Account Payables Balances
Payables to General Ledger Reconciliation Report
⢠Streamline your reconciliation process by comparing Payables transaction
activity, Subledger Accounting and General Ledger data.
â
â
â
â
â
Identify reconciliation exceptions automatically
Identify beginning and ending balances that matches Payables Trial Balance
Drilldown to journal and transaction reports for detailed analysis
Download and analyze report output in a spreadsheet
Reconcile by ledger, specific business unit or account balancing segment
⢠The reconciliation report is available to both for General Ledger and
Payables users
41
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42. Payables to General Ledger Reconciliation
Implementation Considerations
⢠Set Payables Profile Option for data purge frequency
â Purge old extract files based on days set in profile when new extract is run
â Set interval so that it does not interfere with the reconciling timeline
â All extract requests that do not fall within this interval are saved and can be
selected from the Recon Report OBIEE
⢠Assign financial category of Accounts Payables to all liability natural
account values
â Financial Category must be assigned, or the extract will error and not select
any data
42
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43. Payables to General Ledger Reconciliation
Best Practices
⢠Run the Payables to General Ledger Reconciliation report after
the Payables period is set to Closed because drilldown data is
real-time and summary data is static
⢠Make sure the next period is open for entry of new activity
⢠General Ledger sources other than Payables should not be
allowed to post to Payables accounts
43
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44. Additional Resources
Implementation Trainings
â˘
â˘
â˘
â˘
Oracle Fusion Payments Implementation and Configuration Considerations
Oracle Fusion Subledger Accounting Implementation and Configuration Considerations
Oracle Fusion Tax Implementation and Configuration Considerations
Oracle Fusion Common Procurement Implementation and Configuration Considerations
Functional TOIs
⢠Fusion 1.0 TOI: Set Up Procurement â Define Payables
⢠Fusion 1.0 TOI: Set Up Procurement â Define Disbursements
44
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45. 45
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Editor's Notes
Hello, I am .. From Payables Product Management, and in next hour I will be discussing Payables Implementation and Configuration considerations.
In this presentation, we will go through the Payables implementation concepts, considerations and best practices.
We will cover
Procure-to-Pay Overview and its prerequisite setups
Key Implementation Considerations around
Function and Data Security
Business Units and Shared Service Centers
In the Invoicing area we will go through
Integrated Imaging Solution
Multiple Invoice Entry Methods
Match Options and Match Approval Levels
Tolerances and Holds
Invoice Approval
Tax Engine and Multiple Accounting Representations using the SLA
Payment Processing Options
Payables to Ledger Reconciliation Report
Lets go over Procure-to-Pay flow at a high level:
Starting with Requisition where you identify the requirement and then authorize the purchase request.
To purchase goods/services, you negotiate and identify the vendor, request and receive the quotation and finally create and approve the purchase orders.
In logistics module, you receive the shipment notice, receive and inspect the goods and ensure that the received quantity is within the tolerance when compared to PO.
In Payables, you record the supplier invoices matching them to PO or receipt, approving and finally issuing the payment.
Payables Detailed Business Processes (or L2) and Activities (L3)
Payables detailed business processes fall under Procurement business
process or L1.
Under Setup procurement detailed business process, the L3 activity for
Payables is Define Payables.
Similarly Manage Invoices detailed business process comprises of Receive
and Process Invoices, Submit invoices, Approve Invoices, Audit Invoices
and Record Accounting for Invoices.
Manage Payments contains Prepare and Record payments and Record accounting
for payments
Manage Accounts Payable Balances has Analyze Accounts Payables Balances,
Manage Accounts payable Disputes, and Close Payables period activities
This slide depicts some of the products whose setup is required for Payables functionality
Starting with Global Human Resources for employees and HR locations, General Ledger for Ledger, currency, calendar etc.
Subledger accounting to define accounting rules and events, Tax for Payables tax configuration, Projects, Product Item Management for item configuration, Logistics for Receiving Parameters, supplier model for supplier configuration, Purchasing options and others setups in Purchasing.
Prerequisite Setups for Payables Setup tasks
As with all Fusion applications, Payables uses the Functional Setup Manager (FSM) tool to plan, implement and maintain the functionality. Please refer to the TOI on FSM for more details on FSM tool.
Payables can be configured as part of Financials or Procurement implementation projects that are available out-of-the-box.
Some of the setup task-lists and tasks preceding the Payables configuration are depicted in this slide.
Starting with the common application configuration for Financials where users, implementation users, Enterprise structures, ledgers, business units, facilities etc. are setup.
Followed by common financials configuration for setting up transaction taxes.
For Invoicing and Payment configuration, suppliers are setup first followed by Payables, Disbursement, Payment connectivity and security, SLA and Cash Management setup.
Lets review Payables setup task-lists under Financials implementation project.
This first screenshot on the left depicts the Financials implementation project with all its setup task lists.
The screenshot on the right expands on the Invoicing and Payment configuration displaying the task-lists under it.
Function and Data Security in Payables
In Fusion, function security is implemented using Job Roles, Duty Roles and Privileges and the data security using Data Roles
There are 3 predefined job roles to meet Payables job functions:
Accounts Payable Specialist, Accounts Payable Supervisor, and Accounts Payable Manager
Payables job roles are configured such that segregation of duties is maintained for performing supplier management, invoice creation, force approval and payment processing
For the new business units that are defined in the system, the data roles for those business units need to be generated using seeded data role template
The predefined job roles and the duties assigned to them can be customized using Oracle Identity Manager (OIM) and Access Provisioning Manager (APM)
Refer to Oracle Fusion Financials Security Implementation and Configuration Considerations for more details.
This slide lists the duties or duty roles that job roles associated with Payables inherit.
AP specialist has invoice creation and review duties while AP supervisor has invoice creation, processing, payment creation and processing duties.
AP Manager is primarily responsible for period close in addition to invoice and payment processing duties.
Lets discuss business units, business units in Procure-to-Pay flow and shared service centers in next couple of slides.
Business Units in Fusion
Business Unit is a unit of an enterprise that performs one or many business
functions, can process transactions on behalf of other legal entities. Business unit
producing a financial transaction must be assigned to a primary
ledger.
Refer to Oracle Fusion Financial Enterprise Structures Implementation and Configuration Considerations training for more details.
Lets discuss Shared Service Centers
Shared service centers are used to reduce cost and enforce company policies and procedures and can be modeled using business units in two ways:
Service Provider Model
BU Data Security
In Service Provider Model , you define relationships between business units for a specific business function, identifying one business unit in the relationship as a service provider and others as its clients
Shared service centers can also be implemented using business unit data security where shared service center personnel are given data access to process transactions for other business units.
This is referred to as Multi Org Access Control or MOAC in Oracle EBS
This slide depicts the 4 ways in which Procure-to-Pay can be implemented for various business units in the flow:
Decentralized: where individual business units perform business functions like requisitioning, sourcing, procurement and payables on their own
Shared Services: where individual requisitioning business units subscribe to one business unit for sourcing and procurement and payables business functions. If a business unit pays on behalf of a different requisitioning business unit, intercompany transactions are created for financial reconciliation.
Central Sourcing is where a business unit is a shared service center for sourcing while Requisitioning, Procurement, and Payables is done by individual BUs
Finally, in Separate Procurement and Invoicing Service Providers, Sourcing is a shared service center, and another BU is processing orders and paying on behalf of Requisitioning BU
Best Practices for Shared Service Centers
In Fusion-V1, the procurement business function can be centralized. This allows the procurement business unit to
negotiate supplier terms on behalf of all the client business units and allows the client business units to share the
supplier sites. The centralized procurement business unit can also process requisitions for multiple requisitioning
BUs.
To centralize the Payables business function into a single shared service center, suppliers can be asked to send
invoices directly to the central location as opposed to Buyers or other locations.
Procurement via Subsidiary
In order to meet legal requirements for trading, businesses are sometimes required to setup subsidiaries in some countries although their primary operations are located elsewhere. Setting up of subsidiaries and trading via those subsidiaries also often allow businesses to take advantage of available tax favorable regimes.
To facilitate buying via subsidiaries, the purchase orderâs Sold-to BU can be different from the Requisitioning BU. In this screenshot on a purchase order, Vision Services is buying goods via subsidiary Vision Germany.
In next couple of slides we will talk about the integrated imaging solution that provides a seamless âout-of-the-boxâ user experience, supporting the entire invoice lifecycle from scanning, recognition, routing, to invoice entry, approval, and payment.
Paper invoices are still prevalent in todayâs business world, prompting most organizations to implement some form of imaging capability for their Payables department, to help reduce receipt-to-payment cycle and meet audit requirements. This results in implementation of multiple point solutions.
Lets review some of the challenges in implementing third party solutions and compare them to Oracleâs imaging solution.
Given the a la carte selection process for current third party solutions, the end result is a disjoint, bolt-on solution footprint that is truly unique to each implementation and that operates in peripheral fashion and cannot leverage native ERP capabilities.
In contrast, Oracleâs imaging solution is fully integrated âout-of-the-boxâ that supports the entire lifecycle of invoice processing from scanning, recognition, image routing to invoice entry, approval and payment.
Third party solutions rely on multiple components from different vendors for scanning, data extraction, storage and workflow and hence require dedicated IT staff for each to set up, integrate and maintain, resulting in higher cost of ownership. Oracleâs integrated solution is installed and maintained by a common provisioning framework, with minimal configuration and setup needed.
Third party solutions have disparate platforms, certification and release cycles that increases the risk of incompatibility and maintenance overhead. In contrast for Oracleâs imaging solution, all components are certified and supported by Oracle.
Lets review the process flow for integrated imaging solution
Fusion Payables invoice imaging process begins with invoices arriving in the mail room. Imaging specialist(s) preps and sorts them based on parameters such as geography, invoice amount, and due date and scans the invoices using Oracle Document Capture (ODC).
 Images are then sent to a central Oracle Forms Recognition server over a network file share for intelligent data recognition and extraction. Any invoices that fail data extraction or validation are sent to Oracle Forms Recognition Verifier for manual resolution.
Upon successful data extraction, the invoice images are sent to IPM for storage and routing to accounts payable specialists using BPEL workflows.
 Accounts payable specialists can view the list of scanned images for invoice entry in the Scanned Invoices region of the Invoice workarea. After selecting the invoice image, they proceed with invoice entry using dual monitors where invoice entry UI is displayed on one monitor and the image is displayed on the other. The key invoice header attributes are already pre-populated with the data extracted by OFR thus reducing the invoice entry time and data entry errors.
Lets start reviewing the components for integrated imaging solution in detail over next couple of slides.
Oracle Document Capture or ODC plays the first crucial role in digitizing paper invoices to images to support the automation that is necessary for streamlining invoice processing.
ODC runs on desktop personal computers connected to scanners and converts paper invoices to industry-standard image formats. It supports most enterprise class scanners and the two leading high-volume document scanning interfaces: ISIS and Kofax Adrenaline/VirtualReScan.
It is designed for high volume, centralized image capture, where batches of invoices can be scanned at a time. The architecture supports implementation scenarios where companies can centrally scan all invoices by having suppliers send invoices to one location or they can scan documents in field offices using multiple ODC instances.
Now lets review some of the implementation considerations and recommendations for ODC.
For centralized scanning, request suppliers to send invoices to one central location or decentralize ODC at each invoice receipt location
For centralized scanning in one location, consider legal requirements which may require invoices to be processed and stored in the same country as receipt
You should install ODC on machine with at least dual CPU cores at 2 GHz and 4 GB RAM
When evaluating hardware scanning throughput, plan for 60% efficiency of maximum throughput, This is to also to account time for image quality review
Enable Adaptive Thresholding on scanners to remove background colors and gradients for pure black-and-white images
Use TIFF image format with CCIT Group IV compression at 300 dots per inch for optimal balance between scan quality and image size
We do not recommend JPEG format due to its lossy compression
We recommend less than 25 images in a batch to avoid delay caused by recognition exceptions
Also, to optimize high volume scanning we recommend you implement ODC commit server to schedule the export of images to OFR import directory every 15-20 min
Lets review Oracle Forms Recognition in detail.
OFR offers cutting-edge intelligent recognition capabilities for extracting the key invoice header data from scanned images. This extracted data is later pre-populated directly into invoice entry user-interface. Unlike other solutions that use supplier specific templates to extract information, OFR can intelligently locate data within the invoice regardless of its location on the image and whether or not it has processed invoices from that supplier before.
OFR has self-learning intelligence to improve scan accuracy for suppliers over time and provides flexibility to define specific rules for attributes such as format masks on invoice and PO number to further boost recognition results. Implementers can also configure validations for the extracted data against the Fusion Applications database. This results in highly accurate data recognition that dramatically decreases the need for human intervention to correct and resolve exceptions.
For Payables invoice processing, purchase order number, supplier, invoice number, invoice amount, and invoice date are extracted out-of-the-box.
Considerations for OFR
Oracle Forms Recognition Runtime Service runs in the background as a server process. Each RTS instance can be configured to perform specific steps within the overall process and multiple RTS instances can run on a single server. For scalability purposes, you can set up multiple servers each running multiple instances of the RTS that can be centrally managed by the OFR RTS Manager.
Each RTS instance can be configured to either run the Import/Export/Cleanup service or the Recognition/Classification/Extract service.
You must designate 1 RTS instance for Import/Export/Cleanup for every 2-4 instance of RTS that runs data recognition
Number of RTS instances running on a machine must not exceed the number of CPU cores available
RTS instance that is dedicated to data recognition can process up to 250 invoices per hour
Each additional instance can achieve near linear scalability depending on scan volume, document complexity and the number of attributes validated on the invoice image
Hardware Recommendation is to have
A quad CPU core server with minimum 8 GB RAM so more OFR RTS instances can be dedicated to the resource intensive recognition task
You can either use a single server with enough CPU cores or scale by setting up multiple OFR RTS servers or slave servers
Oracle Forms Recognition consists of the following components:
OFR Designer; OFR Runtime Service and OFR Verifier
We have already discussed OFR runtime service in the prior slide, so now lets focus on OFR Designer and OFR Verifier.
OFR Designer is a client tool that enables implementers to customize invoice data recognition process, such as information to be extracted and verification of the processing results. Such configurations are defined in what is called as âOFR projectâ and its initialization configuration files or INI. The OFR Designer is only used during implementation time and is not part of the daily processing.
OFR Verifier is the quality assurance application of the Oracle Forms Recognition suite. If RTS fails to extract and validate an invoice in a batch, the entire batch is marked as failed and will not be sent to IPM for routing.
Recognition failure can be due to one of the following:
Extracted values for one or more attributes failed validation against the Fusion Applications database. Payables imaging solution currently only validates the Supplier on the invoice; Failure could also be when OFR could not find a value with a sufficient confidence level for one or more attributes or Stamps or notes on the documents making sections illegible for OFR or Missing information on the scanned image
A payables specialist reviews incomplete batches using OFR Verifier and re-submits them after correcting the exceptions.
The Verifier, like ODC, is another client application providing multiple deployment options. Verifier can either be setup on each designated userâs workstation or users can access Verifier instances using remote desktop technologies.
Lets review Imaging and Process Management (IPM) in detail.
IPM is an application running on the Enterprise Content Management (ECM) where invoice images are stored and then routed to payables specialists. For the rest of the invoice lifecycle, any reference to the invoice image will point to this repository so documents are never replicated.
Images sent by OFR will be imported by the IPM Input Agent using a scheduled process. IPM and its content repository give you the flexibility to attach configurable storage and security policies to content. For example, for invoices you can set metadata to determine how long the documents will be stored, on what storage device, and who will be able to access and view them. The ability to move images over storage devices as needed maximizes the use of your infrastructure.
After images are stored, IPM creates a BPEL task for each invoice which then routes the images to appropriate payables specialist(s) for data entry. IPM also provides an image viewer embedded within Fusion Payables application allowing payables specialists to review and annotate on the images.
Implementation Consideration for IPM
The IPM image repository is installed and preconfigured by the common provisioning framework and there is no post-install manual configuration required. Prior to running the provisioning process, the IPM Input Directory (which is the same as the OFR Export folder) file system needs to be set up since its location is required to provision IPM. It is recommended that the IPM image repository be co-located with the IPM Input Directory to minimize network traffic when transferring images.
The average size of a black-and-white invoice image saved in TIFF format with CCIT Group IV compression at 300 DPI is 40 KB per page. It is critical that invoices are digitized using the Adaptive Thresholding technology to remove gray scaling, otherwise the image size can go up to 300 KB per page. Implementers can use this sizing information together with the estimated invoice volume to determine the amount of storage needed for IPM.
Image Routing Considerations for Invoice Entry
A default image routing rule based on the invoice amount assigned to individual users will be seeded as part of the provisioning process.
Implementers will need to modify this routing rule using the Worklist application to achieve the desired specialization within the Payables department. For example, routing can be based on supplier, PO prefix, invoice number prefix to ensure the right group of payables specialists will process invoices based on their specific assignments. Moreover, to achieve optimal load balancing among specialists and to avoid task re-assignment, rules should be set up to assign invoice to a user group instead of individual specialist in the system.
Oracle Fusion Payables supports a variety of invoicing methods to meet the needs of your organization.
For manual invoicing, Payables is pre-integrated with ODC, OFR, and IPM to support scanning of invoices for paper-less processing and routing.
The robust invoice workbench allows you to enter complex invoices with sophisticated defaulting and matching logic to match to POs or receipts. It also
provides a holistic view of the invoice throughout its lifecycle. You can view the invoice status, installments, holds placed, payments made, prepayments
that have been applied, etc. You can also drill down to the original PO or receipt. For high volume invoice entry that does NOT require extensive online validation, we have a spreadsheet invoice entry.
The invoice open interface can be populated to import the invoices into Payables in bulk.
Supplier Portal âAllows suppliers to enter their own invoices in a self-service manner. Any unmatched invoices are then routed through approval rules for approval.
For Automated Invoicing: To alleviate the workload of your Payables staff, there are many ways in which invoices are created automatically.
Oracle supports the Evaluated Receipt Settlement (ERS) process to help you get early payment discounts youâve negotiated by automatically creating an invoice in Oracle Payables upon receipt of goods
Using the Return to Supplier (RTS) feature, the system automatically creates debit memos directly in your Payables system when you return goods to your supplier.
Payables will automatically create invoices from expense reports entered by employees in Oracle Fusion Expenses to facilitate payment.
For Electronic Invoicing:
Payables supports a web service and B2B invoice in XML format for creating invoices electronically.
Regardless of the invoicing method you use, Payables supports foreign currency conversion, automatic tax calculation, invoice approval, online accounting, multi-period accounting, and multiple accounting representations.
Lets review considerations for various invoice entry methods
Using Supplier Portal, have suppliers enter their own invoices and inquire on PO agreements, invoices and payment s to reduce paper and transaction processing costs
Using Evaluated Receipt Settlement or pay on receipt, automate invoice creation upon receipt in Logistics
ERS is best suited for inventory purchases as ERS can work if there is a PO; Also POs should include all costs to produce and ship the product, including freight charges and miscellaneous charges. POs also must have firm pricing that should not be affected by unexpected charges
Consider Invoice spreadsheet for invoices having similar lines to utilize spreadsheet features like copy/paste, drag/drop, hide/unhide cells etc.
Spreadsheet is not ideal for payables specialist performing high volume invoice entry in a shared service center.
Use Payables open interface for importing invoices into Payables from other sources
Lets review invoice approval considerations
Invoice Approval uses Oracle Approvals Management to determine who approves invoices and how they will be routed to different approvers. You can have different approval rules for PO matched invoices and Unmatched. Invoice approval is required for self service invoices that are not matched to a purchase order.
Approvers can approve or reject the invoice.
If an approver approves the invoice, then the invoice goes to the next person in the approver list until all required people approve the invoice.
If an approver rejects the invoice, then the approval process ends.
If an approver rejects an invoice, then you can:
Use the Force Approval option to manually approve the invoice. Allow few selected users to force approve on exception basis
Use the Initiate Approval option to resubmit the invoice to the Invoice Approval after correcting any issue that caused the approver to reject the invoice
Approval Rules can be setup for position, job and supervisory hierarchy depending on approval needs. Consider implementing approval before validation to reduce days payable outstanding (DPO) or alternatively require validation before approval to ensure data accuracy
Consider auto-approving specific invoices that need little review
E.g. If your utility bill invoices are always under $500, consider setting up an auto- approval. For expense report and customer refund payment requests, you need not configure approval rules as they are upstream transactions that are already pre-approved
Invoice Approval Rules Configuration
Invoice Approval Rules are defined in Worklist application
Approval Rules are based on Data driven conditions having effective dates and priorities and they can be activated or de-activated
An example rule could be where for invoice type standard, and for amount greater than 2000, approval is needed by Manager, and for amounts less than 2000, approval is needed by Supervisor.
For invoice type of payment request, the invoice is auto-approved and for other conditions the one level supervisor approval is needed
Match Approval Levels
To enforce company policies and ensure that you only pay for goods or services you receive and that suppliers do not over-bill you, Oracle Payables with Purchasing supports 2, 3, and 4 way matching for both goods and services
2 way matching can also support the automatic generation of invoices in AP when goods or services are received.
The 2-Way matching checks that Invoice Quantity does not exceed PO Quantity and Invoice Price does not exceed PO Price
3-way matching: checks the same plus Invoice Quantity does not exceed Received Quantity
4 way matching checks above plus Invoice Quantity does not exceed Accepted Quantity
Here are some of the considerations for 2, 3, and 4 way approval.
Consider 2-way for purchases where receipt is not applicable and for non-inventory purchases or service industries
E.g. Insurance, Financial Services
3-way is the recommended and most widely practised and is used for physical goods, inventory or non-inventory services with units E.g. Consulting labour hours
4-way can be considered for inventory items that require inspection
E.g. Manufacturing, Wholesale and Retail Industries
Unmatched invoices can be used for legal services or utility bills and payment requests for employee expense reports and customer refunds generated in receivables
Tolerances and Holds
You can define the matching tolerances to allow for variances between Invoices, POs and Receipts. Tolerances can be both percentage-based and amount-based. Multiple tolerance templates for goods or services can be defined and then assigned to the appropriate supplier sites. This allows you to manage your tolerances centrally yet assign your policies at the trading partner location.
If your invoice amount and/or quantity exceeds the tolerance levels you defined, then Payables will automatically apply holds to the invoice and prevent payment until the hold is released.
Lets review some other considerations for Invoice processing:
Setup default accounts to speed transaction entry and implement internal control in Common Options for Payables and Procurement, Supplier and Site configuration and Distribution sets
Implement early pay discounts with multiple discount dates to avoid missing discount period using Invoice Options and payment Terms
Apply available prepayments during invoice entry by enabling Show available prepayments during invoice entry in Payables Invoicing Options -
Schedule invoice validation and create accounting to process daily
Fusion Tax:
Payables relies on Fusion Tax for tax configuration and calculation.
Oracle Fusion Tax consists of a tax knowledge base, a variety of tax services that respond to specific tax events, a set of repositories (for tax content and tax recording) that allows customers to manage their local tax compliance needs in a proactive manner.
Oracle Fusion Tax supports all types of taxes, such as sales and use taxes that are recoverable or non-recoverable. It supports deferred tax and tax on freight. It supports the creation of Quantity Based tax rates for duty taxes.
Users can specify whether a tax is inclusive in the amount of the good/service or not when defining taxes in the system.
It also supports offset taxes, which is a negative-rate tax used to fully or partially reduce another tax.
You can control whether or not to allow overrides of calculated tax amounts during transaction entry. You can set controls to allow overrides at multiple levels, such as at the transaction type, user, and tax level. For example, you may allow overrides to GST but not for VAT.
Reporting on Tax
Calculated taxes are then stored in the form of tax lines in the tax repository. These tax lines have all necessary information needed for tax reporting.
Refer to Oracle Fusion Tax Implementation and Configuration Considerations training for more details.
Payables uses SLA to define the accounting events and rules and generate accounting.
A single invoice in AP can create multiple accounting representations in multiple currencies.
In this example, the Primary Ledger represents the corporate representation for a French subsidiary. It uses the parentâs US GAAP accounting method and corporate chart of accounts. It uses the local currency, euros.
The Secondary Ledger represents the French statutory representation that uses the French interpretation of IFRS and the French statutory chart of accounts that is also in euros.
For consolidation to the U.S. parent, we have a USD Reporting Currency assigned to the primary ledger.
Refer to Oracle Fusion Subledger Accounting Implementation and Configuration Considerations training for more details.
Lets review considerations for payment processing
In the payment processing area
We recommend you use Single Payment for off-cycle payments such as during period close and supplier inquiries on due payments
Optimize the payment process request frequency based on organizationâs size to aid in availing early pay discounts and to avoid off-cycle single payments
Schedule Cash Requirements Report to run before Payment Process Request to accurately forecast cash needs
For employee expense reimbursement based on expense policy consider Payment Process with straight through processing as it results in prompt payment for expense related invoices that are based on policy and strict payment terms
Refer to Oracle Fusion Payments Implementation and Configuration Considerations training for more details.
Lets review Payables to General Ledger Reconciliation Report
Close your books faster by automating the labor-intensive process of matching subledger transactions to accounting entries and identifying the discrepancies. Depending on how work is assigned in your organization, the Accounts Payable Manager or the general accounting manager both can access the reconciliation report.
Payables to General Ledger Reconciliation report allows you to:
Identify reconciliation exceptions automatically
Identify beginning and ending balances that matches Payables Trial Balance
Drilldown to journal and transaction reports for detailed analysis
Download and analyze report output in a spreadsheet
Reconcile by ledger, specific business unit or account balancing segment
Implementation considerations for Payables General Ledger Reconciliation Report
Consider data purge frequency for the reconciliation extract data by setting up profile option AP: Reconciliation data purge frequency . This option indicates the number of days for which reconciliation extraction data is kept in the tables.Â
Financial Category of value Payables must be included in Chart of Account setup or the report will not select any data. If you try to choose GL account values in the extract parameters that do not have this category assigned, the extract program will error, indicating the financial category is not assigned.
Some of the best practices around reconciliation report are:
Payables Period should be set to Close because the detail reports are real-time. In order for the detail to match the Summary data on the Reconciliation report, you must make sure to limit access to that accounting period.
Be sure the subsequent period is already open so business operations continue during the reconciliation process.
Reopen the reconciling period to make adjusting entries, but restrict access at that time to control final accounting.
For quicker, cleaner reconciliation, general ledger sources other than Payables should not be allowed to post to the Payables accounts.
Let me point to some other resources that would be useful:
Some useful Implementation Trainings are:
Oracle Fusion Payments Implementation and Configuration Considerations
Oracle Fusion Subledger Accounting Implementation and Configuration Considerations
Oracle Fusion Tax Implementation and Configuration Considerations
Oracle Fusion Common Procurement Implementation and Configuration Considerations
Also refer to following Functional TOIs
Fusion 1.0 TOI: Set Up Procurement â Define Payables
Fusion 1.0 TOI: Set Up Procurement â Define Disbursements
This concludes this session on Payables Implementation and Configuration Considerations.
Thank you.