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<Insert Ricture Here> Release 12 AP / AR Netting : Overview Product Manager

Release 12 AP / AR Netting : Overview

Product Manager

Agenda • Concept • 11i equivalent • Features • Benefits • Pre requisites & Set

Agenda

Concept

11i equivalent

Features

Benefits

Pre requisites & Set Up

Process flow

Netting as a Concept <Insert Ricture Here>

Netting as a Concept

Netting as a Concept <Insert Ricture Here>

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Netting Concept • Trading Partners • Parties with whom the organization transacts • Suppliers as

Netting Concept

Trading Partners

Parties with whom the organization transacts

Suppliers as well as Customers

If a trading partner is both Supplier and Customer

Receivable from and payable to same trading partners

Ideally only balance is settled

For Example :-

ERP Ltd. buys laptops from Laptops Ltd for $ 10,000 Laptops Ltd. procures software from ERP Ltd. for $ 8,000

ERP Ltd. would pay only the balance $2,000

Netting of receivable and payable a necessity

Customers need a mechanism to automate this netting process

11i Equivalent <Insert Ricture Here>

11i Equivalent

11i Equivalent <Insert Ricture Here>

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11i Contra Charging Set up & Process flow SETUP Create Customer Create Supplier Create transaction

11i Contra Charging

Set up & Process flow

SETUP

SETUP Create Customer Create Supplier Create transaction source Create payables Look up codes Setup Auto Accounting
Create Customer Create Supplier Create transaction source Create payables Look up codes Setup Auto Accounting
Create Customer
Create Supplier
Create transaction source
Create payables
Look up codes
Setup Auto Accounting
Rules
Document Sequence
Assign
Document Category
Create transaction type
Sequence Assign Document Category Create transaction type Automated Process PROCESS Create Payable Invoices

Automated Process

PROCESS

PROCESS Create Payable Invoices Create Receivable Invoices Submit Contra Charging request Credit memos Created in AP
Create Payable Invoices Create Receivable Invoices Submit Contra Charging request Credit memos Created in AP
Create Payable Invoices
Create Receivable
Invoices
Submit Contra
Charging request
Credit memos
Created in AP & AR
11i limitations to Salient Features in R12 <Insert Ricture Here>

11i limitations to Salient Features in R12

11i limitations to Salient Features in R12 <Insert Ricture Here>

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11i Limitation – R 12 Feature 1) Trading Partner Approval 11i Limitation 11i Limitation •

11i Limitation – R 12 Feature

1) Trading Partner Approval

11i Limitation

11i Limitation

No facility for taking Trading partner approval for netting

No facility for taking Trading partner approval for netting Release 12 feature • Report of all

Release 12 feature

Report of all transactions proposed to be netted can be sent to trading partner

He can review & reconcile transactions with his ERP

He can approve or reject the netting

“Approval required” flag to be checked during set up

11i Limitation – R 12 Feature 2) Netting with Group of Companies 11i Limitation •

11i Limitation – R 12 Feature

2) Netting with Group of Companies

11i Limitation

Restricted to one trading partner

11i Limitation • Restricted to one trading partner Release 12 feature • Netting can be done

Release 12 feature

Netting can be done with multiple trading partners

Prioritize parties for netting

Mainly useful if trading partners are related or under a single parent company

11i Limitation – R 12 Feature 2) Netting with Group of Companies example Customer X

11i Limitation – R 12 Feature

2) Netting with Group of Companies example

Customer X Customer X Parent Company A Parent Company A Subsidiary B Subsidiary B Subsidiary
Customer X
Customer X
Parent Company A
Parent Company A
Subsidiary B
Subsidiary B
Subsidiary C
Subsidiary C
Subsidiary D
Subsidiary E
Subsidiary E
Purchase
Purchase
Sale
Sale

Payable

Subsidiary B

Subsidiary C

E Subsidiary E Purchase Purchase Sale Sale Payable Subsidiary B Subsidiary C Receivable Subsidiary D Subsidiary
E Subsidiary E Purchase Purchase Sale Sale Payable Subsidiary B Subsidiary C Receivable Subsidiary D Subsidiary

Receivable

Subsidiary D

Subsidiary E

11i Limitation – R 12 Feature 3) Choosing the Netting Basis 11i Limitation • No

11i Limitation – R 12 Feature

3) Choosing the Netting Basis

11i Limitation

No flexibility of choosing the netting basis

• No flexibility of choosing the netting basis Release 12 feature • Provides flexibility to select

Release 12 feature

Provides flexibility to select the netting basis

On the basis of date :-

Oldest to most recent

Most Recent to oldest

On the basis of amount :-

Amount ascending

Amount descending

11i Limitation – R 12 Feature 4) Reporting 11i Limitation • No feature for viewing

11i Limitation – R 12 Feature

4) Reporting

11i Limitation

No feature for viewing reports

11i Limitation • No feature for viewing reports Release 12 feature • Following 2 reports are

Release 12 feature

Following 2 reports are available

Proposed Netting Report

Snapshot of all transactions proposed to be netted

Sent to the trading partner

Final Netting Report

Details of all netted transactions

Documentary evidence for Compliance & Audit Trail

11i Limitation – R 12 Feature 5) Multi Currency Netting 11i Limitation • No feature

11i Limitation – R 12 Feature

5) Multi Currency Netting

11i Limitation

No feature to net transactions accounted in multiple currencies

feature to net transactions accounted in multiple currencies Release 12 feature • For netting transactions

Release 12 feature

For netting transactions accounted in different currencies then user has three options :-

Net Within Currency

Use Single Currency

Convert to Accounting Currency

Netting Benefits <Insert Ricture Here>

Netting Benefits

Netting Benefits <Insert Ricture Here>

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AP/AR Netting Benefits • Creation of automatic Payments in AP and Receipts in AR resulting

AP/AR Netting Benefits

Creation of automatic Payments in AP and Receipts in AR resulting in

Enhanced operational efficiency

Reduction in manual data entry & associated errors

Reduction in admin cost

Ease of Setup and reusability

Better idea of cash flows resulting in

Better financial planning & budgeting

Reduction in interest on debt obligations

Reduction in bank charges

Audit Trail

Pre Requisites <Insert Ricture Here>

Pre Requisites

Pre Requisites <Insert Ricture Here>

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Pre Requisites …… (1) • Create a bank account for netting where • Netting Account

Pre Requisites ……

(1)

Create a bank account for netting where

Netting Account flag checked as yes

Assign a GL account

Multiple Currency Receipts & payments checked as Y

Netting Account
Netting Account
Pre Requisites …… • In Receivables module (2) • Specify the bank account as default

Pre Requisites ……

In Receivables module

(2)

Specify the bank account as default netting bank account for a operating unit in receipt class

In system options check the “Allow payment of unrelated transactions”

for a operating unit in receipt class • In system options check the “Allow payment of
Netting set up and process flow <Insert Ricture Here>

Netting set up and process flow

Netting set up and process flow <Insert Ricture Here>

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Initiating the netting process On navigating to Netting functionality in AP/AR we see the following

Initiating the netting process

On navigating to Netting functionality in AP/AR we see the following 2 tabs :-

1)

Netting Agreement :- Parameters/Rules on which netting is based.

2)

Netting Batch :-

Associate Netting agreement

List of eligible transactions

User able to review and edit the transactions selected for netting

Example :- Laptops Ltd. AP Transactions Amt Inv Date AP01 AP02 AP03 5500 2000 2500

Example :-

Laptops Ltd.

AP Transactions

Amt

Inv

Date

AP01

AP02

AP03

5500

2000

2500

10,000

05-Jul-07

15-Jul-07

25-Jul-07

Netting Agreement

10,000 05-Jul-07 15-Jul-07 25-Jul-07 Netting Agreement Best Laptops Ltd AR Transactions Amt Inv Date AR01

Best Laptops Ltd AR Transactions

Amt

Inv

Date

AR01

AR02

AR03

4000

3000

1000

8,000

04-Jul-07

20-Jul-07

28-Jul-07

3000 1000 8,000 04-Jul-07 20-Jul-07 28-Jul-07 Netting Batch Compare AR and AR Balances AR Balance =
3000 1000 8,000 04-Jul-07 20-Jul-07 28-Jul-07 Netting Batch Compare AR and AR Balances AR Balance =

Netting Batch

8,000 04-Jul-07 20-Jul-07 28-Jul-07 Netting Batch Compare AR and AR Balances AR Balance = 10000, AR

Compare AR and AR Balances

AR Balance = 10000, AR Balance = 8000

So the Netting Amount = 8000

= 10000, AR Balance = 8000 So the Netting Amount = 8000 Transactions Selected For Netting

Transactions Selected For Netting

AP Transactions

Inv

Amount

Due Date

AP01

5500

05-Jul-07

AP02

2000

15-Jul-07

AP03

500

25-Jul-07

AR Transactions

Inv

Amount

Due Date

AR01

4000

05-Jul-07

AR02

3000

15-Jul-07

AR03

1000

25-Jul-07

Creating Netting Agreement

Creating Netting Agreement

Creating Netting Agreement
Creating Netting Agreement …… Step 1

Creating Netting Agreement ……

Step 1

Creating Netting Agreement …… Step 1
Creating Netting Agreement …… Step 2

Creating Netting Agreement ……

Step 2

Creating Netting Agreement …… Step 2
Creating Netting Agreement …… Step 3

Creating Netting Agreement ……

Step 3

Creating Netting Agreement …… Step 3
Creating Netting Agreement …… Step 3
Netting Batch

Netting Batch

Netting Batch
Creating a Netting Batch

Creating a Netting Batch

Creating a Netting Batch
Netting Batch Receivables transaction review

Netting Batch

Receivables transaction review

Netting Batch Receivables transaction review
Netting Batch Payables transaction review

Netting Batch

Payables transaction review

Netting Batch Payables transaction review
Proposed Netting Report

Proposed Netting Report

Proposed Netting Report
Proposed Netting Report
Proposed Netting Report
Netting Batch Payables transaction review

Netting Batch

Payables transaction review

Netting Batch Payables transaction review
Netting Batch: Reverse

Netting Batch: Reverse

Netting Batch: Reverse
Final Netting Report

Final Netting Report

Final Netting Report
Final Netting Report
Final Netting Report
Status Message description Status   Message Description Running Netting batch is submitted for

Status Message description

Status

 

Message

Description

Running

Netting batch is submitted for execution

Selected

Netting batch is saved but yet to submit for execution

Submitted

Batch is submitted for trading partner approval

Suspended

Trading partner does not approve the Netting Batch by the Required Response Date

Rejected

Trading Partner Rejects the batch

Approved

Trading partner approves batch requiring approval

Complete

The Netting has been completed and all transactions are cleared.

Error

System encountered error while validating / selecting transaction.

Reverse

Netted batch is reversed

Payment details in Payables

Payment details in Payables

Payment details in Payables
Receipt details in Receivables

Receipt details in Receivables

Receipt details in Receivables
R12 Netting Setup and process Summary of Setup & Process flow SETUP Create Netting Bank

R12 Netting Setup and process

Summary of Setup & Process flow

SETUP

SETUP Create Netting Bank Account Receivables System Options Create Customer Create Supplier Create Netting Agreement
Create Netting Bank Account Receivables System Options Create Customer Create Supplier Create Netting Agreement
Create Netting
Bank Account
Receivables
System Options
Create Customer
Create Supplier
Create Netting Agreement
Create Customer Create Supplier Create Netting Agreement Automated Process PROCESS Create Payable Invoices Need

Automated Process

PROCESS

PROCESS Create Payable Invoices Need Changes to the Transactions? Yes No Create Receivable Invoices Remove, Add,
Create Payable Invoices Need Changes to the Transactions? Yes No Create Receivable Invoices Remove, Add,
Create Payable Invoices
Need
Changes to the
Transactions?
Yes
No
Create Receivable
Invoices
Remove, Add, Prioritize
Transactions for Netting
Submit Netting Batch
Create Netting Batch
Listing of eligible
transactions
for netting
AR: Receipts created
& applied to
Selected Invoices
AP: Payments created &
applied to the
selected Invoices
AR: Receipts created & applied to Selected Invoices AP: Payments created & applied to the selected
Additional Resources For Customers and Partners • R 12 AP User Guide • For More

Additional Resources For Customers and Partners

R 12 AP User Guide

For More Information about our products

http://www.oracle.com/products/

Oracle Product Documentation:

http://www.oracle.com/technology/documentation/applications.html

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