ORACLE E-BUSINES SUITE

WHITE PAPER

ORDER TO CASH CYCLE

Prepared by: SRINVASARAO GURRAM

Company: ENRICH IT SOLUTIONS

Date: 21-APR-2012.

Product: R12.1.2
Scope of the Document:
This document explains the data flow and functional flow of Order to Cash cycle
including the required setups and effected tables in Order Management, Inventory,
Receivables and General Ledger.
O2C Functionality & Data process Flow:
Order Management deals with Booking the sales order, Picking the material from
sub inventories, shipping the orders and invoicing to customers.

Before starting the process of Order to Cash cycle, ensure that the pre required
setups placed below have been configured.

1. Business Group
2. Legal entity
3. Ledger
4. Operating Unit
5. Inventory Organization.

Since the O2C process is integrated with Inventory, Order Management and
Receivables, there are some mandatory setups have to be configured in each
module respectively.

Setups need be defined from Receivables side,

1. System Options
2. Payment Term
3. Transaction Type
4. Auto accounting
5. Line Ordering Rules
6. Grouping Rules
7. Invoice Source
8. Remit To Address
9. Sales Persons
10.Line Transaction Flexfield

Setups need be configured from Inventory side,

1. Inventory Calendar
2. Calendar assignment
 3. Sub inventories
4. Item creation
5. Sales Order Flexfiled

Setups need be configured from Order Management side,

1. System Parameters‘ values

2. Pick slip grouping rules
3. Release sequence rules
4. Document Set
5. Ship confirm rules
6. Shipping parameters
7. Multi currency conversion
8. Price list
9. Transaction types
10.Document sequence
11.Document sequence assign
12.Defaulting rules
13.Profiles classes
14.Customers
15.Grants

Setups in Oracle Receivables:

1. System Options:
Define your accounting, miscellaneous, and invoices and customers system options

Navigation: Receivables—Setup—System—System Options.

Accounting Options Tab:

Trans and Customers Tab:
Miscellaneous Tab:

2. Payment Term:
Payment term is required to compute the due date of transaction. Once it is
defined, it has to be assigned to a respective Transaction type or Customer site. We
are going to create a proxima payment term as the due date will be fixed as 10th of
every month.

Navigation> Setup>Transaction > Payment Terms.

3. Transaction Type:
Define the transaction types to define the accounting for your transactions such as
Invoice, Debit Memo and Credit memo.

Provide all the required GL Accounts and choose the payment defined in above
setup.

Navigation: Setup>Transaction>Transaction Types.

4. Auto Accounting:
Define the Auto accounting to get default GL accounts for your manual or
imported transactions. However they can be changed during

Navigation: Setup>Transactions>Auto Accounting

For Receivable
Revenue A/C

Tax A/C

Make sure auto accounting is defined for all the types such as Receivables,
Revenue, Tax, Freight and Auto invoice clearing a/c, Unbilled Receivables,
Unearned Revenue.
5. Line Ordering rules:
Auto invoice uses the invoice line ordering rules to order the invoice lines when
grouping the lines into invoices, Credit Memos. Once the rules are defined, it then
has to be assigned to Grouping rules. This rule comes into picture when the sales
order has more than one line.

Use the SALES_ORDER_LINE attribute to order the lines on the invoice in the
same order as they appear in sales order lines.

Navigation: Setup> Transactions>Auto Invoice>Line Ordering Rules

6. Grouping Rules:
Define the grouping rules to group the sales order lines into invoices and debit
memo. Auto invoices will create an invoice based on the attributes specified in the
Grouping rules setup apart from the mandatory attributes Currency and Customer
which are already included in every grouping rule.

Navigation: Setup>Transaction> Auto invoice> Grouping Rules.

7. Invoice Source:
Invoice source is one of the mandatory setups of auto invoice. It denotes the
creation method of your invoice and debit memos by value setting in the Type filed
i.e. Imported or Manual. It must be defined to generate the transaction numbers
automatically for your transactions and identify the source to import the data from
AR interface. Once this setup is configured, this will appear in list values for
‗Source‘ parameter of Auto invoice import program and same has to be chosen
during submitting the program.

Navigation: Setup>Transactions>Source
Auto invoice options Tab:
Customer Information
Accounting Information:

8. Remit-To-Address
It is an address of the business where to send payments by customers for their
invoices as per the predefined agreements. This setup is required to create invoice
through auto invoice.

Navigation: Setup> Print> Remit –To- Address

9. Line Transaction Flex field
Line transaction flexfield must be defined for ‗Auto Invoice‘ regardless of the
invoice that is being created from Order Management or any other legacy systems
as the ‗Auto Invoice‘ relies heavily on line transaction flexfiled to validate and
process interface date. It is used to uniquely identify, grouping and ordering the
lines laying in the interface table to create invoice or debit memos. By default,
Oracle has defined line transaction flexfiled setup for all integration modules of
Receivables including OM. If the invoice is being created from legacy system, this
setup must be defined as per the business requirement.

For more information, refer the document 1068344.1 in Metalink.

Navigation: Setup>Financials> Flexfields>Descriptive>Segments.

10. Sales Persons.
Sales person are required to create a sales order and it has to be selected at sales
order header level.

Navigation: Setup> Transactions>Sales Persons

Receivables Tab.

Setups in Inventory:

1. Inventory Calendar
Navigation: Inventory Super user> Setup>Organization>Calendar
2. Calendar Assignment
Navigation: Inventory Superuser>Setup>Organization

Query your inventory organization and be assigned the calendar.

3. Sub inventories
Navigation: Inventory superuser>Setup>Organization>Sub Inventories.
4. Item definition:
Navigation: Inventory>Setup>Organization>Sub Inventory.

Inventory Tab.
Costing Tab

Purchasing Tab

Order Management Tab

Assign the Item to child organization.

5. Sales Order Flexfield

Navigation: Inventory>Setup>Financials>Flexfiled>Key>Segments
Segments:
Setups in Order Management:

1. System Parameter Values

Navigation: Setup>System Parameters> Values.

Select Category as Generic Parameters.

By assigning Item Validation Org, the items pertaining to that Organization are
available for transaction.

2. Pick slip grouping rules

Navigation: Setup-Shipping-Picking-Define>Pick Slip Grouping Rules.
Pick slip rules are defined to give order of preference for picking, based on
Customer, Order Number etc.

3. Release Sequence Rules:

Define release sequence rules to specify the order in which eligible picking lines
are allocated to Inventory during pick release. Can release the picking lines by
Order, Outstanding Invoice Value, Schedule Date, Departure Date, and Shipment
Priority.

The numbering preference could be either ascending or descending.

Navigation: Setup-Shipping-Picking-Define Release Sequence Rules.

4. Document Set:
It talks about documents to be attached during pick release or ship confirm. These
could be Pick Slip Report, Shipping Exceptions Reports for pick Release. Packing
Slip, Bill of Lading, Commercial Invoice, Trip Stop Interface for Ship Confirm.

Navigation: Setup-Shipping-Documents-Document Set

If usage „Pick Release‟.

If usage „Ship Confirm‟
5. Ship Confirm Rules:
Automated Ship Confirm enables to automatically ship confirm all deliveries that
have all lines at status of staged. Automated Ship Confirm can be executed as a
concurrent program or it can be launched manually.

Navigation: Setup-Shipping-Ship Confirm Rules.

6. SHIPPING PARAMETERS:
Define the default values for basic shipping information such as units of
measurement pick release rules, weight and volume calculations, and delivery
grouping rules. Order Management is Operating Unit specific but sipping
parameters are Inv organization specific.

Navigation: Shipping-Shipping Parameters

General Tab:
Define the shipping weight and volume unit of measure classes, criteria for
calculating percent fill basis like weight, volume, or quantity, and shipping while
Containerizing.

Pick Release tab:

Define Release Sequence rules and Pick Slip Grouping rules, limiting the number
of lines in the pick slip, printing behavior, document set to be printed at pick
release, default staging sub inventory, locator, and decision points to auto create
delivery, auto allocation, enforcing ship sets & ship models, and task planning at
the time of pick release.
Shipping Transactions Tab:
Define document sets to be printed at the time of ship confirm, ship confirm rule,
Auto-pack options, goods dispatched (COGS) account and whether to enforce
packing in containers.

Delivery Tab:
Define the attributes forming the basis of delivery grouping for the organization
Note: The moment you save the data in above setup, you get the below error
message.

FRM-40735: ON-INSERT trigger raised unhandled exception ORA-04062

Please compile the form ―WSHFSPAR” in order to have the issue resolved.

7. Multi-Currency Conversion:
It enables multiple currencies like USD, EUR, etc to be converted to functional
Currency by giving conversion type.

Navigation: Pricing>Price Lists> Multi Conversion Setup.

Note: Make sure the profile “QP: Multi Currency Installed” is set to yes.
8. Price List:
Items are priced in the price list; it defaults to the sales order, also multiple
currencies is supported by defining multi-currency conversion.

Note: Ensure the below profiles are set to ‗Organization Level‘

OE: Item Validation Organization

QP: Item Validation Organization

Navigation: Pricing: Price Lists: Price List Setup

9. TRANSACTION TYPES:
Transaction Type determines flows of Sales Order header and line. Order Category
can be Mixed, Order and Return. Transaction Type code defines whether
transaction type is Order or Line. Fulfillment Flow: Fulfillment method is an
activity which will be considered as prerequisite before a line or a group of lines
can be fulfilled.

Define Line Type First and map to Header/Order.

Navigation: Setup: Transaction Types: Define

Order:
Select Transaction Type Code ORDER.

Main Tab:
Enter Line Transaction Type in Default Order Line Type. Pricing: Attach a
previously defined Price List. Credit Check Rule: It defines the stage at which the
credit check has to be performed; it could be at different stages like Ordering,
Packing, Picking/Purchase Release, and Shipping. Attach the earlier defined line
type and validate the workflow.
Shipping Tab:

Finance Tab:
Assign Line flows:
10. DOCUMENT SEQUENCE:
Document sequence generates a unique numbers for certain business transactions
in various modules. In Order Management, it creates a unique number for each
sales order based on ―Order‖ type. This number is known as a sales order number.

Navigation: General Ledger>Financials>Sequences>Document>Define.

Assign sequence to sales order type.

Navigation: General Ledger>Financials>Sequences>Document>Assign
11. Grants
This setup is required to give the access for a particular user to grant the
certain access like ship confirm and pick release. More than one grant can be
assigned if the user requires different access controls to more than one
organization

Navigation: Setup>Shipping>Grants & role definitions>Grants

Trips Tab:
Stops Tab:
Deliveries Tab:
12. Customer Profile Class:
Use Customer Profiles to group customer accounts with similar credit worthiness,
Business volume, and payment cycles. Each profile class can define information
Such as credit limits, payment terms, statement cycles, invoicing, and discount
Information.

Navigation: Setup>Customers>Profile class

13. Customer creation:
Navigation: Customer>Standard

Business Purpose Tab:

Details Tab:

O2C Process flow:

Ensure that all the periods are opened in required modules.

1. Miscellaneous Receipt:
Create a miscellaneous goods receipt to maintain the on hand quantity.

Navigation: Inventory>Transactions>Miscellaneous Transactions

Note: The above GL account must be offset account or Liability account.

Transaction Lines:
Then, check the material distributions. If the distribution button is grayed out, run
the ―interface manager‖ programs.

Note: If the distributions button is grayed out, create accounting program ignores
the transaction for accounting.
Run create accounting from ‗Cost Management-SLA‘ to get accounted the above
goods receipt.

The journal entry would be as below.

Inventory valuation A/C Dr 78750.00

TO Offset A/C Cr 78750.00

Inventory Valuation account is defaulted from the sub inventory selected during
creation of miscellaneous receipt.

Offset account, this is the one, entered during creation of miscellaneous receipt.

Now the quantity is available for both the items (100200101 &100200102) in order
to create a sales order.

2. Enter & book the sales order:

Navigation: Orders, Returns>Sales Orders
Choose the customer from LOV and then all the fields get defaulted. Next save the
information and then order number would be generated.

Others Tab:
Line Items:

Enter the required fields.

Check availability for both items:

Shipping Tab:

Check the ship date and arrival date

Click on ‗Book Order‟ button.

Now the order line status is “Awaiting shipping” for both the lines.
Note: Remember there will be no journal entry for the sales order booking.

2. Sales order release or Pick release:

Navigation: Shipping>Release sales orders> Release sales orders
Go to Inventory Tab and select the Warehouse as ‗IN‘
Then go to ‗Shpping Tab, and check ‗Auto pick confirm‘ and Auto pick delivery‘
set to ‗Yes‘ or Not.

If Auto pick confirm set to ‗No‘ then order has to be released by manually from
Inventory module.

Clcik on ‗Concurrent button.‘

Up on pick release or sales order release, the following reports would be generated.

Pick Slip Report

Shipping Exceptions Report (XML)

After ‗Pick Release‘ the line status would be ‗Staged & Pick confirmed‟ and this
can be seen in next screenshot.

After release the sales order, the following journal entry would be spawned out.

Event class- Inter org transfer.

Event Type-Sales order staging transfer.

Inventory valuation (Staging sub inventory) Dr Rs.43690

To Inventory valuation (From source Org) Cr Rs. 43690

Please run create accounting from Cost Management-SLA responsibility to get the
above journal entry.

3. Ship Confirm:
Navigation: Shipping>Transactions

Provide the sales order number and hit the ‗find‘ button.

You can see the line status now.

Then click on ‗Delivery‘ button & hit the ship confirm button.
Now the line status is closed as shown below and these have to be imported to
interface tables by running the workflow background program.

Up on ship confirm the following reports would be invoked.

Packing slip report

Commercial Invoice

Bill of lading

After ship confirms the lines status would be ‗Shipped‘ at sales order line level.
Up on ship confirm, the following journal entry would be spawned out.

Event Type: Sales Order issue

Event Class: Sales Order issue.

Deferred cost of goods sold A/C Dr Rs.43690

To Inventory Valuation A/C (Staging) Cr Rs.43690

The Deferred COGS account & Inventory valuation account are derived from
respective Inventory organization and sub inventory respectively.

Please run create accounting from Cost Management-SLA responsibility to get the
above journal entry.

Coming back to Order Management and run the workflow background process

4. Run workflow Background Process.

Navigation: View-Request
Switch to Receivables and check the sales order lines have been interfaced or not.

Navigation: Control-Autoinvice-Interface lines.

Query with sales order number.

5. Run auto invoice Master program.
Navigation: View –Request

Check the output of Auto invoice execution report.

Check the invoice in AR.

Navigation: Control-Accounting-Revenue Accounting

Give the sales order in reference filed & hit the find button.
Invoice is created and the invoice number is 10004

6. Check the invoice in Transaction work bench.

Navigation: Transaction-Transactions
Lines Tab:

Distributions Tab:
Run create accounting to Transaction get accounted. The journal entry would be as
follow.

Receivables Dr Rs.43690.

To Revenue Cr Rs.43690

The default GL code combinations depend on the auto accounting setup.

Create receipt against the transaction as and when the receipt is received from
Customer.