Oracle Payables Configuration

Oracle Payables

Oracle Payables include two fully integrated workbenches, the Invoice Workbench and the Payment Manager. We can perform most of the transactions in Payables using the Invoice Workbench or the Payment Manager. We enter, adjust, and review invoices and invoice batches in the Invoice Workbench. We create, adjust, and review payments and payment batches in the Payments Manager. Oracle Payables workbenches let us find critical information in a flexible way. For example, in the Invoice Workbench, we can find an invoice based on supplier, purchase order number, status, or other criteria. Then, for that invoice, we can review distributions, scheduled payments, payments, holds, and other detailed invoice information. We can also perform matching, submit invoice validation, apply and release holds or initiates payment. We can query an invoice then perform several transactions without having to find the invoice again. We can also keep multiple windows open at one time.

Configuration Steps

1. Define Payables System Setup

Use the Payables System Setup window to define supplier control options and defaults. Although we need to define these options and defaults only once, we can update most of them at any time to change controls and defaults for suppliers and future transactions.
Supplier
Supplier Number Entry: Select an option to enter your supplier numbers manually or let Payables automatically generate sequential supplier numbers. We can change the number entry method at any time.
Supplier Number Type: Select the type of supplier number we want Payables to use for supplier number entry. Options include Alphanumeric or Numeric.
Next Automatic Number: Enter the starting value we want the system to use for generating unique sequential supplier numbers.
Control
Invoice Match Option: Select Purchase Order or Receipts to indicate how we want to match most invoices. Defaulting is in the following order, but can be overridden at any level:
1. Payables System Setup
2. Supplier
3. Supplier site
4. Purchase Order Shipment
Hold Unmatched Invoices: If we enable this option for a supplier site, Oracle Payables applies a Matching Required hold to an invoice if it has Item type distributions that are not matched to either a purchase order or receipt Payment
Invoice Currency: Select the currency to use as a default for new suppliers that we enter.
Pay Group: Select the pay group to use as a default for new suppliers that we enter.
Terms Date Basis: Select the date that Payables uses as the payment terms start date when Payables calculates the due and discount dates for invoice scheduled payments
Pay Date Basis: Select the date that Payables uses to select invoices for payment.
Payment Terms: Select the terms that Payables uses to schedule payments for an invoice. This value defaults to new suppliers that we enter.
Always Take Discount: Enable this option to have Payables always take an available discount for a supplier, regardless of when we pay the invoice. The selection defaults to new suppliers that we enter.
Create Interest Invoices: Enable this option to have Payables calculate interest for the supplier’s overdue invoices and create corresponding interest invoices when we pay the overdue invoices.
Navigation path: Payables>Setup>Options>Payables System Setup

2. Define Payables Options

Use this window to set control options and defaults used throughout Payables. You can set defaults in this window which will simplify supplier entry, invoice entry and automatic payment processing. Although you only need to define these options and defaults once, you can update them at any time to change controls and defaults for future transactions. These options are set at Operating Unit level.
Navigation path: Payables>Setup>Options>Payables Options

3. Define Special Calendar (for recurring invoices)

We use the Special Calendar to define periods that Payables uses for automatic withholding tax, recurring invoices and for the Key Indicators Report. For example, if we monitor staff productivity weekly, use this window to define weekly periods for the Key Indicators calendar type. The Report Run display only check box indicates that a Key Indicators Report has been run for this period. The check box is not applicable to Withholding Tax or Recurring Invoices calendar types.
Navigation path: Payables>Setup>Calendar>Special Calendar

4. Define Payment Terms

In the Payment Terms window we define payment terms that we can assign to an invoice to automatically create scheduled payments when we submit Approval for the invoice. We can define payment terms to create multiple scheduled payment lines and multiple levels of discounts. We can create an unlimited number of payment terms.
Payment terms have one or more payment terms lines, each of which creates one scheduled payment. Each payment terms line and each corresponding scheduled payment has a due date or a discount date based on either a specific day of a month, such as the 15th of the month, or a number of days added to the terms date, such as 14 days after the terms date.
Each payment terms line also defines the due or discount amount on a scheduled payment. When we define payment terms we specify payment amounts either by percentages or by fixed amounts.
Payables provides a predefined, unalterable payment term, called Prepayment Immediate which Payables automatically assigns to all prepayments we enter.
After we define the payment terms, we can select default system payment terms that Payables automatically assigns to the suppliers and supplier sites. The payment terms for a supplier site default to the invoices we enter for that site.
Attention: If we update the payment terms on an invoice, Payables recalculates the scheduled payment for the invoice. Thus, we must reenter any manual adjustments we made to the previous scheduled payment. For example, if we update the payment priority on a particular scheduled payment and then change the payment terms. Payables will recalculate the scheduled payment using the same payment priority defaults as before and we will need to redo our updates.
Navigation path: Payables>Setup>Invoice>Payment Terms

5. Supplier Creation for Commissioner Inland Revenue

For the purpose of taxation we create a separate supplier and assign an account to this supplier so that we can have separate balance in that account. There is no difference between normal supplier creation process and creation of supplier for this purpose.
Navigation path: Payables>Suppliers>Entry

6. Define Withholding Tax (WHT) Codes

In Oracle Payables Tax Code(s) are defined for the purpose of withholding tax.
NOTE: If we do not tick “Create Withholding Tax Group” and save our work even then system automatically tick this box but system does not actually create Tax Group. So we have to tick this check box if we want to create Tax Group.
Navigation path: Payables>Setup>Tax>Withholding>Codes

7. Define Tax Groups

We assign a Withholding Tax Group to an invoice or distribution. Payables calculates invoice/payment withholding tax based on every tax code in the Withholding Tax Group. For example, we assign a Withholding Tax Group to an invoice or distribution and we need to withhold taxes at both the local and country level, each withheld at different rates and remitted to different tax authorities. We define and assign to the invoice or distribution a Withholding Tax Group that includes both taxes.
We rank all of the Tax Codes in a Withholding Tax Group when we define the group. When we enter an invoice and enter a Withholding Tax Group, Payables calculates the taxes in order of rank. Lower ranked taxes are applied to the amount of the invoice or distribution amount less the previous withholding tax amounts. For example, we define a Withholding Tax Group with two tax names, and you give tax A (rate = 10%) a rank of 1 and tax B (rate = 5%) a rank of 2. When we assign this group to an invoice, Payables calculates the withholding tax for Rs. 100 invoice as follows: tax A = Rs.10, tax B = Rs.4.50 (.05(100 – (100 * .10))).
We can assign a default Withholding Tax Group in the Payables Options window. Payables automatically assigns the Payables default Withholding Tax Group to all new suppliers. The suppliers value defaults to any new supplier sites for the supplier. Supplier sites assign the default to any new invoices you enter for the supplier site. We can override any Withholding Tax Group default at any time.
Navigation path: Payables>Setup>Tax>Withholding>Groups

8. Open Payable Accounting Period

Payables allows invoice entry, payment entry and payment voiding in open accounting period. We can enter invoice(s) in Future accounting periods but we cannot post any invoice(s) in Future accounting periods until we change the status of the period to Open. The period statuses available in Payables are Never Opened, Future, Open, Closed and Permanently Closed.
When we update a period status to Closed, Payables automatically checks if any unposted invoice(s) or payment(s) or any unconfirmed payment batche(s) in that period. If we have any unposted record(s) or unconfirmed payment batche(s) in a period we are trying to close, Payables prevents from closing the period and automatically submits the Unposted Invoice Sweep report. We can use this report to view all unposted transaction(s) for that period. We can submit the Unposted Invoice Sweep program if you want to move all unposted transaction(s) from one period to another. Then, close the period.
Accounts payable periods are separate from General Ledger periods. For example, we can close one period in AP before we close the same period in General Ledger.
Navigation path: Payables>Accounting>Control Payables Periods

9. Define Payment Method

A fund disbursement payment method is a medium by which the first party payer or deploying company makes payment to a third party payee such as a supplier. We can use a payment method to pay one or more suppliers. Oracle Payments supports several payment methods for funds disbursement, including the following:
1. Check
2. Electronic
3. Wire
4. Clearing
1. Check
We can pay with a manual payment, a Quick payment or in a payment batch.
2. Electronic
We can transfer funds to the bank of a supplier. We create electronic payments either through the e- Commerce Gateway or by delivering a payment batch file to the bank. For both methods Payables creates a file during payment batch creation. If we are using the e-Commerce Gateway to create the file of payments, an Electronic Data Interchange (EDI) translator is required to create the EDI Formatted file prior to delivering it to the bank. For electronic funds transfers the file is formatted and delivered to ap.out directory for delivery to the bank.
3. Wire
Wire Funds transfer initiated by contacting the bank and requesting wire payment to the bank of a supplier. A payment method where we pay invoices outside of Payables by notifying the bank that we want to debit the account and credit supplier’s account with appropriate funds. We provide the bank with supplier’s bank information and bank sends us confirmation of the transaction. Supplier’s bank sends supplier confirmation of the payment. We then record the transaction manually.
4. Clearing
Clearing Payment for invoices transferred from another entity within the company without creating a payment document. Payment method we use to account for intercompany expenses when we do not actually disburse funds through banks. We do not generate a payment document with the Clearing payment method. When we enter the invoice, we enter Clearing for the payment method. We can record a Clearing payment using a Manual type payment only.
Navigation path: Payables>Setup>Payment>Payment Administrator

10. Define Payment Process Profile

Purpose of creating payment process profile is to define the process of payment. For example to create check we should have one profile. We can keep different grouping rule so accordingly we can define multiple payment process profile. While processing the payment we can use these profiles accordingly.
Navigation path: Payables>Setup>Payment>Payment Administrator

11. Define Document Sequence

A document sequence uniquely numbers documents generated by an Oracle E-Business Suite product. Using Oracle E-Business Suite, we initiate a transaction by entering data through a form and generating a document, for example, an invoice. A document sequence generates an audit trail that identifies the application that created the transaction, for example, Oracle Payables, and the original document that was generated, for example, invoice number 1234. Document sequences can provide proof of completeness. For example, document sequences can be used to account for every transaction, even transactions that fail.
Document sequences can also provide an audit trail. For example, a document sequence can provide an audit trail from the general ledger into the subsidiary ledger, and to the document that originally affected the account balance.
Document sequences generate audit data, so even if documents are deleted, their audit records remain.
NOTE: There is no need to create document category and sequence for automatically created Withholding Tax invoices. But if we want to create manual Withholding Tax Invoice then we have to create category as well as its sequence and then assignment as well.
Navigation path: General Ledger>Setup>Financials>Sequences>Document>Define

12. Assign Document Sequence

After defining document sequences, you must assign a specific sequence to an application and category. You can assign sequence numbers to journal entries, but only to those journals created for actual transactions. You can choose to assign sequence numbers to journal entries that General Ledger automatically creates, or to journal entries you enter manually in the Enter Journals window. General Ledger automatically creates journal entries for actual transactions when you perform the following tasks:
• Import Journals
• Reverse Journals
• Revalue Balances
• Generate Recurring Journals
• Generate Mass Allocation Journals
• Consolidate Sets of Books
NOTE: You should not assign a manual sequence to an Automatic method.
Navigation path: General Ledger>Setup>Financials>Sequence>Document>Assign

After the configuration of these steps we are able to make entries in Oracle Payables.

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