Oracle EBS

Account Payables

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Training Agenda

Areas Covered:
– Overview
– Concepts
– Setup
– Use case in ERP
– Q&A

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Overview:
Account Payables takes care of all payments in Oracle
Applications. This module has active interaction with
Purchasing and General Ledger modules.

The different functionality of the Payables module are:

Set up Supplier.
Enter, review and Approve invoices.
Pay invoices and reconcile payments to bank a/c.
Enter and apply pre-payments.
Create journal entries for posting to GL.

An top level overview of the module can be given as :

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Overview:
ACCOUNTS PAYABLE
This is the final process of Procure to pay, where in this process, we make the payments, to the supplier and in this
process, and there are 2 work benches,

Invoice Work Bench

Payment Work Bench

Invoice Work Bench

In the Invoice Work Bench, we raise all the invoices against the supplier, for which we have to make the payment and
there are 8 types of invoices.
Standard Invoice
Debit Memo
Credit Memo
Pre Payment
Mixed
Expense report
Retain age release
Transportation invoice

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Overview:
Apart from these invoices, there are some other invoices like
Adjustment invoice
Recurring invoice
PO match invoice
Quick match invoice
Self billing invoice
Correction invoice
Interest invoice
Hold invoice
Individual tax invoice
Withholding tax invoice

Payment work bench:

In the payment work bench, we make the payments to the invoices which are raised in the invoice work bench. To make
the payment we use the payment document which is defined in our bank account.

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Payables - Setup:
The mandatory set ups in Payables: (checklist)

Financial option
Payable option
Bank , bank branches and bank accounts
GL periods and payable periods

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Payables - Setup:
To check the financial option
N---- AP----SET UP---OPTIONS-------FINANCIAL OPTIONS

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Payables - Setup:
To define the Payable Option
N----AP----SET UP----OPTIONS----PAYABLE OPTION

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Payables - Setup:
Accounting Methods
Accrual
Cash
AUTOMATIC OFFSET
Accrual method it creates 2 J.E

ITEM EXPENSES A/C Dr

TO LIABILITY A/C--------------------------INVOICE

LIABILITY A/C Dr
TO CASH CLEARING A/C-----------------PAYMENTS

CASH METHOD
IN CASH METHOD IT CREATES 1 J.E
LIABILITY A/C Dr
TO CASH CLEARING A/C

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Payables - Setup:
Payable Options Setup.

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Payables - Setup:
Payable Options Setup.

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Payables – Banks & Branches:
DEFINING BANK, BANK BRANCHES AND BANK ACCOUNTS:
Now a days corporate treasury role has been greatly enhanced
thus picking up a global bank as partner for all banking need is
demand of time in global working model. The recent couple of
years have seen drastic increase in acquisition and merger of
company thus global working as well as global instance get
popularity in ERP areana, and this is one of reason of the
reason bank data model has been significant changes from 11
to 11i and 11i to R12.

In R12,
Suppliers, Banks and Branches are defined as Parties in TCA.
Supplier (party's) payment information and all payment
instruments (Bank Accounts, Credit Cards) moved into Oracle
Payments.

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Payables – Bank Setup:
Bank Setup:
N----AP---SET UP---PAYMENT---BANK & BANK BRANCHES

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Payables – Bank Setup:
Bank Setup:
N----AP---SET UP---PAYMENT---BANK & BANK BRANCHES

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Payables – Bank Setup:
Bank Setup:
N----AP---SET UP---PAYMENT---BANK & BANK BRANCHES

Create the Bank account respectively.

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Payables - Invoices:
Invoice Creation: This consist Setup for:
TO RAISE A STANDARD INVOICE WITHOUT ANY TERMS Distribution Set
N---AP---INVOICES---ENTRY---INVOICES Tax
Setup tolerance, matching options

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Payables - Invoices:
Invoice Creation:
Save it and close the distribution form.

Select ACTION
VALIDATE
SELECT ACTION
SELECT CREATE ACCOUTNING

NOTE :
From Invoice WorkBench, We can directly enter into the Payment WorkBench,
by SELCTING PAY IN FULL option.

SELECT ACTION
SELECT PAY IN FULL

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Payables - Invoices:
Invoice Creation:

DRAFT-----DRAFT ACCOUNTING ---ALLOWS

MODIFICATION ----BUT NOT SENT TO GL

FINAL-------FINAL ACCOUNTED-----NOT ALLOWS

MODIFICATIONS ----NOT SENT TO GL

FINALPOST-----FINAL ACCOUNTED----NOT
ALLOWS MODIFICATION---AND SENT TO GL FOR
POSTING

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Payables - Payments:
Invoice Payments:

This requires set up for payment related dependency

which include ;
Format
Bank
Bank account
Build program
Payment Methods
oManual
oQuick Check
oAutomatic Check
Take a note in manual and Quick check, you have to
simply enter payment details and correlate to
invoices. Automatic check is applicable for batch
payments.

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Payables - Payments:
Invoice Payments:

SELECT ACTION
SELECT CREATE ACCOUTING

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Payables - Payments:
Invoice Payments:

SELECT ACTION
SELECT CREATE ACCOUTING

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Payables - Accounting:
Verify Accounting:

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Payables - Accounting:
Verify Accounting:

ITEM EXPENSE FROM INVOICE DISTRIBUTION

LIABILITY ACCOUNT FROM FINANCIAL OPTION

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Payables - Accounting:
Verify Accounting:
TO CHECK THE PAYMENT ACCOUNTING
GO TO THE PAYMENT WORK BENCH  Tools  View Accounting

LIABILITY ACCOUNT FROM FINANCIAL OPTION

CASH CLEARING ACCOUNT FROM BANK ACCOUNT

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Payables - Create Journal entries:
Create Journal entries:
Typical flow for creating Journal entries is summarized as:

And here is final note of accounting Entries of AP :

During Invoicing
oExpenses A/C Dr to vendor liability
During Payment
oVendor liability A/C Dr to Cash/Bank A/C

And, This is Four Rule of Payables 

You must have a vendor to do anything
Every Invoice must be fully Charged out before paid or posting
to GL.
All Payments must have an invoice
Every Invoice must run through approval process.

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Payables – Period Close(CheckList):
Period Close Processing Checklist:

These are the Closure Checklist for Payables Period end.

1. Complete Transactions : that means Completing all transactions for Oracle Payables:
Complete Invoicing and Credits
Complete Prepayments
Complete Expense Reports
Complete Invoice Import
Invoices On Hold Report can also be used.
2. Approve Invoices :The Payables Approval process is run to try to approve all unapproved invoices in the
system, so that they can be paid by Oracle Payments and posted to the General Ledger
3. Complete Payments
4. Reconcile Payments/Bank Statements
5. Resolve Potential Accounting Issues
Create Accounting
Journal Entries Report
Unaccounted Transactions Report

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Payables – Period Close(CheckList):
Period Close Processing Checklist:

6. Post (GL) Payables Transactions

7. Review Accounting
Payables Accounting Process Report
Posted Invoices Register
Posted Payments Register
8. Unaccounted Transactions Sweep
9. Close Payables Period
Subledger Period Close Exceptions Report
10. Accrue Un-invoiced Receipts
11. Reconcile Payables Activity to GL
AP Trial Balance Report (Account definition, Data Mgr Program)
Third Party Balances Report
Account Analysis Report
12. Mass Addition Transfer to Assets

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Payables – Period Close(CheckList):
Period Close Processing Checklist:

Some notes as per the best Practice,

It always encouraged to include all LIABILITY accounts in Open Account Balances Report
Definition.
Explore the Control Account feature with Third Party Balances report.
You should avoid reversing batches (or modifying Journals) in GL, if transferred by SLA.
Always use Period Close Exception report prior to closing Periods in GL and reconciling to
Account Analysis & Trial Balance reports.
You can use only SLA or GL (not both) to create manual journal entries for subledger transaction
corrections.

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Payables – Invoice Aging Report:
Payables Invoice Aging Report:

Why called Aging Report?

Aging comes from the word Age. “Age” is the chronological representation of any phenomenon. Be it a person, an
organization. Invoice Aging is the calculation of Unpaid or Outstanding Invoice’s Age. In Oracle Payables this calculation is
done using the Invoice Aging standard report. The calculation is represented in Days.

Where is the Aging report used?

It is used to calculate the Due and Overdue days of any outstanding supplier’s or invoice’s payment. Using this aging
information the cash outflow is determined. And many other decision can be taken.

How does the Aging report works?

Oracle Payables uses the Invoice Date, Payment Terms and Term Date attached to it for calculating the invoice’s age. GL
Date has no effect on the aging.

Following are the setup steps required to implement Invoice Aging report:
1) Define Aging Period
Aging Period is a user defined slabs of days. User can define one to many aging calendars.
2) Run the Standard Request using the defined aging period.

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Payables – Invoice Aging Report:
Payables Invoice Aging Report:
Example:
Let’s take a scenario to define the Aging Period. Suppose I want to know the payments Overdue by 30 days and payments
Due in 30 days i.e. if Today is 1-April then this aging period will display the payments due from 2-March to 1-May. So here
is how to define such periods.

Setup:

Step 1:

Navigation: AP>Setup>Calendar>Aging Period

1) Enter the Name, let’s suppose “Monthly Aging Period”.

2) Enter the Description(optional), like “30 days due and overdue aging period”.
3) The Column Order will be by default 1, let it be.
4) Enter 16 in Days From and 30 in Days To. (Yes, number of days in positive will pick the past due payments)
5) Give the First Column Heading as 30 – 16 and Overdue in Second Column Heading, though it is optional. These column
headings will appear on the aging report.
6) Go to next row, the column order will be automatically generated.

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Payables – Invoice Aging Report:
Payables Invoice Aging Report:

7) Enter 0 in Days From and 15 in Days To.

8) Give the First Column Heading as 15-0 and Overdue in Second Column Heading.
9) Go to next row.
10) Enter -15 in the Days From and 1 in Days To.
11) Give the First Column Heading as Due In and give 1-15 Days in Second Column Heading.
12) Go to next row i.e 4th or the last row, as the aging report has only four columns.
13) Enter -16 and -30 respectively in both columns.
14) Give the First Column Heading as Due In and give 16-30 Days in Second Column Heading.
15) Save the period.

Step 2: Now you have run the standard request name Invoice Aging Report. Give the following parameters

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Payables – Invoice Aging Report:
Payables Invoice Aging Report:
Parameters:
Sort Invoice By:
Trading Partner: All invoices will be sorted and grouped by Supplier’s Name
Invoice Type: All the invoices will be sorted by the Invoice Type, like Standard, Prepayments, Credit Memos etc.
Include Invoice Detail:
Yes: The invoice information will be displayed in detail like Invoice Number, Due Date, Unpaid%, Amount Remaining.
No: A summarized view of the
Include Site Details:
Yes: The invoices will be categorized supplier site wise.
No: There will be no site information.
Minimum Amount Due:
There is no need to define this parameter.
Maximum Amount Due:
There is no need to define this parameter.
Invoice Type:
There is no need to define this parameter.
Aging Period Name: Give the name of the period of which you want to have the due calculate.

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Payables – Invoice Aging Report:
Payables Invoice Aging Report:
Sample Output:

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Q&A:

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Contact Info:

Manish Misra
Email: manish.misra@etontechnologies.com
Phone: +1-614-453-2074

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