AP: Exchange Gain/Loss Setup

This is a very basic setup of Forex Gain/Loss calculation and requires User entered Rate. First Let’s see what is Gain/Loss on Exchange Rate.

What is Exchange Gain/Loss?: The idea behind Gain or Loss on exchange rate is simple. It comes in when you are dealing in Multiple Currencies. Let’s take an example, suppose that you are purchasing some goods or services from another country. There must some currency exchange rate, say the base currency is PKR and transaction is carried out in USD and the exchange rate between the two is 80.25 . You ordered a server which was $37,500.00. The liability recorded on the day the shipment was confirmed was in PKR which was 3,009,375.00 (37500*80.25).  It was informed by the vendor that the shipment will take 8 weeks. After 8 weeks or so you received the server and now you have to pay. The exchange rate on the day of payment was 81.86 and you paid Rs.3,069,750.00. The amount you had to pay in PKR was more than the liability recorded at the time of confirmed shipment. The Loss you had to bear due the fluctuation in forex rate was Rs.60,375.00. Similarly had the Dollar rate on the day of payment was 79.20, then you had to pay Rs.2,970,00.00 and the Gain on exchange you enjoyed was Rs.39,375.00

How does it work in Oracle Payables?: Oracle AP calculates this Gain or Loss automatically based on Exchange Rate from Invoicing to Payment.

Here are setup steps or pre-requisites for this functionality:

1. Enable the currency in General Ledger in which you want to do the transaction. USD is enabled by default.
2. Define Exchange Rate, but I have not used the predefined rates, I am using User Entered rates.
3. Define Currency Payables Option. Here you define the account code combination which will be used during the transaction.
4. Define a multi-currency Bank Account from which the payment will be made.

After performing the above steps, the Exchange Gain/Loss functionality is enabled. The exchange rates will be entered by user at the time of Invoice Entry and at the time of Payment, which will calculate the gain or loss on the transaction.

There is another need of calculating Unrealized Gain/Loss on the exchange which I have discussed in another Post.

If you have any queries feel free to contact me at atif.syd@gmail.com

That’s All. :)

AP: Document Sequencing for Bank wise Check Payments

There are scenarios or requirement where the payment voucher number should be generated Bank wise like payments made from HBL should have its own sequence and payment made from MCB should have its own. You can also narrow down the sequencing to Check Books.

Following is the levels of the Payment and its Document Categories:

• All Payment (Check Pay: It is a seeded or default category)
• Bank Account (this needs to be defined)
• Check Book (this also needs to be defined)

I am not referring to other types of payment like EFT or Wire Transfer cuz frankly I haven’t seen any organization in Pakistan using these mode of payments, I am not denying that there aren’t but I haven’t seen and in turn haven’t worked on it. Although I worked with modes like Netting Payment and Refunds :D

The process is very simple. You just have to be familiar with Document Sequencing. For bank account wise sequence generation you have to perform following steps

1. Define a separate Document Category using the System Administrator responsibility.
2. Assign the newly created document category to either Bank Account OR Payment Document.
3. Define a new Document Sequence.
4. Assign the newly created Sequence to Category.

There you go, now the document sequence or voucher sequence will be generated against a particular bank account or check book.

You question should be: Where to assign the category and What is difference between assigning category to Bank Account and Check Book?

Well, the difference is very simple and it is of hierarchy that is if you assign the category code to bank account then all the check books created in that account will have the same document category assigned to it. Otherwise you have to select the category code for each check book.

For Step 1 Defining a separate Document Category, do the following:

Navigation: System Administrator>Application>Sequential Numbering>Categories

1. Select Application as Payables.
2. Enter Category Code like CHK_HBL. It is 30 character field.
3. Enter Name like HBL Check Payment.
4. Enter Description. (Optional)
5. Select Table Name as AP_CHECKS_ALL. Don’t select any other table name. The reason to select this table name is because the payment document is created in this table.

Moving on, you have to assign this document category to either the Bank Account or the Check Book. I prefer to assign it at bank account level.

You have to get to Bank Account page, it’s up to your rights and responsibilities that you choose Payables or Cash Management to get to Bank Account Setup page. Here are the navigation and steps

Step 2 Assigning Document Category to the Bank Account

Navigation: Bank Accounts> Search Bank Account> Update the particular Bank Account>

1. Click on Account Access Tab on the left.
2. Click on Options.
3. Enter the newly created category on the Payment Document Category field. Like in this example it is CHK_HBL.

You can also see another region Payment Document Categories by Payment Method. It is self-explanatory that if you are using multiple payment methods  with the particular bank account and want to have separate number generated for each method then you can define and assign separate document categories to each method.

For step 3 and 4 you have to refer to Document Sequencing

I hope this suffice your requirement. If you have any queries, feel free to contact me at atif.syd@gmail.com

That’s All :)

Oracle EBS: Document Sequencing

Ah, the document sequencing, the audit thingy. What is the purpose of giving a sequence to the transactions or the documents that you create? Well it has been a practice to assign the number to anything which occurs more than once, by numbering them you can identify the order of its generation. It acts like a chain and if a number goes missing, the link is broken and you can see that there was a deletion or removal of the transaction. Sequence numbering can also be seen in our business processes like organization assign employee number or employee code to their employees in order to identify them. Our vehicles have registration numbers. Even the database have a number primary key for the records it holds. BUT that is just to uniquely identify them. Here the purpose of sequencing is to maintain the Audit Trial of the transaction or as Oracle says in its documentation, to maintain the completeness of the transaction.

How?

System generates its own number in a sequence. Like first transaction will have 1 and then second will have 2 and so on and so forth but there are scenarios where more than one person is working on same category and the method of sequence is Automatic then it might have a sequence, I haven’t seen it as yet but it is.

It is very simple to generate a unique Voucher Number, for a document created in EBS modules. The document, also called Categories, can be viewed in the Sequence Assignment window, this window can be found at System Administrator or General Ledger module, provided you have the rights for Defining and Assigning Document Sequence. But before you do, make sure that the profile option Sequential Numbering is set to either Partially Used or Always Used. Personally I haven’t seen much difference in both of options because if you use Always Use, the system won’t let you move forward if there is no sequence assigned to the category and if you use Partially again the system won’t let you move forward.

Any question so far? I don’t think there should be otherwise I have given my email address in the end, you are more than welcome to contact me with your concerns.

Moving forward…

There are two steps for Document Sequencing:

1. Define
2. Assign

I use General Ledger responsibility for defining and assigning the Sequence but most of the people I know use the System Administrator responsibility. Its your choice which one to use. I am writing about the General Ledger method.

Let’s do the first step: DEFINE
Navigation: GL>Setup>Financials>Sequence>Document>Define

The Document Sequence form will open.

1. Enter the Name of the Sequence. For Example XYZ_JV_SEQ_2009. It is 30 character field, so you can have a naming convention that will help you identify the sequence along with period and category.

2. Select the Application for which the document belongs to. For example General Ledger, Payables, Cash Management etc.

3. Enter the Effective From Date. This date is very tricky as you have to be very careful while selecting it. You must first the renewing period of your sequence. If you renew your sequence every year then the From Date will be the beginning of the year, like 01-Jul-2009. It all depends on the organization’s policy.

4. Enter the Effective To Date. This will be the end of the year if you are following a yearly sequence renewal.

5. Select the Type of number generation. In R12.0.4 there are three options

• Automatic: The number will be generated automatically, but might not be gapless if there are more than one user working on same document category
• Manual: The user has to manually enter the document number
• Gapless:The sequence will be gap less even when there are more user working on the same category, but it requires memory as the application will reserve the sequence number and will not generate it until the document is successfully committed.

6. Check Message if you want a popup displaying the number being assigned to the document. This is useful when the user is tagging application number to the hard copy of the document.

7. Enter the Initial Value of the sequence that you want. Usually its 1 but you might want to have it like 20090000001. The maximum you can enter is 28 characters till 1000000000000000000000000000.

8. Save the Record

This is done. You have defined the Sequence. Now you have Assign the sequence to the document category

Let’s do the second step: ASSIGN

Navigation: GL>Setup>Financials>Sequence>Document>Assign

There are two tabs in this form: Document and Assignment

Document Tab: You select the information related to the document.

Assignment Tab: You select the information related to the sequence assignment of that document.

1. Enter the Application name for which you want to assign the sequence, it should be same as selected in the Definition of sequence

2. Select the document Category for which the sequence is being assigned. These categories depend on the application selected.

3. Select the Ledger. I don’t think this need any clarification

4. Select the Method. This is another interesting feature. It not the method of sequence generation but the method of document generation. For example, when you enter a journal voucher, it is a Manual method of document generation, but when you reverse the journal voucher, it is generated automatically. There are three options available here:

• Null: This is selected by default. If the category is generated both manually and automatically.

• Automatic: The document is generated automatically. If you will select this option then manual document will not have document assignment and the system will give error.

• Manual : The document is generated manually.

5. Enter the Start Date. It should be same as the Define Sequence Effective from date.

6. Enter the End Date.

7. Select the Sequence for the document. The defined document sequence should be listed there if the Start date matches the effective from date.

8. Save the Record.

That’s about it. But remember this sequencing steps applies to General Ledger, Payables and other application whose document categories are seeded.

If you have any questions or need some clarification on this topic or any other financial topic, I am available right here

:)

That’s all. Take care. Happy implementing.

-Atif

GL: Natural Accounts Flexfield Qualifiers and Accounting Concepts

This is how the accounting works. Everything pertains to what an Organization owns, have and what it has to give. There is always a balance to what it owns and what it has to give.

This “balance” is converted into an equation, also called the Accounting Equation, which is:

ASSETS = LIABILITIES + OWNER’S EQUITY

though I’ve understood it this way:

OWNER’S EQUITY =  ASSETS – LIABILITIES

Let’s take a simple example to justify the above equation, say you have Rs.1,000 but you know that you have to pay a loan of Rs.400 that you borrowed from your friend.

So according to the equation Rs.1000 is your Asset, Rs.400 loan is your Liability and Rs.600 is the Equity that you own.

Every organization which is registered with Government is obliged to disclose the above mentioned balance in a document called Balance Sheet.

That’s all for the accounting equation.

Moving on after the accounting equation,

There is a

• Debit (Always on the Left Side, written as “DR” for shorthand) and
• Credit (Always on the Right Side, written as “CR” for shorthand)
• Debit Side should always be equal to Credit Side or
• Left Side should always be equal to Right Side or
• DR = CR

With the Debit and Credit comes in the

• Increase in balance or
• Decrease in balance

There are 5 natures of account. Every account can have any one nature and that’s why we can also call it natural account. These natures are:

1. Assets
2. Liabilities
3. Revenue
4. Expenses
5. Owner’s Equity

ASSET: Literally asset is any thing which is valuable to a person, organization or any entity. For example we say that “his quick learning ability is an asset to him” or “Her writing ability is her asset”. Why do we say that? Because quick learning skill or writing ability adds value to a person. A writer sells his writing skills to earn money, similarly in terms of business anything which is valuable to a business is the asset.

Say your organization is a pharmaceutical and manufactures Medicines, then all the chemicals used to manufacture medicine is your asset or in other words the Raw Material is your asset. The cash your organization own is an asset because it can be used to buy items or pay your employee who in turn are used to run your business. There are different types of assets, the broader categories of asset are Current Asset and Fixed, but let’s not discuss it here. For now it is enough to know that asset is anything which is valuable to your organization.

Asset INCREASES when it is Debited and DECREASES when Credited.

Any organization which is registered with the government and exists as Legal Entity is obligated to disclose its Assets on the balance sheet to the government and its Creditors. You might ask Who are creditors and Why is it that an organization is obligated to disclose asset to them? With Creditor comes in the liability.

LIABILITY: Comes from the word “Liable”. Literal meaning of Liable is “to be obligated” , “to be responsible” or “Legally responsible”. In terms of accounting you become liable, responsible to pay when you buy or purchase any thing from another entity. You are liable to compensate whatever you’ve bought. Generally an organization records its liability and pays it afterward. Again, there are different types of liabilities like Short Term Liability and Long Term Liability.

Liability INCREASES when it is Credited and DECREASES when Debited.

OWNER’S EQUITY: This is the share of owner in the business.

Equity INCREASES when it is Credited and DECREASES when Debited.

REVENUE: By definition it is the total gain before inducting any expense. It is mostly associated with the Asset. When any organization sell goods or renders its services, it records an increase in Asset and with this increase comes the gain it has made from selling the goods or services. This gain is called Revenue or Income.

Revenue INCREASES when it is Credited and DECREASES when Debited.

Revenue are not displayed in Balance Sheet. They are reflected in Owner’s Equity.

EXPENSE: By definition any payment made is an expense. How payments are made? Either by Cash or Credit which eventually means Cash. So redefining Expense “The outflow of cash to any person or organization for its supplied Goods or rendered Services”. We incur expenses daily, for example, taxi fare is an expense, dine-out payments are expenses. Expenses are associated with Liability. Whenever an organization books a liability, it is mostly against some expense. There are different type of expense

Expense INCREASES when it is Debited and DECREASES when Credited.

Following table shows the Tabular form of the effect

Nature	DEBIT	CREDIT
Asset	Increase (+)	Decrease (-)
Liability	Decrease (-)	Increase (+)
Equity	Decrease (-)	Increase (+)
Revenue	Decrease (-)	Increase (+)
Expense	Increase (+)	Decrease (-)

In Oracle General Ledger, when we attach the “Natural Account” Flexfield Qualifier to a segment. System attaches the 5 nature on the Value form. When we add the Natural Account Value, we have to define the nature of the account as well.

When we define the natures of the account, the accounting rules of Debit and Credit works accordingly. Like in Payables, the line item is Debit side, so if you’ll give an expense or asset account, it will increase and vice versa.

It is necessary to understand the application accounting behavior in order to properly suggest and implement the accounting solution in an organization.

If you need any help on the application’s accounting behavior, feel free to contact me on Atif.Syd@gmail.com

That’s All.

AP: Invoice Aging Report

Let’s see what the term Invoice Aging means? Why is it called Aging report? Where is the Aging report used? How does the Aging report work?

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.

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.

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.
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

• 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. I think the name says it all :)
• Maximum Amount Due: There is no need to define this parameter. I think the name says it all :)
• Invoice Type: There is no need to define this parameter. I think the name says it all :)
• Trading Partner: Due to this parameter I also call this report as Supplier Aging Report.
• Aging Period Name: Give the name of the period of which you want to have the due calculate.

So with this you can have either Invoice wise or Supplier wise Aging analysis of your payables dues.

If you have any query regarding the Aging Report or anything else then e-mail me at atif.syd@gmail.com

That’s All. :)

AP: Supplier Balance Owed

One of the many good features of Oracle Apps. This option lets you see the total liability of a supplier on just one click. Though it may not be true as it displays the balance including the unvalidated invoices as well. But still it is a good feature.

Here is the navigation for Calculating the Balance Owed:

1. Go Invoices form.
2. Click Find (Torch).
3. Enter the Trading Partner Name.
4. Enter the Site (If you want to calculate the liability on a specific site, otherwise the whole supplier liability will be calculated for that particular Operating Unit)
5. Click on Calculate Balance Owed button.
6. Enter the Operating Unit for which you want to calculate the liability.
7. Click Calculate.
8. If you want to see the invoices then click on the Invoice button.

NOTE: The balance calculated also includes the UNVALIDATED invoices, even the invoices with Header amount that are entered but not validated, even if the invoice line amount is greater than header.

I don’t think it needs any further explanation. If you have any queries, please send it to Atif.Sydi@gmail.com

That’s All :)

AP: Entering DR and CR Memos

Before getting into the transactions, lets see what are Debit Memos and Credit Memos.

In Oracle Payables both of them are used to reduce the invoice amount. This reduction can be of any reason and from either side i.e. the organization using Oracle Payables (Payer) or the Supplier (Payee) it is going to pay.

There is a concept that if an invoice amount needs to be increased then a CR memo is entered and if it needs to be decreased then DR memo is entered. However this concept doesn’t apply in Oracle Payables. Here in Payables the difference between CR and DR memo is of initiation i.e. a Credit Memo is given by the supplier if it finds any discrepancy the amount invoiced and debit memo is given by the customer if they identify any discrepancy.

Debit Memo: A negative change in invoiced amount identified by customer and sent to supplier.

Credit Memo: A negative change in invoiced amount identified by supplier and sent to customer

Moving on,

There are two possible scenarios in Payables for entering a CR or DR memo

1. The invoice is paid
2. The invoice is not paid

In first scenario where invoice was overcharged and has been paid to the supplier; a CR/DR memo will create a Refund i.e. receiving amount in the bank.

In second scenario where the invoice is overcharged but open or not paid; a CR/DR memo will reduce the payment amount.

Here are the steps for entering the invoice for Scenario 1

1. Create an invoice if you want to test this scenario, let’s say invoice number INV-001 with amount 15000/-
2. Create CR/DR memo for same supplier in INV-001
3. Give it a number say INV-001DR1 with amount -3000/-
4. Scroll the invoice header section to the Match Action column and select “Invoice” from the drop down.
5. Don’t give the Invoice Line or Distribution amount.
6. Click on Corrections button.
7. Enter invoice number to be corrected i.e. INV-001 and click Find.
8. Click on Select and enter the amount to be corrected say -2000 or the total amount -3000.
9. Click Correct.
10. With this, the Invoice Line and Distributions will be copied to CR/DR memo with the respective correction in Distribution lines.
11. Now perform the validation.
12. Create Accounting is optional.
13. Now pay the CR/DR memo; you can use the “Pay in Full” option or the Payment window.
14. Select the bank account in which you are receiving the refund from supplier.
15. Enter the check number, which is used by supplier to pay the refund amount.
16. Save the Transaction.
17. The accounting in this case will debit your bank account and Credit the Liability.

Accounting Entry for Refund:

CR/DR Memo

Liability           DR

Expense                CR

CR/DR Memo payment

Bank                   DR

Liability                CR

Here are the steps for entering the transaction in Scenario 2

1. The Invoice for this scenario will also be created already.
2. Enter the CR/DR memo with the reduction amount.
3. Go to payment window.
4. Select the Supplier and every other detail.
5. Select the bank account and document number you are paying from.
6. Click Enter/Adjust Invoice and select the Standard Invoice for which the amount should be reduced in the first line and the CD/DR memo in the next line. You will that the Total will be reduced which will your payment amount.
7. Save the transaction.

That’s All. :)

Your queries are welcome at Atif.Syd@gmail.com

AR: Transaction Write-Offs

What do I mean when I say Transaction Write-Offs?

I mean to say that a customer’s transaction is outstanding for a longest period and you have no clue as to if the customer is going to pay or not, you cannot trace the customer and now you want to write-off that transaction.

Yep it’s called Bad Debts.

How to enter bad debts in Oracle Receivables? That’s your question.

Here’s my answer and Oracle Receivable’s standard functionality:

There is no such term in Receivables as Bad Debts. Receivables suggests that you “adjust” the particular transaction. Yes! Adjustments is type of write off that will cater your Bad Debt scenario.

These are setup and transactions steps for creating and entering Bad Debt Adjustments

Setup Steps:

1. Create a Receivables Activity with Adjustment type. I think adjustment is called a receivable activity because it write offs the outstanding balance on customer.
2. Assign Approval Limit of user to write off amounts. Obviously you cannot let anyone just write off the outstanding balance so you have to define the user’s limit.

Transaction Steps:

1. Query the transaction to write off
2. Adjust the transaction

Here are the details for Setups:

1.Creating Receivables Activity:

Navigation: AR>Setup>Receipt>Receivables Activity

1. Select the Operating Unit for which the activity is being defined.
2. Enter the Activity Name like Bad Debts Adjustments or Uncollectible Adjustemtns
3. Enter the Description (Optional)
4. Select the Type as Adjustments. Since it is defaulted for a new setup so move on.
5. Let the GL Account Source as Activity GL Account
6. Select Tax Rate Code Source as None.
7. Enter the Expense Account in Activity GL Account.
8. Save the Setup

2.Assign the Approval Limits:

Navigation: AR>Setup>Transaction>Approval Limits

1. Query the User Name
2. Select the Document Type as Adjustment
3. Enter the Currency, in case multiple currencies are used
4. Enter the From Amount. This value should be in negative, as the adjustment amount will be -ve of the invoice amount.
5. Enter the To Amount. Do I really need to tell that it should be greater then From Amount?
6. Leave Primary Check box uncheck as it does not relate to adjustment
7. More Tabbed region also does not relate to adjustments.
8. Save the Approval Limit

With this your Bad Debts or Transaction Write-Off is ready to work :)

The question remains about how to use this adjustment?

Hmm… Ok here goes the transaction steps :)

As I said, Query the transaction you want to write off. The Transaction should be Complete. Now do the following

1. Go to Action Menu and select Adjust
2. Select the Activity Name you’ve created for Bad Debt or Write-Off
3. If the whole transaction amount needs to write-off then select Type as Invoice. If partial amount needs to be write-off then select Line.
4. If you select Type as Line then you have to enter the negative amount to be write-off otherwise for Invoice Type the whole outstanding amount comes in automatically.
5. You have to create the accounting of adjustment separately or run the Create Accounting Report

When you save the transaction the outstanding amount is write off and following Account Entry is created for Adjustment

Activity GL Account / Adjustment               DR

Receivables                                            CR

Your queries are welcome at Atif.Syd@gmail.com

I think that’s all for it :)

AP: Recurring Invoices

The concept and use of Recurring Invoice is the same as the  Recurring Journal Voucher in Oracle General Ledger. The only difference in Payables is that you have to define a Calendar according to which the recurring invoices will be generated. And this is the part which is a bit tricky until you exactly know how it works.

The literal meaning of word “Recur” is  “to come again”, I think it is short for the word Re Occur, anyways.

Recurring Invoice means any liability that occurs with a specific span to time. I have used recurring invoice in following scenarios, you can come up with more :)

Recurring Invoice Scenarios:

1. Utility bills
2. Amortization of prepayments

Implementing Recurring Invoices:

Let’s first take a real life scenario and see how to create a recurring calendar on this scenario

Recurring Invoice Calendar

Create recurring calendar according to your need.

Navigation: AP>Setup>Calendar>Special Calendar

1. On the right side of the form there are radio box options select Recurring Invoice
2. Enter the Name of the calendar. Example TestRecurring08
3. Enter the Description of the recurring calendar. (Optional)
4. Enter the Number of Period for recurring invoice calendar
   • If you want Monthly recurrence then enter 12 (Every month for the whole year)
   • If you want Half Yearly recurrence then enter 2 (Twice a year)
   • If you want Half Monthly recurrence then enter 24 (Twice a month for the whole year)

Now enter the calendar. Lets take the example of 24 periods recurring.

1. Enter the Period Name like Jan1 (for the first 15 days)
2. Enter the current Fiscal Year
3. The period Sequence will be  automatically populated when you press TAB button on the keyboard
4. The From Date will also be automatically generated on pressing the TAB button
5. Enter the To Date as 15-Jan-2008 (The year 2008 is for this scenario)
6. Due Date will be blank, System Name will be automatically generated
7. Enter the Period Name for second period as Jan2
8. To Date will be automatically generated
9. Repeat the steps for the whole calendar

Recurring Invoice

Navigation: AP>Invoices>Entry>Recurring Invoices

1. On the form, Enter Supplier Name for whom the recurring invoices needs to generated.
2. Supplier Number will populate automatically,
3. Select the Site for which the invoices needs to be generated
4. Select the Recurring Calendar you created for recurrence
5. Enter the Number of Periods, should be same as defined in recurring calendar
6. Select the First Period of the calendar

Invoice Definition:

1. Enter the Invoice Number (Alphanumeric)
2. Select WHT if applicable
3. Enter Invoice Description
4. Select the Liability Account Code Combination
5. Leave the GL Date blank because if you enter the date say for example 01-JUL-2008, then all the invoices created will have the same GL date but if you keep the field blank then the invoices will have the “From Date” of the calendar for each period.

Line Definition:

1. Either select Distribution Set or PO (Either is mandatory)
2. Give Item Description, Manufacturer and Model Number if applicable

Amount:

1. Enter the First Amount invoice should have, for example, Rs.100
2. Enter Change in Percentage (if required). If you enter 1 then the system will calculate the 1% of First Amount and Adds it to the first amount. Following is the sample table

First Amount = 100
Change = 1%
100
101
102.01
103.0301
104.060401
105.101005
106.1520151
107.2135352
108.2856706
109.3685273
110.4622125
111.5668347
TOTAL=1268.250301

After all is done you can Generate the invoices.

Number of Invoice is the quantity of invoices you want to generate, for example you have created the recurring calendar with 24 periods and you give the Number of Period in the recurring form as 24, and you give 12 as the Number of Invoices.

Take the following example of the above scenario

Scenario 1

Recurring Calendar Period: 24 (Jan-08 to Dec-08)

Period given in Recurring Invoice Form: 24

Starting Period: Jan1-08

Number of Invoices: 24

24 Invoices will generate from Jul-08 to Jun-09

Scenario 2

Recurring Calendar Period: 24 (Jan-08 to Dec-08)

Period given in Recurring Invoice Form: 24

Starting Period: May2-08

Number of Invoices: 8

8 Invoices will generate from May2-08 to Sep1-08

Click on Create Recurring Invoices to generated the invoices in Invoice Workbench

The Next on the form means that next invoice will be generated from Sep2-08 till Dec2-08

When you click Create Recurring Invoices a form will open showing the invoice number with the period name and the GL date as given in the recurring invoice form

Your queries are welcome at Atif.Syd@gmail.com

That’s All :)

GL: Enabling Pakistan as Territory

This issue is particular for Pakistan.

In R12 we need to setup Legal Entity as the part of MultiOrg Structure. In order to do that we need to define the Address of the Entity and initially “Pakistan” is not defined as a territory. So to define Pakistan as a territory we have to do the following setups.

Responsibility

Attach responsibility “Legal Entity Manager” or “Legal Entity Admin”

Setup

1. Go to “Legal Entity Admin” responsibility
2. Go to Lookup or Define Lookups
3. Search for “LE Registration Code” in Meaning
4. Add “NTN” as Code and “National Tax Number” as Meaning. Give description as “Pakistan – CBR”
5. Search for “Registration Code” in Meaning
6. Add “NTN” as Code and “National Tax Number” as Meaning. Give description as “Pakistan – CBR”
7. Go to Jurisdiction
8. Select Federal and click GO
9. Search Pakistan in Territory
10. Select Identifying as YES
11. Give Pakistan as Name
12. Select Legal Entity Registration Code as NTN
13. Click Apply

This will enable the Pakistan as Territory in Legal Entity Form Address.

Your queries are welcome at Atif.Sidiki@gmail.com

That’s All :)

AP: Petty Cash

Petty cash is one of the process that used in Pakistan and even in other countries but Oracle Application does not have a Standard Feature to cater to this process.

When I say “does not” it means that there is no standard functionality of petty cash. Obviously Oracle has suggested its workaround.

I am writing or explaining my workaround for handling petty expense and payments made from petty cash.

According to my knowledge, I know two ways or workarounds to handle petty cash in Oracle Payables:

Workaround 1:

1. Create bank account named Petty Cash
2. Create a Supplier named Petty Cash Supplier.

Use the Cash Management Module to Reimburse your Petty Cash Bank Account from your actual bank account.

Use the Petty Cash Supplier for entering the invoice with expense accounts. You can use the multiple Supplier Sites if you have petty cash administration at different sites.

You can also use the petty cash bank account for Payments made using Cash method.

Workaround 2:

1. Create employee as a Petty Cash Supplier, give advance to that employee, and apply petty cash standard invoices.

In this case you cannot actually pay your Expense Report or Reimburse your Employee Expenses.

I use both of the above methods. But I personally suggest the first method. Though it may be a lengthy one but still it keeps details of every transaction and payment made using petty cash bank account.

There can be other workarounds as well which I haven’t came across with.

I don’t think there is any need for details in this regard? If you have any queries then email me

Your queries are welcome at Atif.Syd@gmail.com

Take Care.

That’s All :)

Oracle EBS: Banks

The concept of Banks in Oracle Apps is same as Customer or Suppliers i.e. Banks are treated as Party or a Shared Entity. Banks are shared among following modules:

• Payables
• Receivables
• Treasury
• Payroll
• Cash Management

Technically Banks are owned by Cash Management.

The hierarchy of banks is as follows:

• Bank
  • Bank Branch
    • Bank Account
      • Payment Document or Check Book

Banks are used in Payables for Payments and in Receivables they are used for Receipts. Then these payments and receipts are automatically transferred to Oracle Cash Management for reconciliation depending on the configured options for reconciliation and Receipt Methods.

The Bank setups are changed in R12 as compared to R11i. The two major changes in Bank setups are:

• The concept of Account Owner in Bank Account Setup.
• And secondly you have to configure Cash Management Responsibility whatsoever to setup a bank.

This account owner refers to Legal Entity. You can see the use of this concept where there are more than one legal entity working on a single instance. But even if you are using a single Legal Entity, you still have to give the right to Legal Entity in order to setup a bank account.

Here are steps for setting up a bank account:

1. Create a Cash Management responsibility and give the attach the following profile option
   1. GL: Ledger Name
   2. MO: Operating
2. Log in the application using “SYSADMIN” user ID
3. Click on “User Management” Responsibility
4. Go to “Roles & Role Inheritance”
5. Search for “Cash Management” in the Application search field
6. Look for the Cash Management responsibility you create in Step.1 and Click on Update icon
7. Click on “Security Wizard” Button. (Click “Save and Proceed” if required)
8. On the next form click “Run Wizard” icon against the field CE UMX Security Wizard
9. Click on “Add Legal Entity” button
10. Search and attach the legal entity.
11. Give the Bank Access Grant
12. Save the records

By doing this you are now able to setup a Bank Account

That’s All for now :)

AP: Suppliers

First let’s see what is the literal meaning of the term supplier?

A person(s) or an organization(s) that “supplies”, “sells” or provides something, it can be goods or services or both, tangible items or intangible items. For Example:

1. A florist supplies flowers, bouquets and plants, and a gardener supplies its services of taking care of the garden.
2. Oracle Corporation supplies both products as well as services, Oracle EBS is a product and My Oracle Support(formerly Metalink) is a service.

Are we clear on what is the meaning of Supplier?

Now, here is what a Supplier is in Oracle Application:

• Theoretically, An entity to which your organization is Liable To, i.e. your organization has booked some liability against that party. Also the Supplier Setup form only shows natural account which has Liability as its nature. The reason for only one nature of account to display there is that Suppliers are you Creditors.
• In Oracle Apps a supplier can be:
  • General Supplier, Hardware Vendor, Raw Material Manufacturer, Stationary, Book Store, Insurance Companies, Leasing Companies, Workshops, etc.
  • Government Organizations
  • Tax Collecting Authorities. In case of Pakistan it would be Federal Board of Revenue(FBR), State Bank of Pakistan(SBP) and National Bank of Pakistan(NBP)
  • Utility Suppliers like Electricity Department, Cell Phone and Land Line Service Providers. In case of Pakistan PTCL, KESC, WAPDA, etc.
  • Organization’s Employees: Yes, your employee is also your supplier. Not logically but technically in case of Oracle Apps. You have to open your employee as a supplier when you to Reimburse the Expense claims of your employee.
  • Petty Cash Administrator: Another Employee opened as a supplier to pay Petty Cash Advances and maintain petty cash through Oracle Payables.
  • Petty Cash Supplier: We open this supplier (particularly in Pakistan’s scenario) to pay off all the petty expenses.
• Technically, a shared entity across all Oracle Applications
• In R12, Suppliers are owned by Oracle Purchasing module

We see suppliers mainly in Oracle Purchasing and Oracle Payables Module. Since Oracle Apps is designed to cater the variety of industries globally, so there is a supplier’s hierarchy to cater the global need of recording the liability as well.

Here is how Oracle Apps defines a Supplier’s Shared Entity. It divides the Supplier in to two portion:

1. Supplier Master or Header Level – Part of Trading Community Architecture and is visible across the instance.
2. Supplier Site Level – Visible only to the Operating Unit.
   

Both levels are required to define a supplier in the system. The transaction is performed at Site Level i.e. Invoice is booked against the supplier’s site.

Let’s take an example of a supplier to understand the Master and Site level concept. Suppose there is a Hardware vendor which has its branches in different cities and/or different countries. This hardware vendor has its Head Office in Karachi and sales offices in Lahore and Islamabad. This hardware vendor has its policy that all the purchase will be dealt from sales offices but the receiving of cash will done from Head Office as its finance department resides there. Now your organization purchase its hardware from Lahore but has to pay for it to the Head Office in Karachi. There are two types of document generated in this scenario.

1. Purchase Order
2. Payment Cheque [or Check as Oracle Apps says it in American English ;) ]

To deal with this, Oracle has concept of Supplier Site. For the above scenario, there will two sites for this vendor

1. Lahore Site, purpose of this site will be Purchasing
2. Karachi Site, purpose of this site will be Payment or Pay Site

In Oracle Purchasing you will only be able to raise the PO against the Lahore site and Karachi site will not be visible in the LOV in Purchasing Module. And in Oracle Payables you will only be able to enter invoice and pay check against Karachi site.

So you see the purpose of Site and Master. There is always one Master Record of supplier and multiple Sites depending on the scenario.

NOTE: Master record doesn’t mean it is Head Office and Site are Branches. Head Office and branches both are sites.

SUPPLIER SETUP

Now here are the setups steps for Suppliers in Oracle Payables. I will not be able to discuss “Each” option but only the ones necessary or is used in Pakistan particularly:

1. Setup an Inventory Organization which is part of Payables setups
2. Configure Payables System Setup
3. Create Supplier Master
4. Create Supplier Site
5. Configure Site options

Payables System Setup

These options are defaulted on supplier form. Most of the fields are optional but it is for ease of entering the supplier data. All the fields are changeable on Supplier form or Invoice workbench. You configure the following in this form

• Supplier Numbering: Auto or Manual. Alphanumeric or Numeric.
• Invoice Match Option: How you want to match the invoice with PO or after receiving items
• Payment:
  • Currency: A default payment currency.
  • Pay Group: This is the Grouping of suppliers in a category. For example, Utility Suppliers, Sundry Creditors, Chemical Supplies etc. But I use it for categorizing the invoices, so I don’t use it here as its an optional field as well. Pay group is defaulted to Supplier form and from supplier form to Invoice Workbench. You can change it on the workbench form.
  • Term Date: The date when system start calculating the payment terms thereby calculating the invoice aging.
  • Pay Date Basis: If your supplier is giving discount then you can setup a payment term with discount and set the pay date basis accordingly
  • Payment Term: A default payment term

This setup is across the instance and is DEFAULTED on every new supplier.

Supplier Master Setup

• Supplier Type: Oracle bifurcates supplier in two types, Standard and Employee. The supplier types I’ve mentioned above are Organization Type like Utility, Manufacturing, Tax Authority. etc.
• Organization Name: It’s the name of the supplier. For example Oracle Corporation
  • NOTE: Naming convention should be strictly followed. Oracle itself emphasizes on setting up a naming convention for suppliers becuase for the application “Oracle Corp.” and “Oracle Corporation” are two different suppliers.
• Country: Do I need to explain this?
• Tax Registration Number: This field is also self explanatory.
• Taxpayer ID: Again a self explanatory field. In Pakistan we use this field as NTN
• Alias: I haven’t used this field yet.
• URL: Self explanatory.

Once done with the master. A detailed web form open with Company Profiles, Banking Details etc.

Here you can configure the option for both Master and Site and to do so you have to create a site.

Supplier Site and Detail Setup

• To create a site you have to create an address. On the Supplier detailed web form there is a link “Address Book” on the left side bar. Go to this link and create an address.
  • Country: I don’t think I need to explain this field
  • Address Line 1: At least one address line is mandatory. You can use the other four lines as well.
    • NOTE: Do not enter city in any of the address line. City field is given separately.
    • NOTE: Do not use the commas at end of the address line because the system automatically puts one after each Address Line.
  • Address Name: This is basically Site Name. This name will appear on the invoice form.
    • NOTE: You can enter a larger text but the invoice form will only displays 15 characters. So be careful while naming the site.
  • Address Purpose: The site you are adding is for what purpose? RFQ, Purchasing or Payment
  • After you are done with address creation then you have to attach this site to and Operating Unit.

Now you are able to setup various options like following

• Tax Details: For enabling Withholding Tax and Sales Taxes
• Accounting Controls: For Liability account, Prepayment account and Distribution Sets
• Payment Terms: Different sites can have different payment terms
• Payment Methods: Define the method of payment medium used for this site. Like Check, EFT or Bank Instruction.

Remember: Some options requires configuring both Master and Site level. Like Payment Methods and WHT.

I will elaborate the Setup of Supplier in this same entry later. If you have any questions email it to me.

That’s All :)

AP: Accounting Entries

It is confusing for most of the beginners or new users to understand how an Oracle Application is performing the accounting on various events. Though after going through the application they get use to it. The option of “Create Accounting” and “View Accounting” helps a lot.

Here are some of the events, its explanation and its accounting performed by Oracle Payables, technically, the accounting engine is moved to Oracle Subledger Accounting (SLA). But the accounting is still viewed in Payables.

Anyways,

STANDARD INVOICE:

	DEBIT	CREDIT
Expense / Item Expense / Misc. Expense	100
Supplier / Liability		100
PAYMENT:
Supplier / Liability	100
Bank / Cash / Cash Clearing		100
TOTAL	200	200

How is liability account code combination credited in the above accounting entry?

You see when you define Supplier’s Site, you have to give the liability account code combination on that particular site. Although the liability account is defaulted from Payables’ Financial Setup, but you can change the account code according to your need. You can even change the liability account code combination on the Invoice Workbench by enabling the Column from Folders option.

When you create a standard invoice, you have to give the Supplier Master name and a Site, from this site, the application picks the liability account. For expense account code combination you can either use a distribution set or manually enter it.

Now comes the payment, the liability account is fetched from the supplier whose invoice is being paid, the cash clearing or cash account is fetched from the bank you select during the payment. This account is defined during the Bank Account Setup.

PREPAYMENTS / ADVANCES:

	DEBIT	CREDIT
Prepaid Expense / Advance Paid	70
Supplier / Liability		70
PAYMENT:
Supplier / Liability	70
Bank / Cash / Cash Clearing		70
STANDARD INVOICE:
Expense / Item Expense / Misc. Expense	100
Supplier / Liability		100
PREPAYMENT APPLIED TO STANDARD INVOICE:
Supplier / Liability	70
Prepaid Expense / Advance Paid		70
TOTAL	310	310

The idea of prepayment or advance is that you pay the supplier before receiving its goods or services. Now what if you pay the supplier but due to some reason or dispute you cancel the agreement or contract before receiving the supplies or service from that supplier? The supplier will have to pay back, now if you are receiving the cash it’s more of an asset. So the prepayment’s accounting is doing the same. When you create a prepayment invoice, the application automatically selects the Assets account given on that particular supplier’s site. And when you apply that prepaid invoice on the standard or actual invoice, the application clears the asset account as well as the liability.

In the above scenario of Prepayment, the total liability was PKR. 100, but the prepayment or the advance was paid of PKR. 70. When the Prepayment was applied to the Standard Invoice, the liability on Standard Invoice was decreased by PKR. 70. Still the remaining amount of PKR. 30 has to be paid and it will be a Standard Payment.

INVOICES with “TRACK AS ASSETS”:

	DEBIT	CREDIT
Asset Clearing	100
Supplier / Liability		100
INVOICE TRANSFERRED TO ORACLE ASSETS:
Asset	100
Asset Clearing		100
TOTAL	100	100

“Track as Asset” is a functionality for moving the items from Oracle Payables to Oracle Assets. It is a check box on the Invoice Line TAB and can be enabled on Distribution Line using the Folder View option. When you check this box and run the “Mass Addition Create Report” from Payables, the items on invoice line or distribution line moves to Oracle Assets. You can give the item description on invoice line so that you don’t have to give it when the items are transferred to Oracle Assets.

Now, how does the system identifies that on which account it should move the items to Assets?

It is because the same Asset Clearing account is given in the Assets Setups.

INVOICE with WITHHOLDING TAX (say 6%):

	DEBIT	CREDIT
Expense / Item Expense / Misc. Expense	100
Supplier / Liability		100
Payment with Withholding Tax :
Supplier / Liability	100
Bank / Cash / Cash Clearing		94
Withhodling Tax		6
WITHHOLDING TAX  INVOICE (Usually Auto Generated)
WHT Expense	6
WHT Payables (NBP or SBP)		6
TOTAL	106	106

The above scenario is of an invoice with a withholding (WHT).

In above accounting entry the WHT payables or Liability account is selected from the supplier defined as a Tax Authority. The WHT expense is picked from the WHT setup.

This is some basic accounting entries made by Oracle Payables.

That’s All :)

Oracle EBS: Key Business Flows

Every business has some Processes, every process has some Flows to meet some requirement or an outcome. These processes and flows can be divided to departmental level. Every department in an organization has some Process Flows and upon execution of these flows the department meets some desired outcome.

Number of departments involved in a process depends on the nature of the process and its flow. Keeping in mind the process and its flow an automated application is designed, developed and implemented to help the department(s) fasten up the flow and efficiently execute it. If the application caters a whole process then it can be called as an ERP application.

These departments and processes can categorize in to two stages:

1. Front Office
2. Back Office

Oracle Application or E-Business Suite is one of these automated application which cater different processes with the help of different applications of module.

We can also call a “process” as a “cycle”. Oracle Applications caters different business cycles with different applications or, in terms of ERP, different modules.

Here is a list of how a standard business process catered by Oracle E-Business Suite, and each process has different Business Cycle.

1. Plan
2. Source
3. Make
4. Market
5. Sell
6. Support

Each business process has a cycle and for each cycle there are set of Oracle Application. Here is the hierarchy of how I’ve defined the Process, Cycle and Oracle Application:

• PROCESS
  • Cycle
    • Oracle Application

So here’s the whole thing:

• PLAN
  • Concept to Release
  • Forecast to Plan
    • Demand Planning,
    • Order Management and
    • Advanced Supply Chain Planning
  • Plan to Replenish

• SOURCE
  • Procure to Pay,
    • Purchasing
    • Inventory
    • Payables
    • iExpenses
    • Cash Management
    • General Ledger
    • Assets (optional)
  • Inventory to Fulfillment

• MAKE
  • Demand to Build
  • Inventory to Fulfillment

• MARKET
  • Campaign to Order

• SELL
  • Campaign to Order
  • Click to Order
  • Order to Cash
    • Order Management
    • Inventory
    • Receivables
    • Cash Management
    • General Ledger
  • Contract to Renewal

• SUPPORT
  • Contract to Renewal
  • Request to Resolution

Back Office Cycle in particular includes:

• Benefits to Payroll
• People to Paycheck
• Project to Profit
• Accounting to Financial Reports

I’ve explained P2P and O2C cycle in detail here. I haven’t gone through the various other cycles and I regrettably accept my knowledge’s limitation in this regard.

That’s All :)

Oracle EBS: Using Query Mode

“Query” means question. There is a language used in Oracle called Procedural Language/Structured Query Language (PL/SQL).

Oracle uses this language in user forms to find records. It’s one the method of finding records. Others are by click Find(Torch) button and second is View>Find but sometimes these option are unavailable and you have to use the query mode.

I like query method the most out of the three. I think it’s a fast way to find the record if you know that it exists on the form where you are querying it.

Anyways, How does it work?

To toggle on the query form click F11on the form you want to search or query the record. If the form fields turns Blue, it indicates that you’ve entered the query mode. Enter the query and execute it by pressing CTRL+F11. You can see the instructions on the lower right side of the screen. To exit the query mode you can simply click F4 which is also used to close the forms.

How to enter a query? or What should we type to search a record? or What is the syntax of any query?

Well the simplest query or the one way of entering query that I usually use is %Record%Name%

Yes, you use the percentage sign in between words or the keywords, but that not all to it. There are different meanings of placing the % sign.

Let’s take an example of the list of records and what will happen of placing the % sign.

• Oracle E-Business Suite
• Oracle General Ledger
• Customers in Oracle Receivables
• Suppliers in Oracle Payables
• Query Mode in Oracle

Suppose the above mentioned words are records in a form. You want to query the record that starts with the word Oracle. The query will be Oracle%

Results will be: Oracle E-Business Suite and Oracle General Ledger.

if you want to find the records with oracle in between them and where ever it is used then the query will %Oracle%

Results will be all records as every record has Oracle in it.

and if you want to find records that ends with oracle then the query will be %Oracle

Results will be : Suppliers in Oracle Payables and Query Mode in Oracle

This query mode find is sometimes Case Sensitive. By sometimes I mean on some forms. I will note the forms with and without case sensitive search and will list them here.

That’s All :)

GL: Allow Dynamic Inserts

If you read this statement “Allow Dynamic Inserts” without any context then it might only give you the literal meanings. In Oracle Apps this statement is used in context with Account Code Combinations.

What is dynamic insertion with account code combination? and what will system do if it is not allowed and the Allow Dynamic insert is disabled or unchecked?

Dynamic Insertion with account code combination means entering a “dynamic” code combination during transactions.

We know that the COA structure is made up of multiple segments, each segment has multiple and various values. If you disable dynamic insertion then you have to “statically” create the account code combinations separately from the screen GL Accounts.

Navigation: GL>Setups>Accounts>Combinations

On this form you can create the logical code combinations, so that no one can create illogical code combinations during transactions. In order to stop any kind of code combinations or dynamic code combinations entries you disable the Allow Dynamic Inserts options. When you disable this option, they system doesn’t allow combinations during transaction that are not created in GL Accounts.

NOTE: Combinations once made cannot be deleted, it can only be disabled.

Disabling Allow Dynamic Insert is a way of preventing the user from making mistake by entering the code combination which are not logical or correct.

That’s All :)

Oracle EBS: Diagnostics – Examine

This option lets you view or find the internal IDs of the record of particular application.

It is useful when you want to integrate the Oracle Apps with any other application.

For example: Integrating Journal Entries in General Ledger,

Payables Invoice and Suppliers in Payables

Receivables Invoice, Receipts and Customers in Receivables. Etc.

This integration is called “Interfacing” in Oracle Apps. Oracle has provided “Interface Tables” of the feature which can be used with other applications.

Examine can be use to find or know what is the ID generated by Oracle Apps for particular record, so that that ID can be used for interfacing.

How to use it?

Navigate to the Oracle Apps form for which you want to know the ID, say, you want to know the supplier’s site ID. The easy way to know it is to navigate to Invoice Entry form and enter the supplier’s name and site for which you want to know the ID. Once you’ve selected the desired supplier and its site, highlight the site field or just click on it and go to Help Menu> Diagnostics> Examine. The system will ask for the password which is usually “apps” but I think it is advisable to change it and the DBA should change it when s/he installs the new environment.

Anyways, if you know the password, enter it. A window will appear with three fields,

• Block: Portion or Part of form. Sometimes the form is divided into regions, like Payables Invoice is divided into Header, Lines, Prepayment, etc. All the Tabs are different regions.
• Field: Fields available in that particular region
• Value: This is what we are looking for, Value broadly consist of two things “Display Name” and “ID”. If you’ve selected or pointed your cursor on the site field, then examine field will display VENDOR_SITE_CODE and if you enter VENDOR_SITE_ID in field, then the internal value of this particular site will be displayed. It will be a numeric value which is used for in interfacing. Similarly you can view other IDs of the records as well. Like if you type Terms_ID then the system will display the ID for Payment Terms attached to the invoice.

Happy Examining.

That’s All :)

GL: Cross Validate Segments

Cross Validate Segment? What does it means?

It means to cross validate the Segment Account Code Combinations which is entered by user on the JV form, particularly.

It works great when you have enabled “Allow Dynamic Inserts” on the COA Structure form then you should also enable the “Cross Validate Segment”.

How does it work? and why with Allow Dynamic Inserts?

It works when you define certain rules. Rules are nothing but a valid or invalid combinations of all segment values in that particular chart of account. Allow Dynamic Insert lets you create any code combination you like but with the Cross Validation Rule you can only select the combination on the COA form but it will give you error message when you click OK.

You “Include” valid combinations and “Exclude” invalid combinations.

Navigation: GL>Setup>Financials>Flexfields>Key>Rules

1. Select the Application, Flexfield Title and Structure
2. Enter the Rule Name and optionally enter a Description
3. First think of the rule and what it says? Enter the Error message according to your rule. Example is given in later.
4. Error Segment means on which segment should the application bring the focus or the Cursor
5. Enter From and To date or the validity of the rule
6. Select Exclude or Include depending on the rule you are about to enforce.
7. Select the inclusive or exclusive Account Code Combination. Now this is the tricky part. So let’s take an example to grab the trick.

Example:

Consider a chart of account with segments Company-Branch-Department-Natural Account

Values Company: 01, 02, 03

Branch: 000,100,101, 102, 200, 201, 202, 300, 301, 302…

Department: 00,10, 11, 12, 13, 14, 20, 21, 22, 23…

Natural Account: 00000, 10000, 10100, 10101, 10102, 10103, 10104, 10105, 20000, 20101, 20102…

Now let’s say that Branch 101 has departments from 00 to 14. So we want that whenever branch 101 is selected the department 20 to 23 should not make a code combination as branch 101 don’t have those departments. The rule will be

Rule Name: Branch 101 and Departments

Error Message: You cannot select this department with Branch 101. Change the department or the Branch.

Error Segment: Department

Exclude: 01-101-20-00000 to 01-101-23-99999

Now there is another scenario with the same COA that the department 21 to 23 can only work with natural accounts from 20000 to 29999. so the rule for this scenario will be

Rule Name: Dept 21 to 23 and Natural Accounts

Error Message: You can only select natural accounts 20000 to 29999 with this department. Change the Department or the Natural Account.

Error Segment: Natural Account

Include: 01-000-21-20000 to 01-999-29999

You can include and exclude as many accounts and account ranges you like. And remember this is not same as Security on account segments, cross validation rules are different from security. Security hides the segment values, whereas, Cross Validation Rules don’t hide the value, it stops you from making illogical code combinations.

Happy Ruling.

That’s all :)

P2P and O2C: Procure to Pay and Order to Cash Cycles

Oracle has developed this ERP solution which truly covers these both cycles as well as many others. Oracle EBS comprises of the Standard Core Business Management applications like General Ledger, Payables, Receivables, Purchasing, Order Management, Inventory, Discrete Manufacturing, Process Manufacturing , HRMS and many more. The application I’ve mentioned are so integrated that it handles the beginning to end of both Assets and Liabilities. When I say Assets I am referring to applications like Order Management and Receivables, and when I say Liabilities I am referring to Purchasing and Payables and both of these Assets and Liabilities are finally pushed and calculated in Oracle General Ledger.

The base or the heart of Oracle EBS is Oracle General Ledger. Let me call GL an intrinsic.

Procure to Pay:

First let’s see what the heading itself means? Procure to Pay means Procuring Raw Materials required to manufacture the final or finished Goods to Paying the Supplier from whom the material was purchased. But this is not just two steps. It involves many steps. Let’s see the steps and Oracle Application involved in performing those steps.

1. Oracle Purchasing: You enter Suppliers of different materials and products you want to purchase to manufacture a finished good that your organization plans to sell.
2. Oracle Purchasing: You prepare a Request for Quotation (RFQ) and send it to different suppliers to get the best and/or economical price for the product.
3. Oracle Purchasing: Suppliers sends their quotations and you upload those quotations in Oracle Purchasing to get the best three quotes and further to get the one best quote.
4. Oracle Purchasing: You prepare a Purchase Order(PO) against the best RFQ to buy the goods from the supplier who quoted the suitable price and sends the PO to that supplier
5. Oracle Purchasing: The supplier receives the confirmation of purchase from PO and ships the ordered goods. You receive the goods enter a Goods Received Note (GRN) in Oracle Purchasing.
6. Oracle Inventory / Oracle Assets: It’s up to you whether you want to receive the goods at your head office or you Inventory directly. In either case you move the received goods to your different Raw Material Inventory from Oracle Purchasing to Oracle Inventory and the Item Count increases. If the item is Asset Type then it will move to Oracle Assets at the time of Invoice creation in Oracle Payables.
7. Oracle General Ledger: Once you move the goods to Oracle Inventory, it sends the Material Accounting to Oracle General Ledger.
8. Oracle Payables: After this the supplier sends you the invoice for the purchased goods and you Enter or Match the invoice against the PO from Oracle Purchasing in Oracle Payables. As said before, if the item is Asset in nature then it will move to Oracle Asset.
9. Oracle General Ledger: When you enter the invoice it means that you have created a Liability against that supplier and also you have recorded the expense incurred or asset purchased. Oracle Payables sends the invoice accounting to Oracle General Ledger.
10. Oracle Payables: You pay the invoice and settle the Liability.
11. Oracle General Ledger: The liability is settled and your cash movement account is updated.
12. Oracle Cash Management: As you pay the invoice Oracle Payables sends the payment information to Oracle Cash Management for Bank Reconciliation. Once reconciled, Oracle Cash Management sends the updated Bank/Cash accounting entry to Oracle General Ledger.
13. Oracle General Ledger: Your cash at bank is updated with actual balance.
14. Oracle Process Manufacturing(OPM) / Oracle Discrete Manufacturing(ODM): You start the manufacturing of your final product. Both OPM or ODM requests the different raw materials from you inventory organizations and manufactures a finished good.
15. Oracle Inventory: As the raw materials are issued to OPM and ODM the inventory sends the issuing material accounting to General Ledger and decreases the Item Count from the Raw Material Store. As the finished good is prepared, Oracle Inventory receives the finished good in Finished Good Store and increase the Item Count.

Now the final product is ready to be sold in the market and from here the O2C cycle starts.

Order to Cash Cycle:

Order to Cash means Customer’s Order Placing to Vendor’s Cash Receiving. When your final product is ready to be sold, you market it. The customer gets fascinated with the marketing campaign and decides to buy your product and from here starts the O2C cycle.

1. Oracle Order Management: Customer places the order.
2. Oracle Order Management: You enter the customer order
3. Oracle Inventory: Check the available unit and the quantity ordered by the customer.
4. Oracle Order Management: You ship the product to customer site and decreases the Finished Goods inventory.
5. Oracle Receivables: The customer receives the product and you invoice the customer.
6. Oracle General Ledger: You record your revenue and receivables.
7. Oracle Receivables: The customer pays and you receive the cash/check.
8. Oracle Cash Management: Oracle Receivables sends the customer receipt for Bank Reconciliation. After reconciliation, Oracle Cash Management send the actual bank balance or Oracle General Ledger.
9. Oracle General Ledger: You have the actual bank balance.

This is how the P2P and O2C cycle works, but this is not the only way, obviously there are many other applications with different cycles. This is one of them.

That’s All :)

Oracle EBS: Responsibilty

General Perspective

As the name itself suggests understanding that responsibility means “Being responsible”, but how does it fits in an ERP application? Hmm. Good question. What I think about this is that when an employee agrees to serve an organization, he is assigned some task and “responsibilities”, these responsibilities varies depending on his role in the organization. He has the access to some documents and files whereas some of the information is not provided to him or maybe that information is irrelevant to his role and designation and he doesn’t need to know it. Similarly if the organization is using some automated system then that employee is assigned with the rights relevant to his role. He has to perform certain functions and prepare certain reports in order to carry out his responsibility.

Oracle Perspective

In Oracle, Responsibility is almost the same as described above, the only major difference is that here responsibility is referring to an Oracle application or EBS module with certain level of access to documents (Reports, Request), information(Forms, Tabbed Regions) and tasks (Menus and Functions) that employee can perform on that module or application. Another definition of Responsibility can be that “An application assigned to an employee to perform his tasks and responsibilities”.

Responsibilities are made up of or composed of following:

• Application i.e. General Ledger, Payables, Assets etc.
• Menus
• Request Group
• Exclusion of Menus and Functions
• System Profile Options (which are assigned through another form)

Responsibilities are created and assigned through another responsibility called “System Administrator”. When a fresh instance is installed, a default User ID is available in the instance as “Sysadmin”. This User ID has the System Administrator responsibility as well as another responsibility called “User Management” through which we can create User IDs. Generally the System Administrator responsibility is owned by the Oracle Application Administrator or if I may say this responsibility is owned by MIS department. They are responsible for creating, updating and changing responsibilities as well as creating User IDs and assigning rights and accesses.

The flow of creating responsibility and user is

1. Decide the Roles in organization,
2. Assign Task to these roles,
3. Decide the Rights of the role according to the tasks,

After doing this HR exercise, In Oracle Application

1. Create Menus according to the Rights,
2. Create Request Group according to the Rights,
3. Create Responsibilities and attach particular Applications, Menus and Request Groups
4. Create User IDs and attach responsibilities accordingly.

How responsibility works in a business process?

Let’s take an example of an organization’s finance department to see how Responsibility works. The hierarchy of department is Manager, Supervisor and User. Manager looks after the function of the whole department, the supervisors and users are assigned with the task of Payments and Receiving. There is a Payables Supervisor who looks after every payment related transaction and a Receivables Supervisor who looks after every Receiving. Similarly there is a Payable User and Receivable User. Payable users are assigned with the task of recording organization’s liability and setting it off, or in other words, payables user is responsible for recording or entering Payables Invoices and making Payments but cannot create Supplier or Bank or Open/Close accounting periods. The supervisor of Payable can enter invoices, make payments as well as he can also open suppliers and bank and also has the access to Payables accounting calendar. To assign the employees with their tasks we will be creating two Responsibilities of Payables application, AP Supervisor and AP User. AP Supervisor responsibility will be having the rights to Invoices, Payments, Suppliers and Banks. AP User responsibility will only have the function of Enter Invoice and Payments. Every employee will have a User ID in Oracle Application; We will assign both the responsibilities to the respective User IDs.

That’s All:)

GL: MassAllocation

The basic concept of Mass Allocation is dividing a cost on some factors.

If we take a simple example then consider 3 departments X, Y and Z using a single landline telephone. Each department has 2, 3 and 6 employees respectively. The bill for month of June-09 of landlines comes out to be Rs.1700. If you have to calculate the telephone usage for department Y. How will you do that? Is it Rs.1700? No. Is it 1700/3 (total divided by total number of employees in dept-Y)? No, because there were 8 more person using the same landline connection. The answer is that you will allocate the total cost into each department based on the number of employee it has. So in this case the allocation will be 1700*3/11 and you’ll get Rs.463.

Here is the department wise total of the telephone bill:

Department X: Rs.309.09 (2 employees usage of 1700)

Department Y: Rs.463.63 (3 employees usage of 1700)

Department Z: Rs.927.27 (6 employees usage of 1700)

This is the formula for MassAllocation A*B/C where,

A = Total Cost

B = Factor (Number of Employee of particular department)

C = Total Factor (Total Employees)

So the Allocation formula for Department Y will be

A = 1700 (Total Landline Bill for a particular month)

B = 3 (Total Number of Employees in Department Y)

C = 11 (Total Number of Employee in all three departments)

In Oracle General Ledger this facility is given to divide or allocate your expenses or revenue income on your selected distributing criteria which can be your number of departments, branches, head count, covered area, etc. In my above example I used Head Count as the basis of allocation.

Steps for generating a Mass Allocation Journal:

1. Pass a Standard Journal – This will identify your “A”
2. Pass a STAT Journal – This will identify your “B” and “C”
3. Define Mass Allocation Formula Batch and Journal.
4. Validate the Formula.
5. Generate the formula for specific accounting period.

Let’s see how we can carry out the process of Mass Allocation in General Ledger.

First let me take a scenario. Consider an organization with 4 divisions or departments:

1. Enterprise Resource Planning (ERP)

2. Software Development (SD)

3. Software Support (SS)

4. Network Infrastructure (NI)

The COA Structure of this organization is Company-Branch-Department-Product-Account

The segment values of Department or the hierarchy of Department segment is

0000 – Common or No Department

1200- Information Technology (Parent) (Child Ranges: 1201 – 1299)

1201-ERP

1202-Software Development

1203-Software Support

1204-Network Infrastructure

Let’s allocate the telephone bill expense of Rs. 18950 for the month of June incurred at Karachi branch on the number of employee each department has. The allocation basis in this example is Head Count per Department.

The account code for Karachi branch is 101 and the natural Account for PTCL expense is 50201 and each department has 9, 11, 5, and 3 employees respectively. That is ERP has a head count of 9, SD has 11, SS has 5 and NI has a head count of 3.

Now the MassAllocation procedure steps starts.
STEP1: We will create a total cost or “A” of the formula. Pass a Standard JV in the period of JUNE with the following Lines

Line1: 1-101-0000-00-50201 18950(DR)

Line2: 1-101-0000-00-10122 18950(CR)

Line 1 Account Description: XYZ-Karachi-NoDeparment-NoProduct-PTCL Expense

Line 2 Account Description: XYZ-Karachi-NoDepartment-NoProduct-Bank

This journal entry is equivalent to paying your PTCL telephone bill. Ideally this expense entry should be coming from Oracle Payables. We are manually entering this actual journal so that we can created a Cost Pool “A” having an amount of Rs.18950.

STEP2: Now we will create the “B” and “C” or Usage Factor and “Total Usage”. Pass a STAT JV. STAT is short for Statistical and it can be used by changing the currency from PKR to STAT. The STAT journal doesn’t need to be balanced. But they do affect the account balances if we inquire on the currency type of TOTAL but let’s not get there, it is a different topic. Simply pass a STAT JV to create “B” and “C”. Remember the Period of the JV should be JUNE as the Standard JV.

The account code combination for the STAT journals in this scenario will be

Line1: 1-101-1201-00-50201 9(DR)

Account Description: XYZ-Karachi-ERP-NoProduct-PTCL Expense

Line2: 1-101-1202-00-50201 11(DR)

Line3: 1-101-1203-00-50201 5(DR)

Line4: 1-101-1204-00-50201 3(DR)

By passing or posting this STAT journal we are creating a basis for expense allocation. The line 1 tells that the XYZ organization has 9 employees at Karachi branch in ERP department incurring PTCL Expense. We can enable UOM on STAT journal by enabling the profile option JOURNAL:MIX STATISTICAL AND MONETARY to YES. Similarly so on and so forth. Now where are “B” and “C” in this journal? You can see 4 lines with changing Department codes, these four lines individually represent Usage Factor “B” which is 9, 11, 5 & 3 and collectively they represent Total Usage “C” which is equal to 9+11+5+3=28.

Now moving on with STEP3

Create a MassAllocation Batch and then a Journal. Name it Karachi PTCL Expense Formula.

When you open the formula entry form you will find the three constant of the Mass Allocation formula A, B, C and two other fields T and O. “T” stands for Target Account and “O” stands for Offset Account. I will explain these Accounts later. Let’s continue with the formula.

Now give the account of the “A” which is 1-101-0000-00-50201 having the value of Rs.18950. On the account entry form you will find that the system prompts or asks for Ledger, it is an optional field. This option of ledger set is used when we are allocating cost from multiple ledgers. And there is another LOV having the value as

C: Constant – The segment is constant and doesn’t need any Loop or Sum. And the balance should be picked against “A” as a constant

L: Looping – The segment needs to loop from first value to last value provided in STAT JV.

S: Summing – The segment needs to sum the value in provided in STAT JV.

Generally the account code in “A” doesn’t not need any kind of looping or summing. So every segment should be given the value of C. The value this account has for the particular period should be picked as a constant. Keep the currency as Entered.

Now move on to enter the code for “B”. The account code for Usage Factor in our example will be

1-101-1200-00-50201. Note that I have given the department code as 1200 which is parent of the departments we selected for allocation basis. Give every segment a Constant C but the segment of Department will be having the value as Looping L. Why? Because we need to pick the individual values of 9, 11, 5 and 3.

REMEMBER: looping is only done on Parent Value of the Segment. In this example 1200 is the Parent department which has the child departments 1201, 1202, 1203 and 1204.

The system will automatically pick the allocation basis by matching the natural account and the looping segment.

REMEMBER: The currency for “B” and “C” should be STAT.

Now give the account code for the Total Usage “C”. The account code will remain the same as “B” with 1200 as the department code. The only difference this time is that instead of Looping we will give the Department segment the value of Summing S. so that we can have the sum of head count which is 28.

It’s time to give the “T” account. No, it’s not the T Account as we see in Ledger. It is the Target Account of the cost pool or these are the Debit Accounts which should hold the allocated expense. In our example these account are the accounts we gave in “B”. Yes the account code combination 1-101-1200-00-50201 with 1200 as Looping. IN FACT, usually the accounts given in “B” are repeated in “T” and account given in “A” is repeated in “O”

Let’s proceed further by entering the “O” or the Offset account. This account is same as the account we gave in “A”. This is the credit account. The account code combination given here will 1-101-0000-00-50201 with every segment as Constant.

With this step we have completed our allocation formula. The final Journal generated with this formula should be

Line 1	1-101-1201-00-50201	6091.071
Line2	1-101-1202-00-50201	7444.643
Line3	1-101-1203-00-50201	3383.929
Line4	1-101-1204-00-50201	2030.357
Line5	1-101-0000-00-50201		18950

If you enable the Full Cost Pool Allocation option then the system will post the rounding difference to the account with highest value. In this case the all the rounding will be given to line2 account. The first four accounts are the accounts we mentioned in Target field and the last account is the one we mentioned in Offset field. The accounting done here is that the PTCL Expense posted on a Common department was credited and distributed to four other departments on the basis we defined in STAT journal in Step 2.

If the concurrent request ends with an error then check the Output and Log file for error details.

That’s All:)

GL: Currency

Currency in General Ledger is one of the 4C’s.

In R12 there is an additional feature given that if you have a separate Reporting Currency then you don’t need to create a separate ledger. You only need to define a Reporting Currency ledger in your Accounting Setup Manager.

There are two types of Currency in Oracle

1. Functional Currency: Currency thatis attached to Primary Ledger or in other terms the Local Currency. For example functional currency for Pakistan is PKR. Any organization operating in Pakistan will have a functional currency as PKR.
2. Entered Currency: Currency attached to primary ledger other than the functional/local currency and is used while entering the transaction. For example if any multinational organization is operational in Pakistan and it uses any other currency than the local currency of Pakistan then that currency will be termed as entered currency. Entered currency is always converted to Local Currency when it is posted in the final accounts.

Currency Conversions

1. Conversion: Foriegn Exchange (Forex) rates of the functional and entered currency. The rates are defined in the table. This rate is used to convert the entered currency into the functional currency. The naviagation to Rates in GL is Setup>Currencies>Rates>Dialy or Historical
2. Revaluation: It is a program that revaluates the entered currency into the current forex rate. This program is run immediately before period closing.
3. Translation: Used when consolidation is needed and transactions are done in multiple currency.

That’s All :)

Oracle EBS: Key Flexfield Segment Value Set

The basic definition of a Value Set (VS) is the “Validation of values” for a particular segment. Now if I further simplify Validation it means the type of value a segment can have.

For Example: Take an example of Multinational Company (MNC) say SydWerkz International having multiple branches in different countries. Now if SydWerkz decides to implement Oracle EBS Financials then the COA structure would definately have a Branch Segment. The heirarchy of the branches decided by SydWerkz International was

• Continent(1)
  • Country(2)
    • City(3)
      • Branch(2)

The number written in front of each branch category is the character length. For example Country has a character length of 2, which means there can be 100 countries or at least 99 countries. The total charachter length of Branch segment will be 8 and code of the branch segment will be 10000000.

Now if we list down the above mentioned categories with the code, it will be

Regions:

1- Asia

2-Europe

Country:

01-Pakistan

01-Germany

02-India

City:

001-Karachi

001-Mumbai

Branch:

01-Branch A

02-Branch B

See the beauty of the heirarchy this code character will have:

10000000 – Asia

10100000 – Pakistan

10100100 – Karachi

10100102 – Branch B

20000000 – Europe

20100000 – Germany

So you see that the branch codes are the identifiers of Branch category. You can even identify which code is a parent and which one is the child. If the last two digits of the branch codes are 00 then the code is of City and it is a parent, if the last 5 codes are 0 then the code is of Country and it is a parent.

A branch value set in this case will have a “Char” format and “Numbers Only” Check Box enabled and the length of the Value Set will be 8.

The Button of Usage shows where the selected Value Set is used, in DFF or KFF in which Structure and in which Segment.

Validation can be done on the following attributes

• Type of segment list
  • List of Values: It displays Searching Criteria and Values. Useful if the quantity of value is from 50-500
  • Long List of Values: It only displays the searching criteria. Useful if the quantity of value is from 500 – 10000
  • Pop List: It is a dropdown for the value set. It is useful if the quantity of the value is from 1-15

• Type of Security that applies on that particular segment
  • Hierarchical Security: if applied to parent then child also has the same security rules. Likewise Non-Hierarchical security is applied only to that specific segment value has the security rule.
  • It for restricting segment values among Responsibilities. When you define security rules for any segment then you have to re-compile the COA Structure.
  • To define security you have to specify the segment, first include all the values then exclude the particular value. Save the rule. Assign the rule to particular responsibility.
• Format of the value set
  • Char is used for financial and other values.
  • Date & Time is specific to Purchasing & Order Management.
• Numbers Only: If this option is checked then the value set will only have numbers. To enable Alphabets keep this box uncheck.
• Upper Case Only: Only Capital letters will be allowed.
• Right Justify Zero fill: This option will automatically fill the zero on the right side. For Example if the character length of a value set is 4 and during entering a value, if “65″ is entered, the system will automatically insert 0 on the right and code will become “0065″
• Maximum Size of the value set:The total length of a value.
• Minimum Value: The minimum side of the range.
• Maximum Value: The maximum size of the value. Like in the above example of the Branch Segment, the maximum size can set to 7999999. as there are only 7 continent and cannot exceed this value at the moment.
• Value Validation: This needs more explanation and it will be discussed later. For now the definition of this attribute is “if the value of this segment depends on another segment or the values should be picked from a Table” then this validation defined. Generally we use the following
  • Independent
  • Dependent
  • Table

That’s All :)

Oracle EBS: Key Flexfields

First let’s break the term to define it in more detail. “Key” means important, For Example somebody says General Ledger is the key module in Oracle EBS or he played the key role in winning this game, etc. So “Key” means important. The term “Flexfield” is composed of two words, “Flex” and “Field”, Flex means flexible. Field is self explanatory term and is referring to the input field in any software.

Key Flexfields are used by some modules like for example Oracle General Ledger uses Accounting Flexfields, Oracle Assets uses Location, Category and Asset Key Flexfield, etc. To see which application uses which use the Segment Setup Window. In General Ledger the navigation is

GL>Setup>Financials>Flexfields>Key>Segment

On Application field click (B)Torch and press the initial letter of the application, Like “i” for Inventory.

Now what or how can any field is flexible? Well there are Three types of flexibilities you get from KFF.

1. Every KFF needs segments. The number of segment depends on the requirement. This segment is one form of flexibility. For Example: One organization decides the COA Structure or Accounting Flexfields as Company-Branch-Department-Natural Account. Another organization decides it COA as Company-Branch-Department-Product-Account.
2. Each segment has a value set. This value set is another form of flexibility. Both of these flexibilities are ONE TIME. Once you have decided the segments and value sets of any KFF structure, it is freeze.
3. The third type of Flexibility in KFF is related to Security. You can define multiple security rules on segment values for multiple responsibilities. How? We will find out later.

So this is the flexibility Oracle has in Key Flexfield. Or what I understand from the term key flexfields.

In General Ledger Segment provides the flexibility to define particular information to level of details required by the user/organization. Technically, it is column divided into further columns, those further columns are called segments. There can be 30 Segments in General Ledger, each can have 25 character length, but in actual the length supported by the application is of 240 characters.

That’s All :)

GL: Flexfield Qualifiers

The definition I inferred from the word flexfield qualifier is “which segment qualifies for which attribute“.

Each Segment can have one of the following Qualifying attributes attached to it. Some of them are mandatory others are optional.

• Cost Center: Usually assigned to Department Segment. This qualifying segment is used by Oracle Assets.
• Natural Account: This qualifier when attached to a segment enables the five nature of accounts Asset, Liability, Expense,Revenue, Owner’s Equity. It also assigns the option of Reconciliation account and Third Party Control.
• Balancing: This qualifier is usually assigned to the segment on which the Balance Sheet is required. System balances the Debit and Credit of the ledger on this segment.
• Intercompany: This qualifier is used to identify the transaction between two entities under one group. More on this in Intercompany.
• Management: This qualifier is used as an additional control on Data Access Set.
• Secondary Tracking: To be discussed

Flexfield Qualifiers determines the nature of the segment. If you define a COA structure as

Company-Department-Account

How will the system knows which segment is natural account? Which segment should be used to balance the accounting entries? which segment will be used as Cost Centre in Fixed Assets?

It is the qualifier through which the system assign particular attribute to the segment. If I attach Natural Account qualifier to Company Segment, the system will not validate anything against this assignment. It will simply enable the five natures of accounts and treat the Company segment as Natural Account.

So for particular segment, a particular qualifier is assigned. This is the one time activity and freezes as we freeze the COA Structure.

That’s All :)

If you have any queries, contact me on Atif.Syd@gmail.com

GL: Chart of Account Concepts

Chart of Account (COA) is one of the building block of Ledger. It is an important as well as a mandatory step to setup a ledger. It is important because the structure of COA determines the level or depth of  financial reporting. The more detailed the structure is the more reporting detail it has, but than more account codes and long data entry by the end user.

A simple example of a COA structure is

Company-Branch-Department-Product-Account

A mandatory structure of COA in GL is

Company-Department-Account

COA determines the particulars of any accounting transaction. If you take the first example (simple COA) of structure, it tells which company, from which location did the transaction took place, which department was involved in the transaction, against which product did the transaction took place, what was the nature of the transaction (Purchase, Sales or Expenditure etc.). COA structure is made up of different Segments.

Segment is the building block of a COA. There can be 30 segments in a single COA structure but all in all Oracle supports a total length of 240 Characters.

In terms of Oracle Apps, COA is a key flexfield namely Accounting Flexfield. There is more on Flexfield here

Lets take an example of a hardware vendor having branches in major cities of Pakistan. The sales department of this vendor sells some p4 Desktops which in Karachi to a bank. How will it note this transaction in Oracle GL?

XYZ – Karachi – Sales – P4 Desktop – Accounts Receivables

The above combination of different segment is called a Account Code Combination. At the back-end or at database level each code combination has an ID referred as CCID.

There can be multiple COA structure defined in an instance. But only One structure can be attached to a Ledger. Each COA structure has to be Enabled, Freezed and Compiled. Other options like Cross Validate Segment, Allow Dynamic Inserts and Freeze Rollup Group are not mandatory but useful in some scenarios.

I have explained some of these option in the following blog entry.

GL:Allow Dynamic Inserts

GL:Cross Validate Segment

That’s All :)

Oracle EBS: MultiOrg Concept

Since Oracle EBS or E-Business Suite is a complete automated application and caters the need of variety of industries. It has an architecture called MultiOrg or “Multiple Organization”.

Whenever we talk about an organization irrespective of its multiple structure, we will find certain common things or feature or let me call it departments. It is not necessary that every organization has every department. But some departments and/or processes are more or less the same.

What is an Organization? In EBS it is a vague term, infact, varied term. In Oracle EBS an organization can be a Legal Entity, or an Inventory, or a department. Anything can be treated as organization in Oracle. When we go through the Oracle EBS documentation we will find the excessive use word Organization. But it not the organization we refer it to here in daily routine.

In our daily routine if we say the word “organization”, we will certainly be referring to some company, for example, Inbox Business Technologies, IBM, Acer, HP, these are the example of organization selling hardware. But in Oracle Multi Org structure they are referred to as Legal Entities.

The Multi Org structure in Oracle consists of following organizations

1. Business Group or HR Business Group
2. Ledger
3. Legal Entity or GRE
4. Operating Unit
5. Inventory Organization

BUSINESS GROUP (BG)

A business group is the top level in multi org structure. Oracle view human resource as the basis for the business. A human resource is selling the products that organization is manufacturing, a human resource is purchasing raw materials required to make a product, a human resource is making accounting and financials statement. In short a legal entity transacts because of Human Resources.

In Oracle EBS, Business Group holds the employee information. If there is a Group of Companies and they all are using a single instance of Oracle Apps then every employee in each company will be defined at BG level. Each employee will then be assigned a responsibility. That responsibility determines which company that employee belongs to and what type of transaction can be carried out. When a fresh EBS instance is installed it has a Default Business Group namely Setup Business Group. We usually rename it as per our requirement.

A BG can have multiple ledger attached to it and there can be Multiple Business Groups in one instance.

Oracle HR resides at this level of MultiOrg structure.

LEDGER

Formerly called Set of Book in R11i. Ledger is an accounting book.

Take an example of a utility shop with an old man sitting with a big register. In that register he notes every transaction related to money or finances. Let’s say he sells some bottles of mineral water to a person. He notes the Date on the transaction took place, the Amount involved in that transaction, Person’s name, particulars of goods sold to that person.

This is similar to what we do in a ledger. There are 4C’s concepts in Ledger.

1. Chart of Account (Particulars of Goods)
2. Currency (Amount)
3. Calendar (Date)
4. Subledger Accounting Convention (Cash / Accrual)

Oracle General Ledger resides at this level.

LEGAL ENTITY

Legal Entity definition by book is any company which is reporting to Government, an entity which exists. In Oracle EBS a company is also referred to as GRE – Government Reporting Entity. A legal entity has a disclosure requirement of their annual revenue. An organization which prepares its Balance Sheet and Income Statement.

Oracle says anything can be your legal entity. Your manufacturing plant can be your legal entity, your departments can be your legal entity. Your inventory can be your legal entity. A legal entity is the one for which you want a Balance Sheet and Income statement. How can a balance sheet be generated for a department is another topic…

OPERATING UNIT

Operating Unit (OU) comes under a ledger with a legal context. “Legal Context” is referred to as the Legal entity to which it is attached. The purpose of an operating unit is to segregate or separate subledger transactions. A legal entity having different branches in Pakistan can treat each branch an operating unit.

Oracle Payables, Purchasing, Receivables, Order Management resides at this level of MultiOrg.

In general an operating unit is the one dealing with paper work. How?

Take an example of P2P (Procure to Pay) cycle. It involves Purchasing and Payables. From Purchasing you generated an RFQ (Request for Quotation) and send it to vendor, against the RFQ you receive a Quotation. Against that quotation you send the PO (Purchase Order), Against that PO you receive Goods and GRN (Goods Received Note), against that GRN you receive payables Invoice, against that invoice you make Payment. Each of these documents are from Oracle Purchasing and Payables.

Similarly there is a O2C (Order to Cash) cycle.

INVENTORY ORGANIZATION

Inventory Organization is last or the lowest level of MultiOrg structure. Inventory organization refers to any kind storage of item, finished goods and raw materials, etc. This storage can be Warehouse, Floors, Cabinets, Drawers, or a logical store which don’t exists physically.

Inventory in general refers to storage and movement of goods from one Inventory organization to another. Inventory has two types of inventory: Master Item Inventory Org, Inventory Organization and Sub-Inventory Org.

Master item inventory stores the every information of item or the definition of item. It does not store the information of location that item is placed or the quantity of item available. Inventory Organization is same as the Master but it has the costing definition, locator information, and types of item it can store. Each Inventory organization should have at least one Sub Inventory Organization. There can be multiple sub inventories under one Inventory Organization. Costing method can also be defined at sub inventory level.

Oracle Inventory, Manufacturing, Warehouse Management, Enterprise Asset Management resides at this level.