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

June 20, 2008 — Atif Siddiqui

8 Votes

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.
 Procure to Pay Cycle

Overview:

In this article, we will see the steps involved in Procure to Pay Cycle. Here is the diagrammatic
representation:

1) Create Requisition:

Requisition is nothing but a formal request to buy something (like Inventory material, office supplies etc)
needed for the enterprise. Only an employee can create one. There are two types of requisitions:

Internal Requisition: Internal requisitions provide the mechanism for requesting and transferring material
from one inventory to other inventory.

Purchase requisition: Unlike Internal requisitions, Purchase requisitions are used for requesting material
from suppliers.

Navigation:

Purchasing Vision Operations (USA) > Requisitions > Requisitions

Choose the requisition type and enter the Item, quantity, Price details in the Lines tab.
In Source Details tab, specify the Buyer name.

Click the Distributions button. Enter the Charge Account.

Save the work. The status of the requisition will now be Incomplete. And now the Approve button is
highlighted. The requisition needs to be approved first before proceeding further by the concerned
authority. Submit this requisition for Approval by clicking on the Approve button. The status will now be
updated to In Process .The workflow then will send an Approval notification to the concerned person
(derived based on hierarchy used Position or Supervisor hierarchy) using which he can Approve or Reject
the requisition.
At any time the status of requisition can be checked using the Requisition summary window.

Navigation:

Requisitions > Requisition Summary

Enter requisition number and click on the find button.

We can also check the Action History of requisition (it will show details about who has submitted,
approved and cancelled the requisitions) as below:

Navigation:

Tools menu > Action History.

Underlying Tables:

PO_REQUISITION_HEADERS_ALL

PO_REQUISITION_LINES_ALL

PO_REQ_DISTRIBUTIONS_ALL

2) Create Purchase Order:

There are 4 types of Purchase Orders:

1. Standard PO: A Standard PO is created for onetime purchase of various items

2. Planned PO: A Planned PO is a longterm agreement committing to buy items or services from a single
source. You must specify tentative delivery schedules and all details for goods or services that you want
to buy, including charge account, quantities, and estimated cost.

3. Blanket agreement: A Blanket PO is created when you know the detail of the goods or services you
plan to buy from a specific supplier in a period, but you do not know the detail of your delivery schedules.
4. Contract agreement: Contract purchase agreements are created with your suppliers to agree

on specific terms and conditions without indicating the goods and services that you will be purchasing

Navigation for creating a standard PO:

Purchase Orders > Purchase Orders

Choose type as Standard Purchase Order. Enter the Supplier, Buyer. In the Lines tab, specify the line
number, line type, Item, quantity, price etc.

Click Terms to enter terms, conditions, and control information for purchase orders.

Click Currency button to enter and change currency information for purchase orders, RFQs, and
quotations.

Click Shipments button to enter multiple shipments for standard and planned purchase order lines
Purchase order shipment specifies the quantity, shipto organization and location, date you want your
supplier to deliver the items on a purchase order line, and country of origin for the items. When you save,
Purchasing creates distributions depending on the default information available.
To enter more shipment information, select the More tab.

1. Enter the Receipt Close Tolerance percent, Invoice Close Tolerance percent to set the receiving
and invoice close point.
2. Select one of the following options for Match Approval Level:

TwoWay: Purchase order and invoice quantities must match within tolerance before the corresponding
invoice can be paid.

ThreeWay: Purchase order, receipt, and invoice quantities must match within tolerance before the
corresponding invoice can be paid.

FourWay: Purchase order, receipt, accepted, and invoice quantities must match within tolerance before
the corresponding invoice can be paid.

1. Select an Invoice Match Option:

Purchase Order: Payables must match the invoice to the purchase order.

Receipt: Payables must match the invoice to the receipt.

Save the work.

Click the Receiving Controls button to enter receiving control information for purchase orders.

- Enter the maximum acceptable number of Days Early and Days Late for receipts.

- Enter the Action for receipt date control.

- Enter the maximum acceptable overreceipt Tolerance percent (receipts that exceed the

quantity received tolerance).

- Enter the Action for Overreceipt Quantity.

- Select Allow Substitute Receipts to indicate that receivers can receive substitute items in place

of ordered items.

- Enter the default Receipt Routing that you assign goods: Direct Delivery, Inspection Required,

or Standard Receipt.

- Enter the Enforce Ship To location option to determine whether the receiving location must be

the same as the shipto location.

Save the work.

Click Distributions button to enter distributions for the shipments.

Select more tab to enter more details and the requisition number (optional).

Save the work.

Click on the Approve button to initiate the Approval process.

Underlying Tables:
PO_HEADERS_ALL

PO_LINES_ALL

PO_DISTRIBUTIONS_ALL (REQ_HEADER_REFERENCE_NUM in Distributions table is the Requisition

number for this PO)

PO_LINE_LOCATIONS_ALL

3) Create Receipt:

Create a receipt to receive the items in the Purchase Order.

Navigation:

ReceivingReceipts

Enter the PO Number and select find button.

Go to Lines, check the lines you want to receive in the PO.

Click on Header button and Save which creates the receipt.
Receipt Tables are:

RCV_SHIPMENT_HEADERS

RCV_SHIPMENT_LINES (Lines Table has PO_HEADER_ID)

4) Create Invoice in Payables:

Once the goods are received, its time to pay the vendor for the goods purchased and hence the invoices
are created.

Navigation:

Payables, Vision Operations (USA) > InvoicesEntryInvoices

Enter type -- Standard, supplier information and amount.

Click the Match button to match to either Purchase Order or Receipt (depending on the Invoice Match
option specified on the PO) and avoid manually entering the invoice.

Enter the PO Number you want match to and click Find.

Select the lines required and click on Match button.

Click on Distribute button to navigate to the Match to Purchase Order Distributions window.
This creates the invoice and you can see the status of the invoice as Never Validated. it has to be
Validated and Accounted before you can pay it.

Validating the Invoice:

Click on Actions Button and Select Validate. Click on OK button.

Now you can see the status of the invoice as Validated, if there are no issues during validation.

Create Accounting Entries:

Click on Actions Button and Select Create Accounting. Click on OK button.

Now we can see the Accounted status as Yes.

You can see the Accounting Entries here:

Tools View Accounting

Invoice Tables:

AP_INVOICES_ALL

AP_INVOICE_DISTRIBUTIONS_ALL

Accounting Entries Tables:

AP_ACCOUNTING_EVENTS_ALL

AP_AE_HEADERS_ALL

AP_AE_LINES_ALL

5) Making a Payment:

Go to the Invoice window and query the invoice you want to pay. You would see Amount paid as 0.00
before you make a payment.

Click Actions button. Select Pay in full and click OK.

Select the Bank Account and Document. Save the Work.
Now that the payment is made, when you query for the invoice in Invoice window, you will the Amount
Paid as $4,000.00.

Create Accounting entries for payment.

Click Actions and select Create Accounting

Select the void checkbox to cancel the payment.

View Accounting Entries:

In the Payments window, query for the payment.

Tools menu View Accounting

Payment Tables:

AP_INVOICE_PAYMENTS_ALL

AP_PAYMENT_SCHEDULES_ALL

AP_CHECKS_ALL

AP_CHECK_FORMATS

AP_BANK_ACCOUNTS_ALL

AP_BANK_BRANCHES

AP_TERMS

You can also pay the invoices using Payment Batch screen. Refer to the article Make AP Payments
through Payment Batches
6) Transfer to General Ledger:

Navigation:

Payables Responsibility > View Requests

Run the concurrent program Payables Transfer to General Ledger with the required parameters.

Journal Import:

Refer to the Article Order to Cash Cycle.

Procure To Pay Cycle Process

1. Create a Standard Purchase order.

2. Give Shipments

3. Give Distributions

4. Approve PO

5. See the status of the PO In The header level: It is approved.

6. Go to the ReceivingàReceipts

7. Give the sub inv and stock locator where you want store the goods. And Save.

8. View the request status and refresh If not Completed.

9. Run the Program Pay on receipt auto invoice.(Which Generate Invoice Automatically)

10. View the Status of the program and refresh if not completed.

11. Go to Payables: InvoiceàEntry àInvoice

Query with the Invoice Num ERS%
12. Validate the Invoice .After Validate Enable the creating Accounting check box.

13.See The Account

14. Enable the check box Pay in full. And Pres ok.
15. Select the Bank and Go to Actions

16. Enable the check box Create Accounting and press ok.

17. See the Account Created.

18. Now see the invoice status validated, accounted and amount paid.

19. Go to Cash Management: Bank Statementsà Manual clearing. àClear Transactions

Find the Bank Account.

20. Enable the Transaction and press Clear Transaction Button.

21. Go to Payables: PaymentàEntryàPayment
Query with Payment Date

22. Go to actions, enable Create Accounting and press ok.

23. See the Account created.

24. Run: Payables Transfer to General Ledger.

25.View the Request status and refers if not completed.

26.Got to GL:JournalàImportàRun
27.View the request status and refers if not completed.

28. Go to JournalsàEnter .Find with Source as Payables.

29.Now We can Post the journals.

Secondary Tracking Segment

Secondary Tracking Segment is a Flex field qualified added in the 11.5.10 release. The
secondary tracking segment is used in the revaluation, translation, and fiscal year-end close
processes. The system will automatically maintain unrealized gain/loss, retained earnings, and
cumulative translation adjustments by unique pairs of balancing segment and secondary tracking
segment values. you can assign Secondary tracking segment flex field qualifier to an segment
which haven’t assigned Natural account, balensing Segment and inter company.

Assets Frequently Asked Questions

1. What are the different ways of adding assets in FA?

2. How do we depreciate Assets in Oracle Applications?
3. What is the significance of asset books in FA? Types?
4.What is ment by retire asset? How do we retire assets in Oracle applications?
5. What are the various Journal Entries generated through fixed assets
6.At what level FA is implemented?
7.What is the profile used to secure asset register?
8.What are the asset types in FA Module?
9.What are the different calendars used in FA Module?
10.Is FA Supports Multi _org?
11.What is ment by Roll back depreciation?
12.What are the mandatory flexfiels used in FA?
13.What are the depreciation methods used in FA module?
14.What is ment by prorate convention?
15.What is the use of allow amortized changes check box?
16.What is the difference between Quick addition and detail addition?
17.What is ment by projection?
18.What is ment by what-if analysis?
19.What is ment by leased asset?
20.What is ment by depreciation override? Can we override depreciation?
21.What is ment by physical inventory reconciliation?
22.Tell me something about asset insurance?
23.What is ment by asset revaluation?
24.In prepare mass additions window what are available Q names?
25.what is the difference between initial mass copy and periodic mass copy?
26.what is internal retairment?
27.What experience do you have in FA Module Implementation?
28.What do you know about FA to GL cycle?

Multi - Org Setup

Multi-Org is a server-side (applications and database) enhancement that enables multiple

business units in an enterprise to use a single installation of Oracle Applications products while
keeping transaction data separate and secure. The Multi-Org enhancement uses native database
views to build a security layer on top of a single installation of Oracle Applications. In Oracle
Applications Release 11i,
Basic Business Needs

The Multi-Org enhancement to Oracle Applications provides features necessary to satisfy the
following basic business needs. You should be able to:

• Use a single installation of any Oracle Applications product to support any number of business
units, even if those business units use different sets of books.
• Support any number of business units within a single installation of Oracle Applications.
• Secure access to data so that users can access only information that is relevant to them.
• Procure products from an operating unit that uses one set of book, but receive them from
another operating unit using a different set of books.
• Sell products from an operating unit that uses one set of books, but ship them from another
operating unit using a different set of books, automatically recording the appropriate
intercompany sales by posting intercompany accounts payable and accounts receivable invoices.
• Report at any level of the organizational structure

The Below is the structure of the Multi-Org

1.Login as sysadmin responsibility

2.Ddefine required responsibilities
Navigation:security->responsibility->define
3.Define user and assign responsibilities to the user.
N:Security->user->define.
4.Login as GL Responsibility
5.Define accounting flexfield
N:setup->financials->flexfield->key->segments
6.Give values for your segments
N:setup->financials->flexfield->key->values.
7.Define Currency
N:setup->Curriencies->define
8.Define Calender.
N:Setup->financials->calender->Type/Accounting
9.Create SOB N:Setup->financials->book->define
10.Login as HRMS responsibility.
11.Define a location N:Work Structure->Location
12.Define a Business Group
N:Works Structure->organization->description
13.Set the following Profile Options to all your responsibilities
HR:security
HR:bisiness group
HR:User Type
GL:Set of books name
14.Login As Inventoruy responsibility
15.Create legal entity
N:Setup->organizations->organizations
16.Create Operatiing unit N:Setup->organizations->organizations
17.Set Profile option Mo:Operating unit for all responsibilites which is worked at operating unit
level.
18.Create Work day calender
19.Create inventory Organization.
N:Setup->organizations->organizations
20.Login as sysadmin and run replicate seed data program.

Note On Indian localization

Oracle Applications was developed as a Global product.Because of this reason it does not
supported by some acts like customs,central excise,vat,cst...etc which are mandatory according
to Indian Laws.

All other contries are also having some contry specific requirements. To meet the above
requirements Oracle developes software named patches.We can add this patches to the base
product of the oracle applications.

Indian Localization is also one patch which meets the contry specific requirements.
What is India Localization Product?
India Localization is a solution built over Oracle E-Business Suite, Oracle's e-business
applications software product, that provides Clients in India with the most comprehensive
solution to comply with the India specific tax requirements as specified by Central Excise,
Customs, Sales Tax and VAT, and Income Tax, (to the extent of tax deduction at source and
generation of Depreciation Schedule for fixed assets). India Localization product also provides
valuable information that can be used for statutory and management reporting.

What Does India Localization Product Do?The product uses its own tax engine, for handling
taxes applicable across 'Procure to Pay' and 'Order to Cash' transactions.

In India Localization, taxes are defaulted based on the pre-determined setup (Tax Defaultation).
Tax amounts are calculated based on precedence such as transaction base value, tax on tax, or
assessable value as specified by tax authority (Tax Calculation). The Tax Amount is considered
for inventory valuation, recoverability and accounting based on the pre-determined
recoverability and accounting rules (Tax Accounting and Recoverability). Details of recoverable
tax amount are recorded as part of the repository (Tax Recording). This information can further
be used to calculate the final tax liability arising on settlement at the end of the tax period (Tax
Settlement) and for statutory reporting (Tax Reporting).

Components of India Localization Product

Tax Defaultation
Tax Calculation and Recovery
Accounting for India Localization Taxes
Recording and Reporting Tax Information

Form personalization

Introduction to Form personalization

Form personalization is a declarative feature that alters the look and behavior of the oracle forms
with out changing base code. This concept was introduced in the release 11.5.10. All E-Business
suit forms can be personalized

By using form personalization you can:1. Display your own terminology.

2. Stream lines the screen interaction.
3. Implement security policies.
4. Add your own validation and error messages.

There are some limitations:

1. You can only change what oracle forms allows to be changed at run time.
2. You can only respond to limited trigger events only.
3. Your changes may be overridden by oracle base code.

To Be Continued in the next post.........

AIM Documents .............

Hai Friends...as a functional consultant we should know about AIM.Please find the AIM
Documents list..............
Business Process Architecture (BP)
BP.010 Define Business and Process Strategy
BP.020 Catalog and Analyze Potential Changes
BP.030 Determine Data Gathering Requirements
BP.040 Develop Current Process Model
BP.050 Review Leading Practices
BP.060 Develop High-Level Process Vision
BP.070 Develop High-Level Process Design
BP.080 Develop Future Process Model
BP.090 Document Business Procedure

Business Requirements Definition (RD)

RD.010 Identify Current Financial and Operating Structure
RD.020 Conduct Current Business Baseline
RD.030 Establish Process and Mapping Summary
RD.040 Gather Business Volumes and Metrics
RD.050 Gather Business Requirements
RD.060 Determine Audit and Control Requirements
RD.070 Identify Business Availability Requirements
RD.080 Identify Reporting and Information Access Requirements

Business Requirements Mapping

BR.010 Analyze High-Level Gaps
BR.020 Prepare mapping environment
BR.030 Map Business requirements
BR.040 Map Business Data
BR.050 Conduct Integration Fit Analysis
BR.060 Create Information Model
BR.070 Create Reporting Fit Analysis
BR.080 Test Business Solutions
BR.090 Confirm Integrated Business Solutions
BR.100 Define Applications Setup
BR.110 Define security Profiles

Application and Technical Architecture (TA)

TA.010 Define Architecture Requirements and Strategy
TA.020 Identify Current Technical Architecture
TA.030 Develop Preliminary Conceptual Architecture
TA.040 Define Application Architecture
TA.050 Define System Availability Strategy
TA.060 Define Reporting and Information Access Strategy
TA.070 Revise Conceptual Architecture
TA.080 Define Application Security Architecture
TA.090 Define Application and Database Server Architecture
TA.100 Define and Propose Architecture Subsystems
TA.110 Define System Capacity Plan
TA.120 Define Platform and Network Architecture
TA.130 Define Application Deployment Plan
TA.140 Assess Performance Risks
TA.150 Define System Management Procedures

Module Design and Build (MD)

MD.010 Define Application Extension Strategy
MD.020 Define and estimate application extensions
MD.030 Define design standards
MD.040 Define Build Standards
MD.050 Create Application extensions functional design
MD.060 Design Database extensions
MD.070 Create Application extensions technical design
MD.080 Review functional and Technical designs
MD.090 Prepare Development environment
MD.100 Create Database extensions
MD.110 Create Application extension modules
MD.120 Create Installation routines

Data Conversion (CV)

CV.010 Define data conversion requirements and strategy
CV.020 Define Conversion standards
CV.030 Prepare conversion environment
CV.040 Perform conversion data mapping
CV.050 Define manual conversion procedures
CV.060 Design conversion programs
CV.070 Prepare conversion test plans
CV.080 Develop conversion programs
CV.090 Perform conversion unit tests
CV.100 Perform conversion business objects
CV.110 Perform conversion validation tests
CV.120 Install conversion programs
CV.130 Convert and verify data

Documentation (DO)
DO.010 Define documentation requirements and strategy
DO.020 Define Documentation standards and procedures
DO.030 Prepare glossary
DO.040 Prepare documentation environment
DO.050 Produce documentation prototypes and templates
DO.060 Publish user reference manual
DO.070 Publish user guide
DO.080 Publish technical reference manual
DO.090 Publish system management guide
Business System Testing (TE)
TE.010 Define testing requirements and strategy
TE.020 Develop unit test script
TE.030 Develop link test script
TE.040 Develop system test script
TE.050 Develop systems integration test script
TE.060 Prepare testing environments
TE.070 Perform unit test
TE.080 Perform link test
TE.090 perform installation test
TE.100 Prepare key users for testing
TE.110 Perform system test
TE.120 Perform systems integration test
TE.130 Perform Acceptance test

PERFORMACE TESTING(PT)
PT.010 - Define Performance Testing Strategy
PT.020 - Identify Performance Test Scenarios
PT.030 - Identify Performance Test Transaction
PT.040 - Create Performance Test Scripts
PT.050 - Design Performance Test Transaction Programs
PT.060 - Design Performance Test Data
PT.070 - Design Test Database Load Programs
PT.080 - Create Performance Test TransactionPrograms
PT.090 - Create Test Database Load Programs
PT.100 - Construct Performance Test Database
PT.110 - Prepare Performance Test Environment
PT.120 - Execute Performance Test

Adoption and Learning (AP)

AP.010 - Define Executive Project Strategy
AP.020 - Conduct Initial Project Team Orientation
AP.030 - Develop Project Team Learning Plan
AP.040 - Prepare Project Team Learning Environment
AP.050 - Conduct Project Team Learning Events
AP.060 - Develop Business Unit Managers’Readiness Plan
AP.070 - Develop Project Readiness Roadmap
AP.080 - Develop and Execute CommunicationCampaign
AP.090 - Develop Managers’ Readiness Plan
AP.100 - Identify Business Process Impact onOrganization
AP.110 - Align Human Performance SupportSystems
AP.120 - Align Information Technology Groups
AP.130 - Conduct User Learning Needs Analysis
AP.140 - Develop User Learning Plan
AP.150 - Develop User Learningware
AP.160 - Prepare User Learning Environment
AP.170 - Conduct User Learning Events
AP.180 - Conduct Effectiveness Assessment

Production Migration (PM)

PM.010 - Define Transition Strategy
PM.020 - Design Production Support Infrastructure
PM.030 - Develop Transition and Contingency Plan
PM.040 - Prepare Production Environment
PM.050 - Set Up Applications
PM.060 - Implement Production Support Infrastructure
PM.070 - Verify Production Readiness
PM.080 - Begin Production
PM.090 - Measure System Performance
PM.100 - Maintain System
PM.110 - Refine Production System
PM.120 - Decommission Former Systems
PM.130 - Propose Future Business Direction
PM.140 - Propose Future Technical Direction

Oracle Implementation Methodalagy

SUMMARY NOTES ON AIM

Application Implementation Method is a provan approach, which specifies all the activities which are
required to implement oracle applications successfully.

The scope of the AIM is enterprise wide.

There are eleven processes of implementation.

1. Business Process Architecture[BP]

This phase explains

Existing business practices
Catalog change practices
Leading practices
Future practices

2. Business Requirement Definition[RD]

This phase explains about the

Base line questionnaire and
The gathering of information.

3. Business Requirement Mapping[BR]

In this phase we can match all the requirements of business with the standard functionality of the oracle
applications.

If all the requirements match with oracle standard (with out customization) functionality then, it is called as
vanilla implementation).

4. Application and Technical Architecture [TA]

Explains the infrastructure requirements to implement oracle applications.

For example:
desktops
software
hardware
people...etc

5. Build and Module Design[MD]

In this phase concentrate on developing the new functionality which is required by the client.
This is called customization.
In this phase explains how to design a forms, database and reports...

6. Data Conversion:[CV]

Is the process of converting or transferring the data from legacy system to oracle applications? This is
called as data migration.
Ex: transferring the closing balances of the previous year as an opening balances to next year.

7. Documentation:[DO]
I
n this phase we have to prepare module wise user guides and implementation manuals which helps in the
implementation.

8. Business System Testing:[TE]

A process of validating the setup’s and the functionality by a tester to certify its status is allied business
system testing. It is done by a functional consultant.

9. Performance Testing:[PT]

Performance testing means evaluation of transaction saving time, transaction retrieval times. It is done by
a technical team.

10; Adoption and Learning.[AP]

This phase explains about the removal of the legacy system of the client. The entire user should be
trained with new oracle applications. In this phase we have to prepare user manuals.

11. Production Migration[PM]

A process of decommissioning of legacy system and the usage of new oracle application system begins
in this phase.

Use Of Automatic Offset Method In Payable Options

If you enter an invoice for expenses or asset purchases for more than one balancing segment, you
might want to use automatic offset method to keep your payables transaction accounting entries
balanced.
If we enable balancing as a automatic offset, payable builds the offset GL account by taking the
balancing segment value from the invoice distribution and overlaying it on to the appropriate GL
account, i.e liability account from the supplier site.
If we enable account as automatic offset, it takes the opposite approach with one segment being
retained from the default GL account and all other segments being retained from the invoice
distribution

Journal source and categories

Journal source and categories is used to differentiate journal entries and to enhance your audit
trail.

Journal entry source indicates where your journal entries originate

Journal categories help you differentiate entries by purchase or type.

Examples for Sources:
Assets
Purchasing
Payables
Manual
Budget …...Etc.
Examples For Categories:
Accruals
Adjustment
Receipts
Revaluation
Payments..Etc..

Oracle applications provided required source and categories with default. But you can define
with your sauce and categories by using the following navigation:
GL:Setup->Journal->Source
Setup->journal-.Categories

With Journal Source you can:

Define inter company and suspense accounts for specific sources.

Run auto post program for specific source
Import journals by source
Freeze journals imported from sub ledgers to prevent users from making changes.
If you have journal approval enabled for your set of books, you can use journal source to enforce
management approval of journal before they are posted.

With Journal Categories you can:

Define inter company and suspense accounts for specific category.

Use document sequence to sequentially number journals by categories.
Assets Additions

Asset Setup Processes (Additions)

Quick Additions

Use the Quick Additions process to quickly enter ordinary assets when you must enter them
manually. You can enter minimal information in the Quick Additions window, and the remaining
asset information defaults from the asset category, book, and the date placed in service.

To add an asset quickly accepting default information:

1.Choose Assets > Asset Workbench from the Navigator window.

2.Choose Quick Additions from the Find Assets window.

The following screen appears.

3. Enter a Description of the asset.

4. Enter the asset Category.
5. Select the Asset Type of the asset. For a description of the assets types, see: Asset Descriptive
Details
6. Assign your asset to a corporate depreciation Book.
7. Enter the current Cost.
8. Optionally update the Date Placed In Service.
9. Update the depreciation method and prorate convention, if necessary. The depreciation
method and prorate convention are defaulted from the category default rules. However, you can
update them here.
10. Assign the asset to an Employee Name (optional), a general ledger depreciation Expense
Account, and a Location.
11. Click on the Done Button.

System displays the following Message.

Multiple Reporting Currencies

The Multiple Reporting Currencies (MRC) is the set of unique feature embedded in Oracle
applications, which allows you to report on and maintain accounting at the transaction level in
more than one functional currency. MRC is based on the Multi-Org Architecture, and is a
significant aspect of a globalization strategy.

The primary functional currency is the currency you use to record transactions and maintain your
accounting data within the Oracle E-Business Suite. In the primary set of books, the functional
currency is always the primary functional currency. Usually, the primary functional currency is
the currency in which you perform most of your business transactions, and the one you use for
legal reporting.

A reporting set of books is a financial reporting entity associated with a primary set of books.
While the reporting set of books has the same chart of accounts and accounting calendar as the
primary set of books, its use of a different functional currency (reporting functional currency)
allows you to report in a different functional currency than that of your primary set of books.

You must define a separate set of books for each of your reporting functional currencies. By
using MRC concept we can maintain up to Eight Reporting Set Of Books.

What is SQL*Loader and what is it used for?

SQL*Loader is a bulk loader utility used for moving data from external files into the Oracle
database. Its syntax is similar to that of the DB2 Load utility, but comes with more options.
SQL*Loader supports various load formats, selective loading, and multi-table loads
key flexfield

key flexfield is a field made up of segments, where each segment has both a value and a
meaning. You can think of a key flexfield as an “intelligent” field that your business can use to
store information represented as “codes.”

Most organizations use ”codes” made up of meaningful segments to identify general ledger
accounts, part numbers, and other business entities. Each segment of the code can represent a
characteristic of the entity. For example, consider an account number for a bank. A complete
bank number may consists of various segments like the country code, area code, city code,
branch code, account type, account number etc

Types Of Purchase Orders

Hai Friends...

From the below picture you can find the diffrence between purchase orders.
Purchasing FAQ’s

1. Define Requition?
2. What are the types of requitions?
3. What is the use of requition template?
4. What is the procedure for qequition import?
5. What is ment by RFQ?
6. What are the types of RFQ”S?
7. What is ment by quatation and quotation analysis?
8. What is ment my PO?
9. What are the types of PO?
10. What are the types of receipts?
11. What is ment by receipt routing?
12. What is the purpose of receiving transactions?
13. What is ment by receipt routing? Types?
14. What is the use of auto creat?
15. What is ment by pay on receipt auto invoice?
16. What do you mean by controlling buyers workload?
17. What is Matching? What are the various methods of matching?
18. What is the use of defining security hierarchy?
19. What is the difference between accrue at period end and accrue on receipt?
20. Why are expenses items typically accrued at period end, and why are inventory items always
accrued on receipt?

Recurring Journals

Define recurring journal formulas for transactions that you repeat every accounting period, such
as accruals, depreciation charges, and allocations.
You can use recurring journals to create three types of journal entries:

Skeleton Journal Entries: Skeleton journals have varying amounts in each period. You define a
recurring journal entry with out amounts, and then enter the appropriate amounts each
accounting period.
There are no formulas to enter, only account combinations. For example, you can record
temporary labor expenses in the same account combination every month with varying amount
due to fluctuations in hours..

Standard Recurring Journal Entries: Standard recurring journal entries use the same accounts
and amounts each period.
For Example: Record monthly lease expenses with constant amounts charged to the same
account.

Recurring Journal Formula Entries: Formula entries use formulas to calculate journal
amounts that vary from period to period. For example, calculate commotion to sales
representative based on the sales of the month.

Period status in General Ledger

Open: In the Open status you can enter and post Journals.

Closed: In this status Journal entry and posting not allowed until accounting period is reopened.
Reporting and inquiry allowed.

Permanently Closed: In this status Journal entry and posting not allowed. You cannot change
this period status. Reporting and inquiry allowed. You can change the status.

Never Opened: Journal entry and posting are not allowed. General Ledger assigns this status to
any period preceding the first period ever opened in your
calendar, or to any period that has been defined, but is not yet future-enterable. You cannot
change this period status.

Future-Entry: Journal entry is allowed, but posting is not. Your period is not yet open, but falls
within the range of future-enterable periods you designated in the Set of Books window. You
cannot change this period status without using the concurrent process to open the period.

Difference between multiple databases, multiple instances, and multiple

installations?
In Oracle database terminology, an instance is the combination of background
processes and memory structures that allow the user to access data in an Oracle
database. In an applications context, instance and database are often used
interchangeably.Multiple installations, or "installs" means that Oracle Applications
are installed multiple times on a single database.Multiple databases or instances
refer to a scenario in which there may exist numerous databases, each with one or
more installations and implementations of the Oracle Applications.

Accounts Payables Frequently Asked Questions

1. What are the types of invoices?

2. What is difference between debit memo and credit memo?
3. What is meant by with-holding tax invoice?
4. What are the mandatory setups in AP?
5. What is the difference between PO default and quick match?
6. Use of recurring invoice?
7. Steps for payment batch?
8. Purpose of Payable invoice open interface?
9. Payable open interface import? (Expense Report Import)
10. Multi Currency payments?
11. Can we implement MRC at Payables?
12. Use of Distribution set?
13. Accounting Methods?
14. Use of automatic offset method?
15. What does the Unaccounted Transaction Sweep Report do?
16. What reports should I run before closing the period?
17. What is the program to transfer data from AP to GL?
18. What is meant by void payments?
19. What are the types of journal categories available in the AP?
20. What is meant by matching and what are the types of matchings available?
21. Types of Prepayments? And difference between them?
22. What is a Hold and Release
23. How to approve ‘n’ no. of invoices
24. What is Zero-Payment in AP
25. What is Proxima Payment Terms?
26. What are the tables associated with Invoice?
27. Which interface tables are used for Invoice Import?
28. What is 2 way, 3 way and 4 way matching?
29. What is Interest Invoice and how it can be created?
30. How many key flexfields are there in Payables?
31. Can you cancel the invoice? If yes, explain?
32. What is pay date basis?
33. What is terms date basis?
34. What is the report used to identify duplicate suppliers?
35. Difference between header level tax calculation and line level tax calculation?
36. What is meant by accrual write off?
37. Difference between quick payment and manual payment?
38. Use of Future dated payments?
39. Tell me steps for Period closing Process in AP?
40. Payable And Financial options?
41. What is meant by third party payments?
42. How to transfer funds between your internal banks?
43. Invoice Approval Process?
44. Can I find out which invoices are matched to a PO?
45. What is Intercompany Invoicing?
46. ERS Invoice means?
47. Use of Pay on receipt auto invoice?
48. What is meant by RTS transactions?
49. What are the steps to define a Bank?
50. Payment Methods?

SOX

The Sarbanes-Oxley Act of 2002, also known as the Public Company Accounting Reform and
Investor Protection Act of 2002 and commonly called SOx or Sarbox; is a United States federal
law enacted on July 30, 2002,To improve quality and transparency in financial reporting and
independent audits and accounting services for public companies, to create a Public Company
Accounting Oversight Board, to enhance the standard setting process for accounting practices, to
strengthen the independence of firms that audit public companies, to increase corporate
responsibility and the usefulness of corporate financial disclosure, to protect the objectivity and
independence of securities analysts, to improve Securities and Exchange Commission resources
and oversight, and for other purposes

Data Load

Data load is the tool to Load data into any application running in Windows, and contains extra
functionality for loading data and setup into Oracle Applications. Means we can load data
through front end forms. To load data using Data Load you setup Data Load to load into the
forms and the forms load the data into your system. Non technical users can also use this tool.

Period closing Process for Payables

Period closing Process for Payables

You cannot close a period in Payables if any of the following conditions exist:
o Outstanding payment batches. Confirm or cancel all incomplete payment batches.
o Future dated payments for which the Maturity Date is within the period but that still have a
status of Issued.
o Unaccounted transactions. Submit the Payables Accounting Process to account for
transactions, or submit the Unaccounted Transaction Sweep to move any remaining unaccounted
transactions from one period to another.
o Accounted transactions that have not been transferred to general ledger. Submit the Payables
Transfer to General Ledger process to transfer accounting entries.

To complete the close process in Payables:

1. Validate all invoices.
Run Invoice Validation Concurrent program.
2. Confirm or cancel all incomplete payment batches.

3. If you use future dated payments, submit the Update Matured Future Dated Payment Status
Program. This will update the status of matured future dated payments to Negotiable so you can
account for them.

4. Resolve all unaccounted transactions.

Submit the Payables Accounting Process to account for all unaccounted transactions. Review the
Unaccounted Transactions Report. Review any unaccounted transactions and correct data as
necessary.

Then resubmit the Payables Accounting Process to account for transactions you corrected. Or
move any unresolved accounting transaction exceptions to another period (optional).
o Payables Accounting Process.
o Submit the Unaccounted Transactions Sweep Program.
5. Transfer invoices and payments to the General Ledger and resolve any problems you see on
the output report:
o Payables Transfer to General Ledger Program.
6. In the Control Payables Periods window, close the period in Payables.
o Controlling the Status of Payables Periods.
7. Reconcile Payables activity for the period. You will need the following reports:
o Accounts Payable Trial Balance Report (this period and last period).
o Posted Invoice Register.
o Posted Payment Register.
8. If you use Oracle Purchasing, accrue uninvoiced receipts.

9. If you use Oracle Assets, run the Mass Additions Create Program transfer capital invoice line
distributions from Oracle Payables to Oracle Assets.

10. Post journal entries to the general ledger and reconcile the trial balance to the General
Ledger.
R12 Features

Release12 introduces a better user experience, resulting in increased productivity and reduced
training and support.

Examples of a better user experience include:

1.Reduced pop-ups and duplicate screens

2.Re-designed and streamlined entire work flows

3.Reduced the number of steps to complete key tasks

4.Improved look & feel and visual style

5.Increased personalization capabilities

6.Lower Costs

7.Fewer errors and

8.Stronger Internal Controles

Whats New in Release 12

Ledgers and Ledger Sets
Legal Entity Configurator
Rules-based Accounting Engine
Global Tax Engine
Global IntercompanySystem
Unified Bank Account Model
Single Sign-On Across Operating Units
Oracle Procure to Pay Life Cycle:

Procure to Pay Process flow:

--------------------------------------
Let’s see the steps involved in performing using Oracle Applications

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:It’s upto 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.
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 that 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.
9. Oracle General Ledger: When you enter the invoice it means that you have created a
Liability against that supplier.
10. Oracle Payables: You pay the invoice and settle the Liability
11. Oracle General Ledger: The liability is settled, your expense is recorded.
12. 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.

13. 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.

Payables Intergration:
------------------------------

Payables Processes:
--------------------------
Overview of Suppliers:
-----------------------------
When you enter a supplier that does business from multiple locations, you enter header
information only once, and you enter supplier sites for each location. Most supplier information
defaults to supplier sites. However, you can override the values that default if necessary. After
you define suppliers, you can use them when you import/enter invoices and create purchasing

documents
Define how supplier sites can be used with the following options:
• Pay - You can import/enter invoices for and make payments to the site.
• Primary Pay - Default pay site for invoice entry and import.
• Purchasing - You can create purchase orders for the site.
• RFQ Only - You can create request for quotations in Purchasing for the site. You cannot
create purchase orders for an RFQ Only site.
• Procurement Card - You can purchase goods or services using a procurement card.
• Primary Pay - If a supplier has multiple pay sites, one can be designated as the primary.
The primary pay site defaults in the Invoices window, helping to speed the invoice entry
process. Also, Payables Open Interface Import uses this site when it imports an external
invoice with no specified site.
Designate a site as an RFQ Only site during the beginning of negotiations with a supplier. If you
decide to use the supplier, designate the supplier site as a Purchasing site by deselecting the RFQ
Only option and selecting the Purchasing Site option. For each supplier site, you can enter
contact information (name, address, telephone) specific to that site. Contact information is for
your reference only.
Flow of Default Values(P2P):
----------------------------------------

• Defaults set at higher levels flow down to lower levels where you can override them.
• Defaults reduce data entry by providing default values based on corporate policy.
Optional defaults (especially the higher level ones) should be left blank if you frequently
override them.
• Purchase order matched invoices will receive defaults from the purchase order you specify
when you match.
Note: Changes to default values affect only new records, not existing records. For example, if
payment terms in the Payables Options window are reset to Net 15 from Net 30, new suppliers
will have a default of Net 15. Existing suppliers will have terms of Net 30.
Invoice Entry:
--------------------

You can enter invoices through:

• Manual entry: Manually enter invoices in the Invoice Gateway and Invoices windows.
• Import: The Payables Open Interface Import program imports invoices from the
Payables Open Interfaces table. This table is loaded by many sources including invoices
entered online by suppliers in iSupplier Portal, invoices sent by suppliers in EDI or XML
formats, and Oracle applications that load invoices into the Open Interfaces Table such as
Oracle Property Manager and Oracle Assets.
• Automatically generated: Oracle Payables automatically generates the following invoice
types: withholding ax invoices to pay tax authorities, interest invoices, and payment on
receipt invoices.
• Recurring invoices: You can set up Oracle Payables to generate regularly scheduled
invoices such as rent.
• Matching: You can match most invoices to purchase orders or receipts. You can group
manually entered and imported invoices in invoice batches.
Invoice import:
---------------------
Oracle Internet Expenses expense reports:
Expense reports your employees enter using a Web browser.
Payables expense reports:
Expense reports entered in the Payables Expense reports window by the Payables department.
Credit Card invoices:
Invoices for employee credit card expenses. The credit card company sends you these invoices as
a flat file.
Oracle Projects expense reports:
Project–related expense reports entered in Oracle Projects.
EDI invoices:
Electronic invoices transferred from Oracle e–Commerce Gateway.
Invoices from external systems:
Invoices, such as invoices from legacy systems, loaded using SQL*Loader.
Oracle Property Manager invoices:
Lease invoices transferred from Oracle Property Manager.
Oracle Assets lease payments:
Lease payments transferred from Oracle Assets.

Oracle Procure to Pay Accounting:

-------------------------------------------
As you know “procure to pay” Business Flow start Purchasing requisition till paying to supplier
and most important, in all the case the purchase is made for basic element called Items.

There are three types of items:

1. Inventory Asset Item/Inventory item-PO Related
2. Inventory Expense Item/Inventory Expenses - PO Related
3. Expense item/Non-PO Invoice.
Inventory Asset Item/Inventory item-PO Related :
----------------------------------------------------
2. Inventory Expense Item/ Expense Item-PO Related:
-------------------------------------------------------------

3. Expenses items/ Non-PO Invoice:

--------------------------------------

Procure To Pay Cycle in Oracle Apps R12 (P2P Cycle)

Here in this post, I tried to explain the steps involved in Procure to Pay
Cycle. This is a pure functional Stuff and helps you to understand the
navigation steps.
I tried to keep as simple as Possible for clear understanding. The
screenshots given below are taken from R12.1.1 apps instance.

Stage 1: Choosing an Item

Let us choose an item to be procured in our example.

Go to Purchasing Responsibility and follow the below navigation to check
for the suitable item.
The item picked for our example should be purchasable item as above.
Click on tools and choose “Categories” to view the below screen.

Stage 2: Creation of Requisition

Follow the below Navigation to reach Requisition Form.

Create a new Requisition for the item viewed in Stage 1.

Click on Distributions to View the charge Account.

Save and Submit for Approval

Now note down the Requisition number and open the “Requisition
Summary Form” to view the status of it. For our Example, Requisition
number is: 14855

Stage 3 : Checking the Status of Requisition

Query for the Requisition Number and click Find.

 Here for our example purpose, I kept the submitted and approved person
has same and hence it shows the status as approved.

To see the approval status, please follow the below navigation.

Stage 4 : Creation of Purchase Order

For creating a Purchase order, let us use the “Autocreate Documents”
Form. Follow the below Navigation

Query for the Requisition

Click on Automatic as shown in the above figure to create a Purchase

Order

Click on “Create” button to create a Purchase order

View the shipment screen to change the “Match Approval Level” to “2-
Way”.

Click the “Receiving Controls” to make sure that the “Routing” is made as
“Direct Routing”
Click Save and submit for Approval.

Note down the PO Number.

Stage 5: Creation of Receipts

Query with the Purchase order created in the above stage.

Check the check box near to the lines that are received and click save.
Click the “Header Button” to view the Receipt Number.

Stage 6: Checking the On Hand

Go to any Inventory Responsibility and follow the below Navigation

Query for our Receipt and make sure the Organization is the same as we
received.
Below screen will show that our inventory has been increased by 5
quantities.

Stage 7: Check the Material Transactions

Follow the below Navigation to reach “Material Transactions” Form

Query for the item and date as below

Below screen shows the source and transaction Type

Below screen shows you the Serial Numbers of the items received.
Stage 8: Creation of Invoice

Navigate to any Purchasing Responsibility and view  Requests

Submit the below requests by providing the Receipt number as Parameter
to create an invoice.

Check the status of the program.

Stage 9: Checking the Invoice

Change to any Payables Responsibility and open the invoices Form.

Query for the Purchase order as below,

Click “Actions” Button then tick the “Validate Check Box” and press “Ok”
to validate the invoice
Below screenshot will give you the status of the invoice

Stage 10: Creation of Accounting and Payment

Once invoice got approved, we can “Create Accounting” and “Create

Payments” via “Action” Button in the “Invoice Form” as we validated the
invoice.

Thus the brief description of P2P cycle came to end.