Oracle Fusion Payables

Oracle Fusion Payables

Objectives
• Explain key concepts in Oracle Fusion Payables.
• Explain automated invoice processing.
• Define common options for Payables and Procurement.
• Define general Payables options.
• Define Payables configuration.
• Define Payables US 1099 tax.
• Define payment options.
• Explain invoice approval rules.
• Define Subledger Accounting rules.
 Key Concepts in Oracle Fusion Payables Procure to Pay Flow

The procure to pay flow includes the following steps:

• Request: Request materials and services and get authorization for requests.
• Source: Source products and services. Negotiate terms and agreements. Manage contracts, agreements, and
suppliers. Create purchase orders.
• Receive: Confirm delivery and receipt of products and services.
• Invoice: Process invoices.
• Pay: Disburse payments and settle supplier liabilities.
Use Oracle Fusion Payables to manage invoices and payments.
Business Units in the Procure to Pay Flow
Configure business units for the following procure to pay transactions.
Procurement Business Unit
A business unit with the Procurement business function.
Establishes a relationship with a supplier through the creation of a site, which maintains internal controls for how
procure to pay transactions are executed with the supplier.
Manages, owns, and is responsible for purchasing transactions.
Requisitioning Business Unit
A business unit with the Requisitioning business function.
Manages and owns requisitioning transactions.
Sold-to Business Unit
A business unit with the Payables Invoicing business function.
Responsible for invoicing transactions.
Assumes the liability for the purchases made on behalf of a client business unit

Navigation : Setup and Maintenance work area > Define Business Units > Assign Business Unit Business Function
Example
The figure provides an example of business function assignment. The Business Unit USA1 Business Unit performs
the requisitioning, procurement, and invoicing business functions. USA1 Business Unit is a procurement business
unit, a requisitioning business unit, and a sold-to business unit.
Service Provider Model
Shared service centers are supported in two ways.
Service provider model: Allows a business unit to act as a service provider to client business units, so that
the personnel in a shared service center can process transactions on behalf of client business units.
Business unit security: Allows shared service center personnel to process transactions for other business
units.
Service Provider Model
• Use the service provider model to centralize the procurement business function. Define business units
with Requisitioning and Payables Invoicing business functions as clients of a business unit with the
Procurement business function.
• The following figure illustrates a scenario where business unit BU 1 provides procurement services for
business unit BU 2. BU 2 performs Requisitioning and Payables Invoicing business functions. The service
provider relationship is defined with BU 1 as a service provider for BU 2.
Service Provider Model Example

The following figure depicts an example of service provider setup where business unit USA1 Business Unit is its
own procurement service provider.

Nav: Setup and Maintenance work area > Define Business Units > Manage Service Provider Relationships
Supplier Model
Suppliers are modeled as a global entity and are not created within a business unit or within any other
organizational context.
Supplier Sites:
• Are associated with a procurement business unit.
• Represent the relationship between a procurement business unit and a supplier.
• Set terms, controls, and policies which govern how procure to pay transactions are executed between its
client business units and the supplier.
Example
• The following figure provides an example of a supplier site setup. The supplier Advanced Corp has a site
called AC USA1, which is associated with the procurement BU USA1 Business Unit.

Nav: Suppliers work area > Search for Supplier > Site tab
Supplier Site Assignments:
Control which client business units can transact with the site.
Define the sold-to business unit associated with the client business unit.
Example
The following figure provides an example of a supplier site assignment.
• The client business unit USA1 Business Unit, which is also the sold-to business unit, is assigned to the site
AC USA1. Therefore, the business unit USA1 Business Unit can create requisitions and process invoices for
this site.

Suppliers work area > Search for Supplier > Site tab > Site link > Site Assignments tab
• In most cases, the client business unit and sold-to business unit are the same. In certain instances, due to tax or legal
reasons, the client business unit may only perform requisitioning, and another business unit acts as the sold-to
business unit and assumes liability for purchases.
• When a different sold-to business unit acts as an agent for the client business unit, you must create an additional
assignment for the sold-to business unit to process invoices. The list of sold-to business units that you can select for
a given client business unit is determined by the Intercompany Transaction Flow setup.
• When the client business unit and sold-to business unit are different, you must accrue purchase orders on receipt.
 Invoice Entry Methods
Oracle Fusion Payables supports a variety of invoice entry methods.

Manual
• Use Oracle Fusion Automated Invoice Processing to support scanning of invoices for paperless processing and routing.
Enter complex invoices with sophisticated defaulting and matching logic to match to purchase orders or receipts. View
invoice information, such as invoice status, installments, holds, payments, and applied prepayments. Drill down to the
original purchase order or receipt. For high volume invoice entry that does not require extensive online validation, use
spreadsheet invoice entry.
Supplier Portal
• Oracle Fusion Supplier Portal allows suppliers to enter their own invoices. Invoices that are not matched to purchase
orders are routed through workflow approval rules that you can configure.
Automated

• To alleviate the workload of your payables staff, there are many ways in which invoices can be created
automatically. Use the Evaluated Receipt Settlement (ERS) process to automatically create an invoice in
Payables upon receipt, and use the Return to Supplier (RTS) feature to automatically create debit memos
when you return goods to your supplier. Payables automatically creates invoices from expense reports
entered by employees in Oracle Fusion Expenses.

Electronic
• Payables supports B2B XML invoice web service and provides an open interface to import invoices from
another system.
• Regardless of the invoice entry method that you use, Payables supports foreign currency conversion,
automatic tax calculation including withholding tax, invoice approval, online accounting, and multiple
accounting representations.
Implementation Considerations for Invoice Entry Methods
 Function and Data Security

Functions and data are inaccessible to users unless they are provisioned with the roles necessary to gain
access.
Function Security
• The predefined Oracle Fusion Payables job roles are configured to maintain segregation of duties for
managing suppliers, creating invoices, force approving invoices, and creating payments.
This table lists the predefined Payables job roles.
 Job Roles and Duty Roles

This table lists some of the Payables duty roles and shows how duties are segregated across job roles.
For example, the Accounts Payable Specialist has the Payables Invoice Creation Duty and can create invoices,
but does not have the Payables Payment Creation Duty, so cannot pay them.
 Data Security

Generate data roles for business units and reference data sets using predefined data role templates. The
following table summarizes the data roles required for Payables and the security access that the data roles
grant.
 Prerequisite Setups

Before you perform the tasks in the Define Payables task list, configure the following common tasks for Oracle
Fusion Payables:
• Manage reference data sets.
• Verify data role generation.
• Provision roles to implementation users for sets.
• Manage business unit set assignments.
• Assign the business unit business function Payables Invoicing.

Creating suppliers is part of Procurement. To define suppliers, perform additional tasks, such as:

• Create a supplier with a type of Tax Authority for withholding tax.

• Manage Inventory Organizations.
• Manage Procurement Agents to identify the users who will create supplier sites.
• Assign the Procurement Business Unit Business Function.
• Manage Service Provider Relationships to specify the business units that provide the procurement service.
• Configure the Procurement Business Function.
 Defining Automated Invoice Processing Configuration
Defining Automated Invoice Processing is a manual task. Automated invoice processing is a fully integrated invoice
imaging solution that supports the entire invoice life cycle from scanning, recognition, and routing, to invoice
entry, approval, and payment.
• If you have Oracle Fusion Automated Invoice Processing, you must set up Oracle Document Capture, Oracle
Forms Recognition, and Oracle Imaging and Process Management.
Document Capture
• Digitizes paper invoices to images to support the automation necessary for streamlining invoice processing.
• Is designed for high volume, centralized image capture, where batches of invoices can be scanned at a time.
• Supports implementation scenarios where companies can centrally scan all invoices by having suppliers send
invoices to one location, or they can scan documents in field offices using multiple Document Capture instances.
Forms Recognition
• Offers intelligent recognition capabilities for extracting key invoice header data from scanned images. The
extracted data is later prepopulated directly into the invoice entry user interface.
• Intelligently locates data within the invoice, regardless of its location on the image and whether or not it has
processed invoices from that supplier before, unlike other solutions that use supplier-specific templates to extract
information. As new suppliers are added, or an existing supplier changes its invoice layout, Forms Recognition can
extract data from these new invoice layouts without additional configuration.
Imaging and Process Management
• Stores and routes invoice images to accounts payable specialists. For the rest of the invoice life cycle, any
reference to the invoice image points to the Imaging and Process Management repository so documents are never
replicated.
 Automated Invoice Processing Flow

The invoice imaging process begins with invoices arriving in the mail room.
Imaging specialists prepare and sort invoices based on parameters, such as geography, invoice amount, and due
date, and then scan the invoices using
Document Capture.
• Images are then sent over a network file share to a central Forms Recognition server for intelligent data
recognition and extraction. Any invoices that fail data extraction or validation are sent to the Forms
Recognition Verifier for manual resolution.
Once data recognition is complete, the invoice images are sent to Oracle Imaging and Process
Management for storage and routing to accounts payable specialists using Oracle BPEL Process Manager
workflows.
Payables specialists view the list of scanned images for invoice entry in the Scanned Invoices region of the
Invoices work area, and proceed with invoice entry using dual monitors where the invoice entry page is
displayed on one monitor, and the image is displayed on the other. During invoice entry, key invoice header
attributes are already prepopulated with the data extracted by Forms Recognition, reducing entry time
and data entry errors.
 Defining Common Options for Payables and Procurement

The Define Common Options for Payables and Procurement task list consists of the following tasks:

• Manage Payables Calendars

• Manage Payment Terms
• Manage Common Options for Payables and Procurement
Manage Payables Calendars
Define Payables calendars for:
– Payment terms.
– Automatic withholding.
– Key indicator reporting.
When you create a calendar or add years to an existing calendar, the following attributes control how periods are
generated:
• Period Frequency: Determines the number of periods per year and period name format options. If you select a
Period Frequency of Other, you must define calendar periods manually.
• Periods per Year: Identifies the number of periods per year based on the period frequency selected.
• Start Date: Represents the first date for the calendar and is the start date for the first period.
• Period Name Format: Determines the period name.
The following figure shows an example of a monthly calendar.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Financials > Define Invoicing and
Payments Configuration > Define Payables > Define Payables Configuration > Manage Payables Calendars
Manage Payment Terms

Payment terms:
• Contain information used to determine invoice due dates and amounts.
• Consist of one or more installments, each of which can have up to three discounts.
• Can be shared across business units through reference data set assignment.
 Reference Data Sharing
Payment terms are enabled for reference data sharing using the method of assignment to multiple sets, no common
values allowed. The predefined reference group is called Payables Payment Terms and the determinant type is
business unit. Assign payment terms to one or more reference data sets and share them across business units. A
payment term must be assigned a set before the payment term can be used.
Assigning Sets to Business Units
• When you define a business unit, you assign the business unit a default set. The default set becomes the set for
the reference group Payables Payment Terms. Use the Manage Business Unit Set Assignment task to change the
default set.
• In this example, for business unit USA1 Business Unit, the reference data set name USA1 BU Set is assigned to
the reference data object Payables Payment Terms.

Nav:Setup and Maintenance work area > Manage Implementation Projects > XXImplementation Project > Define
Business Units > Manage Business Unit Set Assignment
Assigning Sets to Payment Terms

• Assign sets to payment terms as part of the Manage Payment Terms task. To assign a set, you must first
generate and provision the set data role to the implementor. Data roles for reference data sets are
generated using the predefined data role template Financials Common Module Template for SetID. The
set data role is required only for payment terms setup.

Assigning the Common Set to Payment Terms

• You can assign the predefined Common set to a payment term.

• Unlike the reference data sharing method of assignment to one set only, with common values, payment
terms that you assign to the Common set are not always available regardless of the business unit on a
transaction. Instead, the Common set works like any other set. You must assign the Common set to the
reference data object Payables Payment Terms, and also assign the Common set to every payment term
that you intend to use.
NOTE: You must complete payment terms setup before performing the Manage Common Options for
Payables and Procurement task.
 Predefined Payment Terms

The following payment terms are predefined and assigned to the Common set.
• Immediate: Scheduled for payment immediately.
• 2/10 Net 30: Two percent discount deducted if paid within 10 days, remainder paid 30 days from invoice terms
date.
• Net 30: Payment due in 30 days.
• Net 45: Payment due in 45 days.
• Net 60: Payment due in 60 days.
• Net Monthly Account: Payment due on last day of the month following the one in which the invoice is dated.
• End Current Month: Pay by end of current month.
Important
The first time that you configure common options and save the Manage Common Options for Payables and
Procurement page for a business unit, a default record for the Manage Invoice Options task is automatically
created at the same time. The Payment Terms field on the Manage Invoice Options page is a required field
and the invoice options record is saved using the predefined payment term Immediate.
Before you proceed with the Manage Common Options for Payables and Procurement task, you must:
• Generate the data role for the reference data set that is assigned to the business unit.
• Provision the data role for the reference data set to the implementor.
• Assign the reference data set for the business unit to the payment term Immediate.
 Types of Payment Terms
You can define different types of payment terms. This table describes each type of payment term.

Payment Terms Example

This table shows how the attributes on a Day of month payment term affect the calculated invoice due date.
Manage Common Options for Payables and Procurement

Define the common controls and default values for each business unit with the Payables Invoicing and
Procurement business functions.
• Common options are grouping into the following categories:
• Default Distributions
• Automatic Offsets
• Currency Conversion
• Expense Accruals
• Self-Billed Invoices
• Legal Entity Information
Default Distributions

Default distributions provide default accounts for payables transaction processing. You can specify some
default distributions on a supplier site assignment, in which case the supplier provides the default
distributions on an invoice.

Setup and Maintenance work area > Implementation Project > XXImplementation Project > Define
Invoicing and Payments Configuration > Define Payables > Define Common Options for Payables and
Procurement >Set business unit scope >Manage Common Options for Payables and Procurement
Liability
Default liability distribution for an invoice, unless a supplier site assignment has a different value.
Prepayment
Default distribution for a prepayment invoice, unless a supplier site assignment has a different value.
Bill Payable
Default bill payable distribution, unless a supplier site assignment has a different value.
Conversion Rate Variance Gain and Conversion Rate Variance Loss: Conversion rate variance gains or losses for
inventory items or expense items that were accrued on receipt. Variance is calculated between the invoice
and either the purchase order or the receipt, depending on how you matched the invoice. These distributions
do not record variances for expense items that were not accrued on receipt.
Discount Taken: Discounts taken on payments if you allocate discounts to a single distribution.
Miscellaneous
Distribution for invoice lines with a type of Miscellaneous. If you do not enter a value, miscellaneous charges
are prorated across invoice item lines.
Freight
Freight for an invoice. You can override this distribution during invoice entry. If you do not enter a freight
distribution, freight charges are prorated across invoice item lines.
Prepayment Tax Difference
Tax amount difference between a prepayment and the invoices that it is applied to. These differences are
usually due to changes in tax rates between prepayment and invoice creation times. This distribution is used
only if the Applied Amount Handling option on the tax record is set to Recalculate.
Automatic Offsets
Automatic offsets are a method for balancing invoice and payment journal entries that cross primary balancing
segment values.
Automatic Offset by Primary Balancing Segment
For this method, Payables uses the invoice liability distribution and overrides the primary balancing
segment with the one from the charge distribution to build the liability entry line account. The resulting
journal entry is balanced by the primary balancing segment. The invoice distribution combination provides
the primary balancing segment value and the liability distribution on the invoice header provides the
remaining segment values.
Receiving uses the receiving inspection distribution for the destination organization, and overrides the
primary balancing segment with the one from the PO charge distribution to build the receiving inspection
entry line account.
Automatic Offset by All Segments, Except Natural Account
For this method, Payables uses the charge distribution combination from the invoice distribution and
overrides the natural account segment with the one from the invoice liability distribution to build the
liability entry line account. The resulting journal entry is balanced by all segments, except the natural
account segment.
Receiving uses the charge distribution and overrides the natural account segment with the one from the
receiving inspection distribution for the destination organization to build the receiving inspection entry line
account.

**Consider this option carefully before setting it. Changing automatic offsets after creating accounting
entries can result in accounting inconsistencies or slow performance.
 Currency Conversion
Currency conversion options provide default settings for converting foreign currency invoices to the ledger currency.

Require conversion rate entry

• Require a conversion rate whenever you enter an invoice or a payment in a currency other than the ledger
currency. If you maintain daily rates, the rate is automatically populated based on the date and the rate type that
you enter. If daily rates do not exist for the date and rate type, and if this option is enabled, you cannot enter or
save the transaction.
• If the conversion rate type is User, then you must always enter a conversion rate. You cannot create accounting
entries or pay foreign currency invoices without conversion rates.
• If you do not enable this option, after you have entered invoices or created payments, you can enter conversion
rates manually or by running the Apply Missing Conversion Rates program.
Conversion rate type
Specify the default conversion rate type when you enter invoices or create payments. You can change the
conversion rate type at invoice entry or payment creation time.
Realized gain and loss distributions
Specify the realized gain and loss accounts for payments. If a conversion rate changes between the time the
invoice is entered and the time of payment, the realized gain or loss is calculated and recorded to these accounts.
 Expense Accruals

Specify when to accrue for expense items.

Period end: During period close, accrual entries are created for all receipts that do not have invoices. Accrual
entries are reversed when the next period is opened.

Receipt: During receiving, accrual entries are created. You can override this setting on the purchase order
schedule for expense destination types.

Specify a default expense accrual distribution for use in purchase orders.

 Self-Billed Invoices

Self-billed invoices are:

• Evaluated Receipt Settlement (ERS) invoices that are automatically created by the Pay on Receipt process in
Oracle Fusion Receiving.
• Debit memos that are automatically created from a return to a supplier transaction in Receiving.
Set automatic invoice numbering options for self-billed invoices.

• Gapless invoice numbering: Enable gapless invoice number generation.

• Buying Company Identifier: Enter an identifier to use as part of the automatically generated invoice number.
Legal Entity Information
Define a legal entity for each registered company or other entity recognized in law for which you want to
record assets, liabilities, and income, pay transaction taxes, or perform intercompany trading.
Subledger applications, like Oracle Fusion Payables, use the legal entity model to identify the legal entity
that owns an invoice. Legal entity information is used for tax calculations, legal reporting, and to classify
whether an invoice between two entities is an intercompany transaction.
Specify values for:
• VAT Registration Member State and VAT Registration Number: If business operations are carried out in a
member state of the European Union. These values are used in Value Added Tax (VAT) reporting.
• Bill-to Location: The default bill-to location for purchase orders if a bill-to location is not already specified
on a supplier site assignment.
 Defining General Payables Options
The Define General Payables Options task list consists of the following tasks:
Manage Invoice Options
Manage Payment Options
Manage Tax Reporting and Withholding Tax Options
For each business unit with the Payables Invoicing business function, define the controls and default values to use
throughout Oracle Fusion Payables.

Defaulting Flow
Unlike Oracle E-Business Suite, in Oracle Fusion Payables default values do not flow from Payables options to a supplier site
because:
The business unit for a supplier site has the Procurement business function, which could be different from the business
unit for Payables.
A supplier site can have more than one business unit assigned to it using supplier site assignment.
You can set some of these options directly on a supplier, in which case the supplier setup determines the default value for
an invoice.
 General Payables Options Terminology

The following terms are applicable to the General Payables Options tasks:
Invoice Distribution
The accounting information for an invoice line, such as accounting date, amount, and account combination.
Invoice Group
A collection of invoices that is used as:
• A parameter in reports.
• A parameter in the invoice validation process.
• Selection criteria for pay run processing.
Invoice Request
An invoice created through Oracle Fusion Supplier Portal that is not associated to a purchase order and that is pending
approval by the requester.
Matching
The process of associating an invoice with a purchase order or receipt. Used to ensure that you pay only for goods and
services that were ordered or received.
Final Matching
A process that changes the status of a purchase order schedule to final close and prevents further invoicing.
Pay Group
A method for categorizing suppliers for payment processing.
Payment Process Request
A grouping of installments that are processed for payment in a batch. For each request, you specify selection criteria,
payment attributes, and processing options.
Payment Request
A request from Oracle Fusion Receivables or Oracle Fusion Expenses to disburse funds to a payee who is
not defined as a supplier. Recorded in Oracle Fusion Payables with an invoice type of Payment request.
Self-Service Invoice
An invoice that a supplier enters through Oracle Fusion Supplier Portal.
Tolerance
The allowed variance between invoice, purchase order, and receipt information. The invoice validation
process places matching holds on invoices that exceed the allowed variance.
Withholding Tax Group
A collection of one or more withholding tax codes. Used to associate more than one withholding tax code
to an invoice.
 Manage Invoice Options

Invoice options control how Oracle Fusion Payables processes invoices and are grouped into the following categories:
• Invoice Entry
• Matching
• Approval
• Discount
• Payment Request
• Prepayment
• Self-Service Invoices

Invoice Entry

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General Payables
Options > Set business unit scope > Manage Invoice Options
The following options are set at a business unit level only:
• Require invoice grouping: Enable this option to require the name of a group during invoice entry.
• Allow document category override: Enable this option to override the document category that is assigned to
an invoice. Document category usage is based upon the value of the profile Sequential Numbering Enforced.
• Allow adjustments to paid invoices: Enable this option to cancel or add lines to paid invoices such that paid
amount remains the same. You can also unmatch an invoice from a purchase order that is not final matched,
and then rematch the invoice to a different purchase order.
• Recalculate invoice installments: Enable this option to recalculate installment information during the invoice
validation process.
• Receipt acceptance days: Enter the number of days to accept receipts. Receipt acceptance days are added to
the Goods Received Date when recalculating installments.
Accounting date basis: Select the basis for the default accounting date.
– Goods received or invoice date: If the invoice does not have a date for goods received, the invoice date
is used.
– Goods received or system date: If the invoice does not have a date for goods received, the system date
is used.
• Invoice date: The date on the invoice.
• System date: The system date when the invoice is created.
The following options can be set for a business unit and for a supplier site. If a value is not specified for a supplier
site, the invoice options value is used.
Currency: Select the default currency.
Pay group: Select the default pay group.
Payment priority: Select the default payment priority.
Payment terms: Select the default payment terms.
Terms date basis: Select the basis for determining the terms date.
Goods received date: The date the goods are received.
– Invoice date: The date on the invoice.
– Invoice received date: The date the invoice is received.
– System date: The date the invoice is entered.
Pay date basis: Specify the basis for determining whether an installment is selected for payment and whether a
discount is taken.
– Discount date.
– Due date.
 Matching

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General Payables
Options > Set business unit scope > Manage Invoice Options

The following options are set at the business unit level only:
Allow final matching: Enable this option to perform a final match when matching to a purchase order or when adjusting
a matched invoice distribution. Once you final match to a purchase order, any subsequent matching of that purchase
order to invoices results in the invoices being placed on hold.
Allow matching distribution override: Enable this option to override the invoice distribution that was created from
matching an invoice to a purchase order.
Transfer PO distribution additional information: Enable this option to transfer descriptive flex field information from the
purchase order distribution to the invoice distribution when you match an invoice to a purchase order.
The following options can be set for a business unit and for a supplier site. If a value is not specified at a supplier site,
the invoice options value is used.
Quantity tolerances: Select a quantity-based tolerance set.
Amount tolerances: Select an amount-based tolerance set.
NOTE: If you define tolerances after this task, you can edit the Manage Invoice Options page to include them later.
 Discount

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General Payables
Options > Set business unit scope > Manage Invoice Options

The discount options are:

Exclude tax from calculation: Enable this option to exclude tax from an invoice when calculating the discountable
amount for an installment.
Exclude freight from calculation: Enable this option to exclude freight from an invoice when calculating the
discountable amount for an installment.
Discount allocation method: Specify how to distribute discounts: All invoice lines, Tax lines and single distribution, or
Single distribution.
Always take discount: Enable this option to take the available discount, regardless of when you pay the invoice.
You can set each of the following options on a supplier site to Yes, No, or Default from Payables Options. The supplier
site setting determines how the option is used.
Exclude tax from calculation.
Exclude freight from calculation.
Always take discount.
 Prepayment

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General Payables
Options > Set business unit scope > Manage Invoice Options

The prepayment options are as follows:

Payment terms: Specify the default payment terms for a prepayment. For example, you may want to have Immediate
payment terms for all prepayments.

Settlement days: Enter the number of days to add to the system date to calculate a default settlement date for a
prepayment. You cannot apply a prepayment to an invoice until on or after the settlement date.

Use distribution from purchase order: Enable this option to build the invoice distribution by taking the purchase order
distribution and overriding the natural account segment with the natural account segment from the supplier site
prepayment distribution or, if not defined, from the common options prepayment distribution.

Show available prepayments during invoice entry: Enable this option to display the number and amount of available
prepayments when you enter an invoice.
 Approval
Approval options control the automated invoice approval process . Oracle Fusion Payables provides configurable
predefined invoice approval rules as well as the ability to add rules using the Approval Management extensions (AMX)
of the Oracle SOA Suite and Oracle Human Workflow. The invoice approval process determines if an invoice
requires approval, and if so, automatically routes the invoice to the applicable approvers who then approve or reject
the invoice.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General
Payables Options > Set business unit scope > Manage Invoice Options

The approval options are as follows:

Enable invoice approval: Enable this option to automate the invoice approval process using the invoice approval
workflow.
Allow force approval: Enable this option to allow a user with the Accounts Payable Manager job role to override
the automated invoice approval process and approve invoices manually.
Require validation before approval: Enable this option for the invoice approval workflow to select invoices for
processing only when they are validated. Self-service invoices that are not matched to purchase orders always
require approval before validation, regardless of the option setting.
Require accounting before approval: Enable this option for the invoice approval workflow to select invoices for
processing only when they are accounted.
 Interest

Interest invoices are invoices that Oracle Fusion Payables creates automatically for overdue invoices. An interest
invoice is created and paid while you are paying an overdue invoice.

The interest options are as follows:

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General Payables
Options > Set business unit scope > Manage Invoice Options
• Create interest invoices: Enable this option to calculate interest on overdue invoices and create interest
invoices. To use automatic interest rate calculation, you must also define interest rates. You can set this
option on a supplier site to
• Yes, No, or Default from Payables Options.
• Minimum interest amount: Enter the minimum amount of calculated interest below which an interest
invoice is not created.
• Interest allocation method: Select the method for allocating interest expense.
– Single distribution: Use the interest expense distribution.
– All invoice lines: Use the natural account segment from the interest expense distribution.
• Interest expense distribution: Enter the distribution combination for interest expense if the option
Interest allocation method is set to Single distribution.
 Payment Request

Oracle Fusion Receivables can submit requests for customer refunds and Oracle Fusion Expenses can submit requests
for expense reports. Create payments to disburse funds using the payment functionality in Payables.

The payment request options are as follows:

Setup and Maintenance work area > Implementation Projects > XXImplementation Project >Define General Payables
Options > Set business unit scope > Manage Invoice Options
• Payment terms.
• Pay group.
• Payment priority.
Implementation Considerations
Manage payment requests separately from other payments using the following setups in
Oracle Fusion Payments:
• Payment method controls.
• Payment method defaulting rules.
• Payment file and report formats.
• Payment attribute validations.
NOTE: In Oracle Fusion Payables, employees are no longer modeled as suppliers unlike Oracle E-Business
Suite.
 Self-Service Invoices

Oracle Fusion Supplier Portal lets registered suppliers create invoices, view invoices, and view payments. When a
supplier creates an invoice that is not matched to a purchase order, the invoice is initially recorded in Payables as an
Invoice request. Once an Invoice request is approved by the requester, the request becomes an invoice.

The self-service invoice options are as follows:

Setup and Maintenance work area > Implementation Projects > XXImplementation Project >Define General Payables
Options > Set business unit scope > Manage Invoice Options

Limit invoice to single purchase order: Enable this option to limit an invoice to purchase order schedules that belong to
a single purchase order.
Allow invoice backdating: Enable this option to allow a supplier to enter an invoice for a date in the past.
Allow unit price change for quantity-based matches: Enable this option to allow a supplier to enter a unit price on an
invoice that is different from the unit price on the purchase order. Select from among
the following values: No, Price decrease only, Price increase only, and Price increase or decrease.

NOTE: Student Activity Manage Invoice Options.

 Manage Payment Options

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General
Payables Options > Set business unit scope > Manage Payment Options

The payment options are:

• Allow payment date before the system date.
• Allow override of the supplier site bank account.
• Account for payment.
 Account for Payment
Specify when to create payment accounting entries by setting the Account for Payment option.
At payment issue
Debit the liability account and credit the cash account. For a bills payable, debit the liability account and
credit the bills payable account. Then, at payment maturity, debit the bills payable account and credit the
cash account. Realized gain or loss is calculated at payment creation and, for bills payable, at payment
maturity.
At payment clearing
Debit the liability account and credit the cash account when the payment clears. Realized gain or loss is
calculated only at payment clearing for both regular payments and bills payables.
NOTE: You should enable this option only if Oracle Fusion Cash Management is implemented. Otherwise,
payments will never be accounted.
At payment issue and clearing
Payables accounts for each payment at:
• Issue time: Debit the liability account and credit the cash clearing account. For bills payable, debit the
liability account and credit the bills payable account. Then, at payment maturity, debit the bills payable
account and credit the cash clearing account.
• Clearing time: Debit the cash clearing account and credit the cash account. This accounting is created only if
Cash Management is implemented.
Realized gain or loss is calculated at all points where accounting is created.
Implementation Consideration
After you set the Account for Payment option, the only change you can make is from account At payment
issue to account At payment issue and clearing.
 Manage Tax Reporting and Withholding Tax Options

Tax reporting and withholding tax options control United States (US) 1099 tax reporting and withholding tax
calculations.
Income Tax Reporting
In the United States, the Internal Revenue Service (IRS) requires that you report certain types of payments that you
make to US 1099 reportable suppliers.
Withholding Tax
You may be required to withhold tax from invoices and pay it to a tax authority on behalf of the supplier.
 Income Tax Reporting

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General Payables
Options > Set business unit scope > Manage Tax Reporting and Withholding Tax Options

Income tax reporting options control combined federal and state US 1099 filing.
Use combined filing program: Enable to produce state records for all tax regions participating in the Combined Filing
program that have qualifying payments.
Use supplier tax region: Enable to use the income tax region on a US 1099 supplier as the default tax region
on invoice distributions.
Income tax region: Enter the default income tax region for invoice distributions of US 1099 suppliers if you enable
the Use combined filing program option and do not enable the Use supplier tax region option.
 Withholding Tax

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Define General Payables
Options > Set business unit scope > Manage Tax Reporting and Withholding Tax Options
The withholding tax options are as follows:

Use withholding tax: Enable withholding.

Allow manual withholding: Enable this option to create and adjust manual withholding tax lines.
Include withholding distributions in income tax reports: Enable this option to include federal tax withheld for
US 1099 suppliers on US 1099 reports.
Tax group: Select the default withholding tax group for invoices.
Apply withholding tax: Select when to withhold.

Never: Payables will not automatically withhold taxes. You must create withholding tax lines manually.

At invoice validation: Taxes are automatically withheld at invoice validation. If you select this option, Payables
calculates withholding only once. If you adjust an
 invoice after it was validated, you must adjust the withholding tax manually and the option Allow manual
withholding must be enabled.
– At payment: Taxes are automatically withheld when you create payments in a payment process
request or with a Quick payment.
Create withholding tax: Enable to automatically create withholding tax invoices to remit withheld taxes.
– Never: Payables will not automatically create withholding tax invoices. You must create withholding
tax lines manually, run the withholding tax reports to determine the amounts to remit to your tax
authorities, and create the withholding tax invoices.
– At invoice validation: A withholding invoice is automatically created when an invoice subject to
withholding tax is validated. You can enable this option only if withholding is applied at invoice
validation time.
– At payment: A withholding invoice is automatically created when an invoice subject to withholding
tax is paid. You can enable this option if withholding is applied either at invoice validation or at
payment.
• Withholding amount basis: Specify whether to include discount and tax amounts when calculating
withholding tax.
Withholding Tax Options on a Supplier
Supplier site assignment includes the following options which, if specified, provide the default value for an
invoice.
• Use withholding tax.
• Withholding tax group.
Defining Payables Configuration

The Define Payables Configuration task list includes the following tasks:
• Manage Payables Lookups
• Manage Payables Descriptive Flex fields
• Manage Payables Profile Options
• Manage Payables Document Sequences
• Manage Distribution Sets
• Manage Invoice Tolerances
• Manage Invoice Holds and Releases
• Manage Aging Periods
 Manage Payables Lookups

Lookups are containers for the list items that appear in an application. Users select one of the items from such lists to
enter a value on the application user interface.
Payables has several predefined lookups. Some lookups, such as Invoice Type, have a customization level of System and
are locked for editing. Other lookups, such as Do Not Pay Reason and Source have a customization level of Extension,
which allows you to add lookup codes.
The following figure shows the predefined lookup type Valid Pay Groups, which has a customization level of User.
You can edit this lookup type and its codes.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project >Financials > Define
Invoicing and Payments Configuration > Define Payables > Define Payables Configuration > Manage Payables Lookups
 Manage Payables Descriptive Flex fields
There are several Payables descriptive flex fields that you can deploy for use, such as Invoices and Invoice Lines.

The following figure shows general information for the descriptive flex fields Invoices and Invoice Lines.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Financials > Define
Invoicing and Payments Configuration > Define Payables > Define Payables Configuration > Manage Payables
Descriptive Flex fields
 Manage Payables Profile Options
Profile options are global configuration settings that users can modify to change the way an application works. For
example, settings such as user preferences and application configuration parameters can be modified as per the user's
requirements.

Setup and Maintenance work area > Implementation Project > XXImplementation Project >Define Invoicing and
Payments Configuration > Define Payables > Define Payables Configuration > Manage Payables Profile Option

Oracle Fusion Payables has one profile option. The Reconciliation Data Purge Frequency profile option specifies the
number of days to keep Payables to Oracle Fusion General Ledger reconciliation extract data.

Every time you run the Extract Reconciliation Data from Payables to General Ledger program, the program refers to
the Reconciliation Data Purge Frequency profile option. Extraction requests that are older than the number of days
specified in the profile option are purged.
Set the interval in such a way that it does not interfere with the reconciliation time line. The number of days should
be long enough so as not to lose prior extracts that may be needed for comparison purposes.
Example
If you set the Reconciliation Data Purge Frequency profile option to 30 and run the extraction program on:
 Manage Payables Document Sequences
Assign a unique voucher number to each invoice and payment document to have a unique identifier for
each document.
Setup and Maintenance work area > Implementation Project > XXImplementation Project > Define
Invoicing and Payments Configuration > Define Payables > Define Payables Configuration > Manage
Payables Document Sequences
Example
You may get two invoices with identical invoice numbers from two different suppliers. If you assign a
voucher number to each invoice, you can locate each invoice based on its unique voucher number.
Voucher numbers provide proof of completeness. If you use sequential voucher numbers, you can confirm
that no document was lost.
Document Sequences
When defining a new sequence, you must enter the name of the table that stores sequence audit
information. For document sequences used by Oracle Fusion Payables, the audit table name is
AP_DOC_SEQUENCE_AUDIT.
Document Categories
Set up document sequencing for different types of documents or document sequence categories. For
example, you may decide to assign a sequence of numbers to the document category Credit Memo
Invoices. Each credit memo that you create will have a unique voucher number.
Predefined Document Categories
• There are several predefined document categories that you can use in document sequencing, such as the
following:
• Standard Invoices
• Credit Memo Invoices
• Debit Memo Invoices
• Interest Invoices
• Electronic Payments
• Check Payments
• Clearing Payments
Manage Distribution Sets
Distribution sets automatically create distributions for invoices that are not matched to purchase orders.
Setup and Maintenance work area > Implementation Project > XXImplementation Project > Define
Invoicing and Payments Configuration > Define Payables > Define Payables Configuration > Manage
Distribution Sets
For example, create a distribution set that allocates the advertising expense on an invoice to four
advertising departments. Add the distribution set to a supplier site assignment to use it on every invoice
for that supplier site and business unit. If you do not assign a distribution set to a supplier site, you can
assign a distribution set to an invoice at invoice entry.
Define distribution sets either with percentages or without percentages.
Distribution Sets with Percentages
Use a 100 percent distribution set when the percentage of expenses to allocate is known.
For example, define a fully allocated distribution set for a rent invoice by assigning 70 percent of the
invoice amount to the sales facility expense account and 30 percent to the administration facility expense
account.
Distribution Sets Without Percentages
Use a 0 percent distribution set when the percentage of expenses to allocate is not known.For example,
define a distribution set with no amounts allocated to the sales facility expense account and the
administration facility expense account. You can then enter amounts for the distributions during invoice
entry depending on variables such as the monthly head count for each department.
 Manage Invoice Tolerances

Invoice tolerances are the allowed variances between invoice, purchase order, and receipt information.
If variances exceed the specified tolerances, the invoice validation process places an invoice on hold. For example, if
the billed quantity for an item exceeds the quantity tolerance, invoice validation applies a hold on an invoice
Preventing payment until the hold is released.
There are quantity-based tolerances and amount-based tolerances. For each type of tolerance, you specify
Percentage or amount limits.
The following figure shows an example of a quantity-based tolerance. The Ordered Percentage tolerance has a limit
of five percent. Ordered Percentage is the percentage difference above the purchase order schedule line ordered
quantity that you allow suppliers to invoice. In this case, an Ordered quantity hold will be placed on an invoice
if the five percent limit is exceeded.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Financials > Define
Invoicing and Payments Configuration > Define Payables > Define Payables Configuration > Manage Invoice Tolerances
NOTE: A percentage tolerance of zero indicates that no variance is allowed. An active tolerance without a tolerance limit
value indicates that unlimited variance is allowed.
 Manage Invoice Holds and Releases
Define the holds and releases that you manually apply to an invoice. You cannot pay an invoice that is on hold. Predefined
holds and releases are used during the invoice validation process.
Releasing Holds
Some predefined holds can be released manually. Other holds require that you fix the exception condition before the
hold can be released.
For example, if the sum of the distributions on an invoice does not equal the invoice line amount, a Distribution variance
hold is placed on the invoice. You cannot manually release a Distribution variance hold. Instead, you must correct the
exception condition by adjusting the distribution amounts and validating the invoice again.
Predefined Holds and Releases
This figure provides examples of some predefined holds and releases.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Financials > Define
Invoicing and Payments Configuration > Define Payables > Define Payables Configuration > Manage Invoice Holds
and Releases
 Manage Aging Periods
Aging periods define the day ranges and column headings for the Payables Invoice Aging report.
Example
The following figure shows the definition of an aging period called Standard Monthly.
The First column, which is called Current, is defined to report invoices that are due for payment up through 30 days
prior to the day you submit the report. For example, if you run the report on March 3, 2012, the Current column will
include an invoice due on July 3, 2012, as well as an invoice due on February 2, 2012.
The Second column, which is called 31-60 Days Overdue, is defined to report invoices that are due for payment 31
through 60 days prior to the day you submit the report. For example, if you run the report on March 3, 2012,
the 31-60 Days Overdue column will include an invoice due on January 11, 2012.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Financials > Define
Invoicing and Payments Configuration > Define Payables > Define Payables Configuration > Manage Aging Periods
Defining Payables US 1099 Tax
The setup tasks for United States (US) 1099 tax reporting are included in the Define Payables Tax and
Withholding task list.
• Manage Tax Regions
• Manage Reporting Entities
Manage Tax Regions
Use tax regions for United States (US) 1099 electronic media combined filing reporting.

Tax regions include reporting limit amounts and methods.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Financials >
Define Invoicing and Payments Configuration > Define Payables > Define Payables Tax and Withholding >
Manage Tax Regions

Reporting limit amounts represent the minimum amount for determining whether to report on payments to a
supplier. If no limit amount is specified, Payables assumes that the limit is zero.
Reporting limit methods can be set to one of the following values:
• Same as federal: Uses the federal reporting limit instead of the region reporting limit amount.
• Compare individually: Compares the reporting limit amount to the sum of payments for each US 1099
miscellaneous income tax type.
• For example, the reporting limit for region X is 600 USD. If you make a total of two 400 USD payments to a
supplier in region X, and classify each payment as a different 1099 miscellaneous type, Payables does not
report the supplier to region X because neither individual payment type exceeded the region X reporting
limit. In this case, Payables reports the supplier only to the federal tax authorities.
• Compare sum: Compares the reporting limit amount to the sum of payments for all US 1099 miscellaneous
income tax types.
For example, the reporting limit for region X is 600 USD. If you make a total of two 400 USD payments to a
supplier in region X, and classify each payment as a different 1099 miscellaneous income tax type, Payables
will report this supplier to the region X tax authority because the sum of the payments exceeds the region
X reporting limit. In this case, Payables reports the supplier to both federal and state tax authorities.
 Manage Reporting Entities
A reporting entity is a person or organization that has a unique tax identification number (TIN).
Reporting entities are used for United States (US) 1099 reporting. US 1099 reports accumulate the totals for all primary
balancing segment values that are assigned to a reporting entity to derive the total amount paid.
For each reporting entity, assign one or more primary balancing segment values.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Financials > Define
Invoicing and Payments Configuration > Define Payables > Define Payables Tax and Withholding >
Manage Reporting Entities
Example
An enterprise defines a reporting entity called Headquarters, which is comprised of Company 1, Company 2, and
Company 3. Each company is represented by a primary balancing segment value.
When submitting a US 1099 report, Headquarters is entered as the reporting entity. Payables prints the accumulated
payments for Companies 1, 2, and 3 on the US 1099 Report. The report sums up the paid invoice distributions that have
these company balancing segment values in their accounts.
Related Reports
• US 1096 Report
• US 1099 Report
• US 1099 Invoice Exceptions Report
• US 1099 Supplier Exceptions Report
• US 1099 Payments Report
• US 1099 Electronic Media Report
 Defining Payment Options
Manage Interest Rates
The Define Payment Options task list consists of the Manage Interest Rates task.
Define interest rates for calculating and paying interest on overdue invoices.
You can add, change, or delete a rate at any time. Interest is calculated using the interest rate in effect the day after
the invoice is due. When a rate is not defined, there is no interest calculated and no interest invoice created.

Setup and Maintenance work area > Implementation Projects > XXImplementation Project > Financials > Define
Invoicing and Payments Configuration > Define Payables > Define Payment Options > Manage Interest Rates

Invoice Approval Rules

Oracle Fusion Payables provides predefined configurable rules for invoice approval.
You can:
•Add rules using the Approval Management extensions (AMX) of the Oracle SOA Suite and Oracle Human Workflow.
• Administer rules using the Oracle Business Process Management (BPM) Worklist Application interface.

Every invoice that requires approval must be approved before the invoice can be paid.

When you initiate approval for an invoice, the invoice approval task invokes a set of approval rules created in AMX to
build the list of approvers. AMX sends out approval notifications to the first set of approvers, and every time it receives
a response to an approval notification, AMX sends out approval notifications to the next set of approvers on the
approval list. This process is repeated until all approvals are complete.
 Invoice Request Approval
An invoice request is an invoice created through Oracle Fusion Supplier Portal that is not associated to a purchase
order and that is pending approval by the requester. Once a requester approves an invoice request, the invoice
request becomes an invoice. You cannot disable or configure this initial approval flow.
Set up additional approvals for an invoice request after the initial approval by the requester, by configuring the
rule set Invoice Request Approval Rule Set. The rule set contains a predefined rule called Ignore Invoice Request
Approval Rule Set Rule, which ignores participants. To use the rule set, delete the predefined rule and then add
new rules.
The following figure shows the predefined rule for the rule set
Invoice Request Approval Rule Set.

Setup and Maintenance work area > Implementation Project > XXImplementation Project > Define Common Applications
Configuration for Financials > Define Approval Management for Financials > Manage Task Configurations
for Financials > FinAPInvoiceApproval (11.1.2.0.0) link > Data Driven tab >InvoiceRequestApprovalRuleSet
 Invoice Approval
The rule set Invoice Approval Rule Set contains the following predefined rules:
• Manager Approval Rule: Approval of an invoice with an amount greater than or equal to
1000 by an immediate supervisor.
• Auto Approval Rule: Automatic approval of an invoice with an amount less than 1000.
The following figure shows the predefined rule for the rule set Invoice Approval Rule Set.

Setup and Maintenance work area > Implementation Project > XXImplementation Project > Define Common Applications
Configuration for Financials > Define Approval Management for Financials > Manage Task Configurations for Financials >
Fin AP Invoice Approval (11.1.2.0.0) link > Data Driven tab >
Invoice Approval RuleSet
 Predefined Approval Task

The Fin Ap Invoice Approval task configuration has event-driven and data-driven settings. The event-driven settings
define escalation, expiration, and notification policies. The data-driven settings define assignment and routing
policies, and consist of the following predefined rule sets:
Invoice Request Approval Rule Set for invoice request approval.
Invoice Approval Rule Set for invoice approval.
The following figure shows the predefined task FinApInvoiceApproval and its predefined rule sets.

Setup and Maintenance work area > Implementation Projects tab > XXImplementationProject > Define Common
Applications Configuration for Financials > Define Approval Management for Financials > Manage Task Configurations
for Financials > FinAPInvoiceApproval (11.1.2.0.0) link > Data Driven tab
 Defining Sub ledger Accounting Rules

Begin configuring Oracle Fusion Sub ledger Accounting from the Setup and Maintenance work area.
Define Sub ledger Accounting Rules Task List

Navigation: Home page > Navigator > Tools > Setup and Maintenance > Manage Implementation Projects > <Your
implementation project>. Expand your specific product task list to access the Define Subledger Accounting Rules task list

This graphic displays the tasks to complete to set up Subledger Accounting for your product. You can determine the task
lists and tasks that are included when you define the Configure Offerings attributes. You can include either the
Manage Sub ledger Accounting Method task list or the Maintain Subledger Application and Accounting Method task
list in your offering.
 Relevant Setup Tasks
• Initial Setups
• In the Setup and Maintenance work area create an implementation project for the Oracle Financials
offering.
• Subsequent Maintenance
• Choose your implementation project.
• Set the context by choosing an existing subledger application as the scope.
• Access the setup tasks from the task list.
 Payables Event Classes and Types
Oracle Fusion Payables provides predefined accounting event classes and accounting event types. You can modify
the accounting setup to create accounting for some events and not for others.

The following table lists the predefined event classes and event types.
Highlights

• Explain key concepts in Oracle Fusion Payables.

• Explain automated invoice processing.
• Define common options for Payables and Procurement.
• Define general Payables options.
• Define Payables configuration.
• Define Payables US 1099 tax.
• Define payment options.
• Explain invoice approval rules.
• Define Sub ledger Accounting rules.