The Oracle Prodigy: Credit Memo

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Overview of Advanced Collections in Oracle Fusion Applications

What is Oracle Advanced Collections?

Advanced Collections provides a comprehensive solution for managing and running the day-to-day collection operations. Advanced Collections can help an organization improve its cash flow, increase collection efficiencies, optimize customer relationships and instill corporate and fiscal discipline.

It allows the collectors to focus and track their on their collection activities with the help of Infotiles, which are containers of important information your collectors need to focus on.

Who uses Oracle Advanced Collections?

Collectors are responsible for following up payments from delinquent and pre-delinquent Customers, tracking their activities and sending dunning letters. They will be responsible in minimizing the risk of financial exposure and making sure that the owed money is collected.

Below is a quick video Demonstrating how to setup Collectors:

Advanced Collections Infotiles

We have predefined Infotiles for Advanced Collections in the Work Area:

Delinquent Infotile - Once an invoice is delinquent, it will get picked up by the processes and allocated against the particular collector with all of the delinquent invoices. Delinquent means that the invoice is still unpaid after its payment term.
Promises Infotile - Collectors can see if a customer has broken a Promise to Pay. Promise to Pay is, as the term implies, a promise made by the customer to pay their overdue invoice. If such promise is broken, you can apply collection strategies to that customer to perform Dunning, a phone call, an escalation, etc.
Strategy Tasks Infotile - This Infotile shows the Strategies collectors need to work on, such as following up on a payment by making a phone call, or sending a dunning letter. Strategies are Tasks that can either be manual or automated. For more information on Strategy Tasks, check out a separate article, Overview of Collection Strategies in Oracle Fusion Applications.
Activities Infotile - This is where you've got other activities that aren't work items from a strategy that you need to complete. So you can create them yourself, or somebody else might create them and assign them to you. And as you can see, when you're in here, the strategy task, you could complete it, cancel it, or reassign it to somebody else if you wanted to. A credit analyst can reassign a case folder to different credit analyst without needing an approval

Advanced Collections Features

Advanced Collections provides a way for Collectors to raise disputes, record payments, record a Promise to Pay.

Disputes - Disputes happen when a Customer has a concern regarding the Invoice they are being billed, it may be for a number of reasons such as billing error, a hardware issue, a promised discount, etc. The customer informs the collector about this and the collector can then go in and raise a dispute in behalf of the customer. Once approved, this will then go on to become a Credit Memo. For more information on disputes, check out a separate article, Overview of Collection Disputes in Oracle Fusion Applications.
Payment
Promise to Pay - As previously mentioned, a Promise to pay is a promise made by the customer to pay their overdue invoice. Payment promises are made after the transaction's payment term is overdue. For Example, if the invoice date is 1-May-2019 and the payment term for that invoice is NET 30, then the due date for an invoice. would be 31-May-2019. However, the customer failed to pay the invoice, thus, a promise to pay can be created to collect either a partial payment or a full payment.

Collections Case Folder

Allows you to group together related transactions to increase collection efficiency. Typically, they have the same bill-to customer which is used by a collector to take action on that collections cycle. You can use it to group similar transactions together, perform your collections activity against the entire group simultaneously.

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Creating a Receivables Credit and Debit Memo in Oracle Fusion Applications

What is a Credit Memo or a Debit Memo?

In Receivables, a Credit Memo decreases the value of a transaction while a Debit Memo Increases the value of a transaction. Both of these are linked to the original Invoice.

What's the difference of an Adjustment as compared to Credit/Debit Memos?

In an adjustment, the amounts are updated for the original transaction whereas a Debit Memo or Credit Memo is a new transaction that is linked to the Original Invoice like an addendum. Although note that we can create a separate Credit/Debit Memo that is not linked to an Invoice. These are called on-account Credit/Debit Memos.

When is it preferred to use Adjustments or Credit/Debit Memos?

It depends on the organization requirement as well as statutory requirements that prevails in a country to decide which approach should be followed. But Adjustments are more commonly used when there is an error in the original amount stated in the Invoice, whereas Credit/Debit Memos are used when there is an amendment in the actual invoice.

Steps in creating a Credit Memo

So navigation is step one. Once we're logged in terms of starts us in the Billing work area. And we're looking for the Task Credit Transactions.

A window will prompt the user to search and select the original invoice the Credit Memo will be linked to. Once selected, click "OK".

On the "Credit Memo" screen, fill up the required fields. For the Credit Memo Amount, the user may either put in the exact amount or a percentage from the Original amount. Once done, click on "Save and Close". This will effectively create a Credit Memo linked to the Original Invoice.

You may search and verify for the newly created Credit Memo by navigating to Billing Work Area > Task Panel > Manage Transactions screen:

View the Credit Memo's report by selecting the Transaction and clicking on the "View PDF" button:

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Creating a Manual Refund in Oracle Fusion Applications

This article demonstrates the steps involved in creating a Manual Refund via an On-Account Credit Memo.

Navigate to the Receivables Application > Billing Work Area

Click on the Task Panel and create an On-Account Credit Memo:

On Create Transaction screen, fill up the necessary details to create a Credit Memo. Make sure the Transaction Class selected is a Credit Memo:

Fill up the Bill-To Name and the Ship-To Name, including the Amount and Quantity of the Credit Memo. Also note to use the negative sign for Credit Memos:

Once complete, click on Complete and Close to complete the transaction.

A confirmation message confirms that the Credit Memo has been created.

Next, login as a User with enough privilege credentials in Payables then Go to Accounts Receivables Work Area and click on the task Panel and select Apply Credit Memos

Search and Select for the On-Account Credit Memo you created and click on "Issue Refund":

On the Issue Refunds screen, populate the required fields and click on "OK". This populates the Payables Open Interface Tables and creates a Payment Request in the form of a Payables Invoice.

To verify if the Credit Memo has been applied, go back and search for the Credit Memo in the "Manage Credit Memo Applications" screen. Notice that the Unapplied amount has been reduced to Zero:

Next, navigate to the Payables Work Area and check on the Invoice created for the Customer for the refund.

On the Payables Work Area, search for the recently-created Invoice and select it. You can either Account for the transaction or refund the Customer in full.