Overview of Payables Configurations in Oracle Fusion Applications

What are the required Configurations to use Payables in Oracle Fusion Applications?

These are some of the basic setups that we need to deal with first when it comes to Payables-to-Cash process. Some of the setups will be common, including enterprise structures, reference data sets. And some of the setups are specific to invoicing and payment process, and some of the setups are specific for reconciliation related requirements.

The required Configurations to use Payables are divided into four categories:

1. Common Application Configurations
2. Invoicing and Payments Configurations
3. Cash Management and Banking
4. Suppliers and Supplier Site Configurations

Common Application Configurations

• Common Application Configurations are mostly configurations to be done in the General Ledger. Firstly, you need to establish legal structures such as Enterprise details, Legal Entities, Business Units, Ledgers, etc. Secondly, you need to configure Reference Data Sets (RDS).
• Enterprise Structures basically represents the entities through which you are managing your business. It includes a top entity called the Enterprise and under it you can have Legal Entities, ledgers, business units, inventory organizations, cost of books, etc. This includes Final reporting Structures, which is where the role of ledgers comes into the picture. For more information on Enterprise Structures, check out a separate article, Overview of Enterprise Structures in Oracle Fusion Applications
• Reference Data Sets allows either the sharing of Master Data Objects (i.e. Payment Terms, Set of Books, etc.) across Business Units or makes it exclusive to a specific Business Unit or shared across multiple business units. It basically partitions the Master Data Objects on which Business Units get access to it. For more information on Reference Data Sets, check out a separate article: Overview of Reference Data Sets in Oracle Fusion Application.

Invoicing and Payments Configurations

• To manage invoices and payments within Payables and Payments, you need to manage and maintain setups that are common to the Payables application.
• For example, you will maintain common Payable and Procurement options. They will govern how the transactions are processed within the Payables and Payments application. Common Payment and Procurement Options are also used to default certain attributes directly on the invoices that you will process. Do note that there are certain Payment and Procurement Option attributes than can also be overridden at the supplier level.
• Configurations such as allowing Invoice approvals and accounting for the payment transaction is driven through Invoice Options and Payment Options, respectively.
• Setups required for Payment Processing such as design payment formats, payment systems, payment transmission configurations for electronically transmitting the payment files to your banks for disbursement purposes.
• You may have to configure tax rules based on which the taxes should be calculated automatically.
• You may have to set up Subledger Accounting Rules based on which the accounting entries at the Subledger level for these transactions will be generated. For more information on Subledger Accounting, check out a separate article: Overview of Subledger Accounting in Oracle Fusion Applications

Cash Management and Banking

• The primary role of Cash Management is for bank statement reconciliations and for bank account transfers.
• You need to manage the Bank, Bank's branches and Bank Accounts. To know more about Managing the Bank, Bank's branches and Bank Accounts, check out a separate in-depth article: Creating Banks, Bank Branches and Bank Accounts in Oracle Fusion Applications
• You also need to ensure that you have established a proper mechanism to upload the bank statements electronically. To know more about Cash Management and Bank Statements, check out a separate article: Overview of Cash Management in Oracle Fusion Applications

Once these basic setups have been completed, you need to maintain your supplier and supplier site data. 

Supplier and Supplier Sites

Suppliers are used in different applications including Procurement, Payables, and Payments. You will use suppliers in the Procurement application for managing purchase orders as you cannot create a purchase order without a supplier. You need suppliers in the Payables application for processing supplier invoices. You need supplier in the Payments application for disbursing payments against the invoices that were recorded within the Payables application.

Supplier sites are basically used for establishing a relationship between a business unit and other attributes that will govern how the invoices related to those suppliers will be processed. This allows the system to know which business unit is authorized for recording transactions as far as a particular supplier site is concerned. You have have got an option to assign one site to multiple business units if necessary.

Supplier Sites also provide many defaults, controls and policies. Supplier Sites can default accounts combinations related to liability, advances automatically on the invoices. If it is not provided in the Site-Level, then system will retrieve those details straightaway from the common Payable and Procurement options.There is also a mechanism to specify a default withholding tax code, a default distribution set. Supplier Sites also controls whether to put holds on the invoices, default payment term, default terms date basis, etc.

Once all of these are setup and done, you can now proceed to create Payable Transactions in Oracle Fusion Applications.

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Overview of the Procure-To-Pay process flow in Oracle Fusion Applications

What is the Procure-to-Pay process flow?

The Procure-to-Pay process flow Involves two modules, the Procurement and the Payables Modules. In a quick summary, this process flow involves capturing the demand of a product/service, facilitating quotations from suppliers, converting quotations into purchase orders, receiving material, and finally releasing the payment for the vendor.

The process begins with demand, and the demand is recorded in the form of a requisition. The requisition is utilized as a base for requesting supplier quotations. Supplier quotations then get entered and compared within the application. Based on analysis and best product and price choice, the organization will award a purchase order to the chosen supplier. The supplier will then ship and send the material (or provide the service) to the organization, and finally the organization will book the invoice to pay the supplier. Do note that the sourcing of quotations is not a mandatory step in the process.

What is Procurement?

Procurement, or sometimes referred to as Purchasing, refers to a business practice of attempting to acquire goods and/or services to accomplish the goals of its enterprise. It is simply the process of identifying what the organization needs and buying it. The Procurement Modules' main end-users are called "Buyers".

Key Terminologies in Procurement

Purchase Requisition

• Purchase Request is a precise document generated by an internal or external organization to notify the purchasing department of items it needs to order, their quantity, and the time frame that will be given in the future.
• Executed by the End-Users of Each Department and sent to the Purchasing department.

Quotation

• Request For Quotation (RFQ) is the communication between customer and supplier asking the availability of the item and its corresponding price.
• Executed by Buyers to be sent to Vendors

Purchase Order

• A written authorization from a buyer, for a supplier to deliver specified goods or services to the buyer, at the price, quality level, delivery date, and certain other terms specified in the agreement. A purchase order is legally binding after the supplier counter-signs it.
• Executed by the Buyers and sent to the selling Vendor

What is Payables?

The Payables Application, sometimes referred to as the AP Module, is the module that is primarily involved with interfacing with Suppliers and paying Suppliers. Apart from the Procurement module, the AP module interfaces with multiple applications such as applications such as the Payments application for fund disbursement, Cash Management for bank statement reconciliation.

Key Terminologies in Payables

Suppliers

• Organizations or Entities that provide goods or services. Can be both Internal or External.

Payment Disbursement

• Provides funds for delivered goods or services to suppliers.
• Can also provide funds for Customer Refunds or Employee expense reimbursements in the form of a Payment Request
• Can be in the form of sending a physical check or electronic funds transfer (EFT)

Assets

• Acquired Physical Goods that have a direct impact to an organization's net worth such as buildings, furniture, computers, etc.
• Can be entered into the Payables module and will flow down to the Assets Module.
• Value can Depreciate/Appreciate over a period time, and can be decommissioned as well.

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Create a Supplier in Oracle Fusion Applications

To Create a Supplier, the User must first be granted the seeded role of "Supplier Manager". Navigate to the Security Console from the Navigator:

Click on the "User" tab and search for your desired user to grant the role to:

Click on "Edit" and proceed to click on the "Add Role" button:

Select "Supplier Manager" from the List of Values (LoV). If there is another role with a similar name, choose the Role with the Code of "ORA_" as the prefix. This signifies that it's the seeded Oracle role.

Once done, click on the "Add Role Membership" button and Save. You may need to logout and log back in after a few minutes for it to take effect to the desired user.

Click on the Navigator and select "Suppliers". Alternatively, you may click on the "Procurement" Menu on the Welcome Springboard and proceed to click on "Suppliers".

Click on the Task Pane and select "Create Supplier". Fill up the initial required details and click on "Create":

Once done, The initial details of the Supplier will be created. Please take note that you would still need to complete other important details before you can proceed to use the newly-created Supplier. You can view the details still pending for the Supplier by viewing the "Suppliers with Incomplete Setup" section in the Supplier screen:

A quick step-by-step Video demonstration can be found here:

Set Procurement Agents in Oracle Fusion Applications

Go to Setup and Maintenance > Choose the "Financials" offering and select "Manage Procurement Agents" under the Tasks.

Select the desired Business Unit the Agent will come under:

On the Manage Procurement Agents page, you may either search for an existing agent by filling up the required fields and clicking on the "Search" button, or you may click on the "+" sign to add a new agent:

In the "Create Procurement Agent" page fill up the Required fields and identify if that specific agent needs access to other Agents' Documents as well.

Click on "Save and Close" and you may verify if the Agent has been created from the "Manage Procurement Agent" page: