AR

The Accounts Receivable (AR) module is a part of the Oracle Financial Applications
11i. This module enables you manage the tasks related to raising invoices, debit
notes, credit notes, deposit notes, and guarantees. It also helps you manage
transactions, receipts, and collections and track payments from customers after a
sale is complete. You can integrate AR with the Oracle General Ledger, Order
Management, Oracle Inventory, Oracle Cash Management, and Oracle Party
Model/Customer modules, but you do not need to install these modules to work with
AR. You can also install AR as an independent module.

This ReferencePoint explains how to record and track information pertaining to

transactions and receipts in an organization and how to record the remittance to the
bank. It also explains how to record customer information using the AR module.

Customers
Before you start the process of tracking Account Receivables in Oracle, you need to
enter customer information in the database. All information related to a customer
must be entered when customer makes the first purchase from your organization.
When entering this information, you can also define customized fields. For example,
you can create fields to store multiple addresses for each customer.Figure below
shows the different types of customer information:

Customer Information

Entering Customer Information

The only mandatory information required for a new customer is the name, customer
number, and address. To enter customer information:
1. From the main menu, select Customers->Standard. You are prompted to enter
the name of the customer.
 2. Enter the name and click the Find button. If a customer with that name does
not exist, then a message box appears asking whether you want to create a
new customer.
3. Click New, if you want to create a new customer. The Customers window
appears, as shown -

The Customers Window

4. Select the customer type, which can be either an organization or a person. If

the new customer is a person, not an organization, you can enter information,
such as prefix, first name, middle name, last name, and suffix.
5. If the Generate Party Number profile option is set to No, enter the unique
customer number. If the option is set to Yes, a unique number will be assigned
to the customer when you save the form.
6. Enter an alternate name for the customer, if required. You can only enter this
field if the profile option AR:Customer Enter an Alternate Name, is set to Yes.
7. Enter the name of the customer.
8. Select the Status check box to specify the customer as an active customer. For
inactive customers, you cannot enter new transactions, but can apply and
process payments for existing transactions.
9. Enter the TaxpayerID information as an additional reference. This field is used
to query customer using Taxpayer ID.
10. Enter the unique tax registration number, also known as the VAT number.
11. Enter the customer address. Enter classification information, such as profile
class, primary sales person, tax code, and tax calculation in the information.

You can enter several types of information when creating a customer. These
include customer addresses, business purpose, contacts and contact roles,
customer relationships, and profile classes.
 Note When using the Multiple Organization support feature (multi-org),
you cannot enter a salesperson or a tax code at the time of
creating the customer. You can assign this information to the
customer site only after the customer is created. If you are not
using the multiple organizations feature, then you can assign a
salesperson and tax code at both the customer and site levels.

Entering Customer Address

For each customer, you can enter multiple addresses. You can also provide one or
more Business Purposes for each address. When an address is created, its status
is Active by default. When an address is inactive, you cannot enter new transactions
for that address but can continue to process existing transactions.

You can validate addresses using flexible address formats or the address validation
system option. The validation rules for address information are:
• The home country is defined in the Default Country field of the Systems
Options window. You can use this information for tax calculation, flexible bank
structures, flexible address formats, and taxpayer ID and tax registration
number validation.
• The Sales Tax Location Flexfield structure validates addresses within the home
country and calculates the sales tax based on the shipping address of the
customer. You must enter a Location Flexfield Structure in the System Options
window so that you can determine whether the Tax Method is Sales or VAT.
• If you are using a location-based tax method and you enter the value for your
home country in this field, the system requires you to enter a value for every
component of your Sales Tax Location Flexfield. If you have implemented the
Flexible Address Formats feature, then enter a value in the Country field that is
assigned to an address style.
Note You can specify how the system will respond, if an invalid address
is entered. The system can display an error message, a warning,
or perform no validation when an invalid address is entered.

Assigning Business Purpose

Customers may have multiple addresses. For each address, you can assign a
business purpose. Functions performed at a particular customer site are described
by the business purpose. Table below describes common business purposes:
Table : Business Purpose Types

Business Description
Purpose Type

Bill-to Send Invoice to this address. There can be only one primary
active Bill to site for a customer.
Table : Business Purpose Types

Business Description
Purpose Type

Ship-to Send goods or services to this address.

Statements Send customer statements to this address. There can be

only one active statement business purpose for each
customer.

Dunning Send dunning letter for a customer to this address. There

can be only one active dunning business purpose for each
customer.

Marketing Send marketing collateral on this address.

Drawee Send the bills receivable at this address.

You can deactivate a business purpose for an address if that particular site is not to
be used later. The information that you enter for a customer is stored using the
customer site. This information is used as default customer information in different
windows in the application. When accessing this information, the system uses a
hierarchy to determine the order in which the default values are selected for a
transaction entry. The order is:
• Ship-To address
• Bill-To address
• Information at the customer level

You can enter the business purpose for the selected address in the Usage field of
the customer form. Each business purpose chosen is active and non-primary by
default. You can set a business purpose as primary by selecting the Primary
checkbox. If Automatic Site Numbering in the System Options window is set to No,
then you must enter a number for this business purpose in the Location field. If you
do not enter a number, then the system automatically assigns a location number
when the data is saved. Location names are used as shortcuts to refer to a
customer address.

Entering Customer Contact Roles

The Oracle application enables you to enter, add, change, or deactivate information
for customer contact roles. A contact role enables you to assign a contact person to
a particular business purpose or function. For example, you may have a customer
address with a Ship-To and Bill-To business purpose. If there are two different
contact persons assigned to each address, then you can assign the Ship-To role to
one person and the Bill-To role to the other. When entering this information, you
can:
 • Enter any number of contacts as required for a customer.
• Enter the contact details, including last and first name, title, job, mail stop, and
reference.
• Assign a specific customer contact for a business purpose.
• Enter several telephone numbers for each contact. There can be only one
primary telephone number.
• Enter the telephone Type. The types of telephone numbers are:

○ General
○ Fax
○ Inbound Watts
○ Outbound Watts
○ Telex

The various the fields in the Contacts and Roles tabbed region of the Customers
and Customer Addresses windows are:
• Active: Indicates whether the contact information is active. You can choose
only the contact persons whose status is Active in the Contact fields of the
Sales Orders window.
• Description: Sets the role of the contact person, such as Bill-To, Ship-To,
Statements, or Marketing.
• Email: Specifies the e-mail address for the contact.
• Job: Displays the default job title for the contact person, when you select a
contact person. This field is available in the Customer Calls window.
• Mail Stop: Sets the mail address for the selected contact.
• Reference: Sets the reference information for the contact. This field is for
informational purpose only, but the value of this field must be unique for each
contact.

Creating Customer Relationships

You can define relationships among customers to control payment and commitment
applications. You can create relationships between any numbers of customers and
specify the relationship as either one-way or reciprocal.

In a one-way relationship, the company can apply receipts only to the invoice of the
customer for whom the receipts are generated. The invoice for the related customer
cannot be applied to the parent customer. In addition, a customer can only apply
invoices to commitments that it owns or to commitments of a parent customer to
which it is related. In reciprocal relationships, customers can pay each other's debit
items. They can also enter invoices against each other's commitments. For
example, you might have two customers who are business partners, but individually
conduct business with your company. In this case, you can create a relationship
between these two customers.

In the system option window, if you set the Allow Payment of Unrelated Invoices
option to Yes, then the relationship for each customer need not be defined. If you do
not want a relationship to be active, then clear the Active check box in the Customer
Relation Tab.

Customer Profile Class

The customer profiles class groups customers with similar creditworthiness,

business volumes, and payment cycles. A Profile class is defined from the
Customer Profile Class window, as shown below in screenshot. Every customer has
an associated profile class. Each class provides information, such as credit limits,
payment terms, invoicing, statement cycles, and discount information. You can also
define amount limits for finance charges, dunning, and statements for each currency
in which you do business.

The Customer Profile Class Window

You need to assign a profile class and address for each customer in the Customers
window. The customer profile class provides default values when entering customer
information. You can optionally customize these values for each customer or
address. The default values set by the profile class take precedence over the values
set when creating a customer.

Most of the fields in the Define Customer Profile Classes window are self-
explanatory. Some important fields in this window are:
• Account Status: Checks the status of this account. If required, you can define
the account status for a customer in the Receivable Lookups window by
selecting the lookup type, Account Status.
• Credit Limit: Sets the credit limit of the customer to whom this profile class is
assigned. If credit limit check is active and the outstanding credit balance for a
customer exceeds the limit, then all new orders for this customer are
automatically put on hold in Oracle Order Management.
• Credit Rating: Sets the credit rating for this customer. You can define additional
credit rating names in the Receivables Lookups window by selecting the lookup
type, Credit Rating for customers. For example, the default credit ratings for a
customer include, average and excellent.
• Currency: Sets the currency to define credit limits.
• Finance Charges Interest Rate (%): Sets the interest rate to be charged to
customers assigned to the profile class. Finance charges are calculated on
statements and dunning letters.
• Maximum Interest per Invoice: Sets the maximum interest to be charged from
the customers. This value overrides the value that you specify in the Finance
Charges Interest Rate field.
• Minimum Customer Balance for Finance Charges: Determines whether or not
the finance charges will be assessed when a customer submits dunning letters
or statements. If the customer balance of past due items in a particular
currency is less than the minimum amount specified in this field then the
finance charges are not assessed.
• Minimum Receipt Amount: Sets the minimum amount due from a customer.
The system will not generate automatic receipts in a particular currency that is
less than the minimum receipt amount. You can also define a minimum receipt
amount for a payment method. When creating automatic receipts, AR uses the
greater of the two minimum receipt amounts.
• Minimum Statement Amount: Sets the minimum outstanding balance for
Receivables to generate a statement for customers assigned to a particular
profile.
• Minimum Dunning Amount: Sets the minimum dunning for a customer. If a
customer has a past due amount that is greater than the minimum dunning
amount specified, then AR selects this customer for dunning.
• Minimum Dunning Invoice Amount: Customers with this profile option do not
receive dunning letters if the amount in this filed is greater than the balance of
their past due payments.
• Percent Collectable: Sets the percentage amount of the customer account
balances that you regularly collect for customers assigned to a particular
profile.
Important Assign a profile class to an address that already has a Bill-to
location defined.

Note You can also update specific information for a customer. This
information can differ from that provided for the assigned Profile
 Class. When you change the information for a certain customer
assigned to a particular profile, the changes affect only that
customer and not the other customers assigned to the same
profile.

When you modify an existing Profile class in the Customer Profile Classes window,
the system displays a pop-up window that lets you decide how to apply changes.
You can choose one of these options:
• Do Not Update Existing Profiles: Prevents update of existing customer profiles
with the new profile class values. When you choose this option, the system
assigns the new profile values to only the new customers assigned to this
profile class.
• Update All Profiles: Updates new profile class values for all the customers
assigned to the profile class.
• After the customer profiles are updated, AR generates the Update Customer
Profiles report that helps you track changes made to a profile.
• Update All Uncustomized Profiles: Updates customer profiles for only those
options that currently have the same original setting as the profile class. After
the customer profiles are updated, AR generates the Update Customer Profiles
report. The Exceptions section of this report mentions the customized profile
classes that were excluded from the update process but can be updated
manually.

For the AR module to function, you must enter the customer name, number, and
address in a profile class. If you do not specify this information or do not assign a
profile class, then the system assigns the profile class, Default, to each new
customer entered.

Setup for Entering Transactions

From the transaction window, you can enter invoices, debit memos, credit memos,
and commitments. You have to set up Receivables to enter transactions. To do this,
you need to define transaction types, accounting rules, and AutoAccounting.
Defining Transaction Types
Before entering a transaction, you need to define the transaction type with which
transactions will be associated in the transaction window. The transaction type
defines the accounting for the debit memos, credit memos, on-account credits,
chargebacks, commitments, and invoices. Screenshot below shows the Transaction
Types window where you define a transaction type:
 The Transaction Types Window

To define the transaction type:

1. Name the transaction type and choose the class. The classes are invoice,
chargeback, credit memo, debit memo, deposit, or guarantee.
2. Attach the payment terms to the transaction type.
3. Check the Open Receivables and post to GL option. These options determine
whether or not transaction entries update customers' balances and whether or
not Receivables posts these transactions to the general ledger.
4. Choose any one Transaction status from the options, Open, Closed, Pending,
or Void.
5. Check the Allow Freight box to enable freight to be entered for this transaction
type.
6. Determine the creation sign for the transaction.
7. Choose a Creation Sign from the options Positive Sign, Negative Sign, or Any
Sign. For transaction types of class Guarantee or Deposit, choose Positive
Sign. You cannot update this field after you enter transactions of a particular
type.
8. Enter the flexfield GL code combination for the receivable, revenue, unbilled
revenue, tax, freight, clearing, and unearned revenue accounts.

When defining the Transaction type:

• Define the transaction types in the order:

○ Credit memo transaction types.

○ Invoice, debit memo, and chargeback transaction types.
○ Commitment transaction types.
 • Enter a clearing account for invoice or debit memo transactions. Receivables
use the clearing account if you have enabled this feature for transaction
sources that are used for imported transactions.
• AR uses the Unearned Account field to determine the Unearned Revenue
account for invoices with the rule, Bill In Advance.
• AR does not require you to enter a revenue account for credit memo
transaction types if the profile option, Use Invoice Accounting for Credit
Memos, is set to Yes. If the option is set to No, you must enter a revenue
account.
• Freight account combinations must be defined. This field is skipped if the
transaction type class is deposit or guarantee. If the Allow Freight option is not
checked, you do not need to enter the Freight Account.
Defining AutoAccounting
You must define AutoAccounting before entering transactions in Receivables.
AutoAccounting specifies how AR determines the general ledger accounts for
transactions that have been either manually entered or imported using AutoInvoice.
AR creates default account codes for revenues, receivables, freights, taxes,
unearned revenues, unbilled receivables, finance charges, and AutoInvoice clearing
accounts using the information provided in this window. When you enter
transactions in AR, you can override the default general ledger accounts that
AutoAccounting creates. AutoAccounting controls the value assigned to each
segment. You can define AutoAccounting rules in the window shown -

The AutoAccounting Window

To define the AutoAccounting rules:

1. Open the AutoAccounting window.
 2. Enter the type of account to define or choose from the options Freight,
Receivable, Revenue, AutoInvoice Clearing, TaxUnbilled Receivable, or
Unearned Revenue.
3. For each segment, either enter the table name or constant value that you want
AR to use to retrieve transaction information. When you enter an Account
Type, Receivables displays all the segment names in the Accounting Flexfield
Structure. You can use different table names for different accounts using
Oracle Receivables. The table names are:
○ Salesreps: Select this option for AutoInvoice clearing, tax, or unearned
revenue accounts, if you want AR to use the revenue account
associated with this salesperson. If you choose this option for unbilled
receivable accounts, AR uses the receivable account associated with
this salesperson.
○ Transaction Types: Use the transaction types table to determine the
segment of revenue, freight, receivable, AutoInvoice clearing, tax,
unbilled receivable, and unearned revenue account.
○ Standard Lines: Use the standard memo line or inventory item on the
transaction to determine this segment of revenue, AutoInvoice clearing,
and freight, tax unbilled receivable, and unearned revenue account.
○ Taxes: Specify this option if you want to use tax codes when
determining tax account.
○ Bill-To Site: Enables you to use the Bill-to site of the transaction to
determine this segment of revenue, freight, receivable, AutoInvoice
clearings, tax, unbilled receivable, and unearned revenue accounts.
Defining Transaction Batch Sources
Batch sources control the standard transaction type assigned to a transaction and
determine whether or not AR automatically numbers the transaction and the
transaction batches. Active transaction batch sources appear as a list of values and
choices in the Transactions, Transactions Summary, and Credit Transactions
windows. Screenshot below shows the window where you define the transaction
batch sources:
 The Transaction Sources Window

To define a transaction source:

1. Name the batch source and choose the type of the batch source from the
following options:

○ Manual: Use manual batch sources with transactions that you enter
manually in the Transaction and Transactions Summary windows.
○ Imported: Use imported batch sources to import transactions into
Receivables using AutoInvoice.

2. If the batch source is a Manual source, and you want to automatically number
new batches created using this source, check the Automatic Batch Numbering
option, and enter a Last Number. For example, to start numbering your batches
with 100, enter 99 in the Last Number field. If you are defining an Imported
transaction batch source, Receivables automatically numbers the batch with
the batch source name, request ID.
3. For Imported transaction batch sources, define how AutoInvoice should handle
imported transactions that have Invalid Tax Rates. Choose Correct if you want
AutoInvoice to automatically update the tax rate and choose Reject if you want
AutoInvoice to reject the transaction.
4. Determine how you want AutoInvoice to handle imported transactions with
Invalid Lines by entering either Reject Invoice or Create Invoice.
5. Determine how you want AutoInvoice to handle imported transactions that
have lines in the Interface Lines table that are in a closed period. Enter Adjust
in the GL Date in a Closed Period field for AutoInvoice to automatically set the
GL date to the first GL date of the next open or future enterable period. Enter
Reject to reject these transactions.
6. Enter a Grouping Rule to use for a transaction line.
 7. Check the Create Clearing option. This option sets the revenue amount for
each transaction line. The revenue is equal to the selling price multiplied by the
quantity specified for that line.
8. In the Customer Information tabbed region, choose either Value or ID for each
option to indicate whether AutoInvoice validates customer information for this
batch source. Choose Value to import a record into the AutoInvoice tables
using its actual name, or choose ID to use its internal identifier.
9. In the Accounting Information tabbed region, choose ID, Value, or None to
indicate how AutoInvoice validates Invoice and Accounting Rule data for the
batch source. Choose either ID or Segment to indicate whether you want
AutoInvoice to validate the identifier or the flexfield segment for this batch
source.
10. Check the Derive Date option to derive the default rule start date and default
GL date from the ship date, rule start date, order date, and the default date that
you supply when submitting AutoInvoice.
11. In the Other Information tabbed region, specify the validations for AutoInvoice
data.
12. In the Sales Credits Data Validation tabbed region, specify validations for
salespersons, sales credit types, and sales credit.
Defining Accounting Rules
The accounting rules create revenue recognition schedules for invoices. You need
to define accounting rules depending upon the need of the organization where
Receivables is installed. Accounting rules determine the percentage of total revenue
to record in each accounting period. You can use accounting rules with transactions
that have been imported into AR and with invoices that have been created manually
in the Transaction windows. You can define multiple accounting rules. You can
assign a default accounting rule to the items in the Master Item window and to
Standard Memo Lines in the Standard Memo Lines window.

The invoicing rules and accounting rules are not applicable if the cash basis method
of accounting is used. There are two types of Accounting rule types in AR, Fixed
Duration and Variable Duration. Screenshot shows the window where you can
define Accounting rules:
 The Invoicing and Accounting Rules Window

To enter accounting rules:

1. Open the Invoicing and Accounting Rules window and enter a name for the
accounting rule.
2. Choose Accounting Fixed Duration or Accounting Variable Duration Accounting
rules. The fixed duration is entered to prorate revenue recognition evenly over
a predefined period of time. The variable duration specifies the number of
periods over which you want to recognize revenue for the invoices to which you
assign this rule.
3. Enter the periods for the accounting rule schedule.
4. Define the revenue recognition schedule for the accounting rule.
Setting up Document Numbering
To enter transaction information, you need to set the document numbering option.
This option generates document sequence numbers, which are unique numbers
assigned to transactions created in Receivables.

By assigning unique numbers to each transaction, you can ensure that no

transactions are lost. Document sequences also generate audit data. As a result,
even if a transaction document is deleted, it can be restored using audit records.

To number transactions, you can use either an automatic sequence or a manual

sequence set. Automatic sequences enable you to create an audit trail of unique,
sequential document numbers without manual data entry. Manual sequences let
you decide which document numbers to assign to transactions at the time of data
entry, while ensuring that the numbers are unique.

You can assign document numbers to all types of transactions, imported,

automatically generated, and manual. You can also assign a different sequence for
each transaction type, payment method, adjustment, and finance charge activity.
Document numbers can also be assigned for every transaction or for selected
categories of transactions.

You can assign document numbers at the time of:

• Entering commitments
• Entering credit memos
• Entering invoice adjustments
• Entering invoices
• Entering miscellaneous transactions
• Entering receipts
• Entering quick cash
• Creating reverse receipts

To ensure correct document sequencing:

1. Enable the Sequential Numbering Profile Option. You can set this option at the
application level. Valid values for this option are:
○ Not Used: Enables the cursor to skip the Document Number field when
you enter transactions. If you set the profile option to this value, you
cannot use the Automatic Receipts feature.
○ Always Used: Restricts you from entering a transaction if no sequence
exists for it. This option requires you to manually enter a document
number when entering transactions.
○ Partially Used: Allows you to enter a transaction even if no sequence
exists for it.
2. Set Document Number Generation Profile Option. The option helps determine
when to generate a document number for the transactions. You can choose to
generate a document number when the transaction is committed or when the
transaction is completed.
3. Choose whether the document number is the same as the transaction number.

When you create or import transactions, the transaction batch source determines
whether to automatically generate the batch and transaction numbers or to enter
these numbers manually. The transaction batch source also determines whether the
same number is used for both the document and the transaction number.

To ensure that the document number and transaction numbers are the same for the
transactions of a batch source:
1. Open the Transaction Sources window.
2. Enter or query the transaction source from this window.
3. Mark the Copy Document Number to Transaction Number check box.
4. Save the data.
 5. In the Document Sequences window, enter the name, type, and initial value for
the number sequence.
6. Assign a sequence to one or more combinations of Application, Document
Category, and Range of Transaction Dates. When you define a new payment
method, transaction type, a Receivables Activity of type Adjustment or Finance
Charge, then Receivables automatically creates a corresponding document
category with the same name.
7. If the Oracle General Ledger module is installed, and you have sequential
numbering enabled for this application, then you can define sequences,
categories, and assignments for the journal entry categories.
Defining Receivables Activities
Define Receivables activities to provide default accounting information for miscellaneous cash,
discounts, finance charges, and adjustments. Activities that are defined in this window appear as
lists of values in various Receivables windows, such as the bank, adjustment, and system options
windows. You can define multiple activities.Screenshot shows the window, where you can define a
Receivables activity:

The Receivables Activities Window

Note
For Bank Error type activities, you cannot implement tax accounting because
there is no business need to calculate tax on these activities. After you define an
activity, you cannot change its type. In addition, you cannot update the GL
account for an existing activity if you have assigned the activity to a transaction.

To define the receivables activity:

1. Open the Receivables Activities window and enter a name and description for this activity.
2. Choose the type of activity. An activity type determines whether it uses a distribution set or GL
account. The types of activities are:
○ Adjustment: Use these activities in the Adjustments window. At least one activity of this
type must be created.
 ○ Bank Error: Use these activities in the Receipts window. This activity is used when you
enter miscellaneous transactions.
○ Earned Discount: Use these activities in the Adjustments and the Remittance Bank
windows. These activities adjust a transaction if a payment is received within the
discount period.
○ Finance Charge: Use these activities in the Customers and System Options windows.
A finance charge activity is defined if you include finance charges on your statements
or dunning letters.
○ Miscellaneous Cash: Use these activities in the Receipts window when entering
miscellaneous transactions. You must define at least one activity of this type.
○ Unearned Discount: Use these activities in the Adjustments and the Remittance Banks
windows. These activities adjust a transaction if payment is received after the discount
period.
3. Specify how AR should derive the accounts for the expense or revenue generated by this
activity by determining a GL account source. Choose a GL account source from:
○ Activity GL Account: Allocates the expense or revenue to the general ledger account
that you specify for this AR Activity.
○ Distribution Set: Allocates the expense or revenue to the distribution set that you have
specified for this AR Activity. Choose this option only if the activity type is
Miscellaneous Cash.
○ Revenue on Invoice: Allocates the expense or revenue net of any tax to the revenue
accounts specified on the invoice.
4. Specify a tax code source from:
○ Activity: Allocates the tax amount to the Asset or Liability tax accounts specified by the
Receivables Activity.
○ Invoice: Distributes the tax amount among the tax accounts specified by the tax code
on the invoice.
○ None: Allocates the entire tax amount according to the GL Account Source that you
specified. Select this option, if you do not want to separately account for tax.
5. Choose the Tax Recoverable radio button if the tax is deductible, otherwise, choose Non-
Recoverable.
6. Enter an Activity GL Account.

Entering Transaction Information

To make a record of the business with the customers, you need to enter information about
transactions from the Enter Transaction window. Entering transactions in Receivable enables you to
raise an invoice, debit memo, credit memo, deposit, or guarantee. Screenshot shows the window
where you enter the transaction information:
 The Transaction Window

To enter invoices or debit memos:

1. Open the Transactions window.
2. If the batch source does not specify the Automatic Invoice Numbering profile option, then you
need to enter a transaction number. If the automatic batch source is specified, AR
automatically assigns a number when you save the transaction. A transaction number is unique
within this batch and it is not possible to modify this number after a transaction is saved.
3. Enter the date and currency of this transaction. The default date is the batch date. If there is no
batch information, then the default date is the current date. The default currency is the currency
entered at the batch level. You can change the currency to any currency defined in the system.
4. Select a transaction source type with a class, either Invoice or Debit Memo.
5. If the transaction batch source has the Post to GL option set to Yes, then enter the GL Date for
this transaction.
6. Enter the customer Bill-To, Name, and Location for the transaction, in the respective fields.
7. Enter the payment terms for the transaction. The hierarchy used by Receivables to determine
the default payment terms is:
○ Customer Bill-To site level
○ Customer address level
○ Customer level
○ Transaction Type
8. If manual sequence numbering is used, then open the More section of this window and enter a
unique Document Number.
9. Open the Remit To region from this window and enter the Remit To Address for this
transaction.
10. To enter the goods or services to bill this customer, choose Line Items, and enter the Item,
Quantity, and Unit Price for each item. AR automatically calculates the total amount for each
item.
11. If you have entered an inventory item, enter a Warehouse Name to indicate the ship-from
location for this item. This field is optional.
 12. If you want to enter Freight information for an invoice line, select the line, then choose Freight
and complete the information.
13. Save the data. If you are ready to complete this transaction, press the complete tab.
Entering Commitments
A commitment may be an oral or written commitment for certain goods or services for a prevailing
rate. In AR, you can create two types of commitments, Deposits and Guarantee. You need to follow
the same steps to enter commitments as those used to create invoices. The only difference is that
you need to specify the transaction type as either Deposit or Guarantee.

Deposits
Deposits are created to record any advance payment made by customer for goods or services that
will be delivered in the future. The Invoice is raised for the goods or services and then the deposit
invoice is adjusted against it. The steps to create a Deposit Invoice are similar to that of creating a
regular Invoice. To create a deposit invoice, specify the transaction class, Deposit, in the set up.

After a Deposit invoice is entered and payment is received against the deposit, several journals are
created for the transaction. These are Customers Deposit Account Debit, Revenue Account Credit,
Bank Account Debit, and Customer Deposit Account Credit.

When an order is placed and an Invoice is raised for the goods and services, against the deposit
then the customer's receivable account is debited and the revenue account is credited. The
unearned revenue account is also debited and the customer invoice account is credited.

Guarantees
A guarantee is created to record a contractual agreement with a customer to conduct business over
a specified period. The invoice for the guarantee is raised and it is adjusted against the invoice
raised for the goods or services. Creating an Invoice for guarantee is similar to creating a regular
Invoice. Commitments do not include tax or freight charges. Use the transaction class, Guarantee, to
enter Invoices for a guarantee. In the Commitment tabbed region, you can enter a range of effective
dates for this commitment. If you do not assign an end date, Receivables lets you enter invoices and
credit memos against this commitment until the amount due becomes zero.

After the full cycle of Guarantees is complete, a set of accounting entries are generated in
receivables, when:
• The Invoice for the Guarantee is raised, the unbilled receivable account is debited, and the
unearned revenue account is credited.
• The Invoice is raised for goods or services for the guarantee. The customer account is debited
and the revenue account is credited.
• Money is received against the goods or services. The bank account is debited and the
customer account is credited.
Entering Invoices with Rules
You can create invoices that span over several accounting periods. The accounting rule determines
the accounting period in which the revenue distributions for the invoice or the Invoice lines are
stored. The invoicing rule determines the accounting period in which the receivable amount is stored.
You can either manually assign invoicing and accounting rules to transactions you create or import
these rules into Receivables using the AutoInvoice utility.

You can also use the accounting rules to determine revenue recognition schedules. The duration
over a predefined number of periods and variable duration lets you define the number of periods
during invoice entry.
The invoicing rules determine when to recognize the receivables for invoices that span over multiple
accounting periods. There are two types of invoicing rules, bills in advance and bills in arrears.

Bills in Advance
The bills in advance rule is used to recognize the receivables at the time when the bill is raised. It is
an invoice created before the revenue is recognized.

For example, if your company provides services and has to enter into a contract for the next three
months, then you should recognize revenues in that particular month even though you may have
received the payment when you started the service. The invoice raised is a bill in advance and
revenue is recognized in the months ahead. For example, in April you raise an invoice of $1,500 for
a three-month contract. The Accounting rule is three months fixed duration. The entries passed for
this invoice are:
• In April, when the invoice is raised, the receivable account debit is $1,500 and the unearned
revenue credit is $1,500. The unearned revenue debit is $500 and the revenue credit is $500.
• In May, when the invoice is raised, the unearned revenue debit is $500 and the revenue credit
is $500.
• In June, when the invoice is raised, the unearned revenue debit is $500 and the revenue credit
is $500.

Bills in Arrears
You use the bill in arrears rule if you want to record the receivables at the end of the revenue
recognition schedule.

For example, for the invoice of $1,500 raised for a three-month contract, the accounting entries
passed are:
• In April, when the invoice is raised, the unbilled receivable debit is $500 and the revenue credit
is $500.
• In May, when the invoice is raised, the unbilled receivable debit is $500 and the revenue credit
is $500.
• In June, when the invoice is raised, the unbilled receivable debit is $500, the revenue credit is
$500, the receivable debit is $1,500, and the unbilled receivable is $1,500.

You need to run the revenue recognition program to generate the revenue distribution.
Note
If the GL date for a transaction is in a period that has a status of either Closed or
Close Pending, then Revenue Recognition changes the revenue GL date to the
first subsequent period that has a status of Open, Future, or Not Open.

Crediting Transactions
Credit memos are created to reduce the balance due for a transaction. From the Credit Transactions
window, you can enter, update, and review credit memos against specific invoices, debit memos, or
commitments. When you credit a transaction, the appropriate accounting entries are created. You
can credit an entire invoice or specific invoice lines. Freight can also be credited for an entire invoice
or only for specific invoice lines.

You can also delete an incomplete credit memo if the Allow Invoice Deletion option is set to Yes in
the system option window. Before you create a credit memo for the transaction, the transaction must
be complete. Screenshot shows the window where you create crediting transactions:
 The Credit Transaction Window

To create a credit memo against a transaction:

1. In the Transactions Summary or Credit Transactions windows, query the transaction to credit. If
you chose Credit Transactions from the Main menu, enter the number of the transaction to
credit in the Find Transactions window.
2. Enter the batch source for the credit memo. The default is the batch source of the transaction
that is being credited.
3. Enter the date, which is printed on the credit memo. If the batch date is earlier than the date of
the credited transaction, then the default date is the current date. If the date of the invoice is
later than the credit memo date, then the default date is the invoice date.
4. If the batch source does not use the automatic transaction numbering option, then enter a
credit memo number. If you do not enter a number, AR automatically assigns a number when
you save the transaction.
5. Enter a transaction type for the credit memo. The default is the transaction type assigned to the
invoice. You can choose a transaction type with a class of credit memo.
6. Choose the rules method if you are crediting a transaction that uses invoicing and accounting
rules.
7. Enter the currency for the credit memo. If this credit memo is part of a batch, then the default
currency for this memo is the one assigned to the batch. You need to enter exchange rates if a
currency other than the functional currency is entered.
8. Enter a unique document number for this credit memo, if the automatic sequence numbering is
not used. If automatic sequence numbering is used, a number is automatically assigned when
the transaction is completed.
9. Enter the percentage or amount of line, tax, or freight charges to credit for only the part of the
balance due. The balance due for each type of charge that is credited is created in the
interface table and the sales revenue and non-revenue credit assigned to your salespersons
are reversed.
10. Save the data and complete the transaction.

Setup for Entering Receipts

For creating receipts in receivables you need to record information about banks, receipt batch
sources, and receipt classes.
Defining Banks
Enter the bank information for bank branches with which you do business. Each bank branch can
have several bank accounts and each bank account defined can be associated with the payables
payment documents and receivables payment methods. If you are using Oracle Cash Management,
define a Bank Errors Account, a Bank Charges Account, and a Cash Clearing Account for each bank
account you plan to reconciliate. Screenshot shows the Banks window where you enter information
on the bank:

The Banks Window

To define a bank and bank branches:

1. In the Banks window, enter the basic bank information, such as the bank name, branch name,
bank number, branch number, and address, and select bank as the Institution.
2. Enter the Electronic Funds Transfer (EFT) number if required.
3. Enter the name and other information about your bank contacts in the Contact region and save
the data.
 4. Click the Bank Account button. The Bank Accounts window appears, as shown below-

The Bank Accounts Window

5. Enter the Bank Account Branch and Bank Account Number. The bank account numbers must
be unique within a bank branch.
6. Select Internal Account Use.
7. In the GL Accounts window, enter a cash account, clearing account, bank charges, bank
errors, confirmed receipts, and the future dated payments with a GL code combination.
8. In the More Receivables options, enter receipt and discount GL account information. You can
enter contact information in the Account Contact region.
9. Save the data.
Defining Receipt Batch Sources
The receipt batch source provides default values for the receipt class, payment method, and
remittance bank account fields for the receipts added to a receipt batch. Screenshot below shows
the Receipt Sources window:
 The Receipt Sources Window

To define receipt sources:

1. In the Receipt Sources window, enter a unique name and description for this source.
2. Enter a receipt class in the appropriate text box. The receipt class determines the processing
steps for receipts you created using this batch source.
3. Enter a payment method. The accounting for automatic and manual receipts is determined by
the payment method.
4. Enter a bank account to associate a remittance bank. You remit receipts created using the
receipt batch source to the remittance bank.
5. Select either the manual or automatic batch numbering option. If automatic batch numbering is
selected, then you need to enter the last number you want to use when numbering your receipt
batches.
6. Enter the range of dates during which this receipt batch source will be active.
7. Save the data and close the window.
Defining Receipt Classes
Use receipt classes to store receipt information. You can specify the payment method in the receipt
class window. Screenshot shows the Receipt Classes window:
 The Receipt Classes Window

To define the receipt class:

1. Open the Receipt Classes window and enter a name for the receipt class.
2. Select a Creation Method from this window. The automatic creation method creates receipts
using the Automatic Receipt program. The manual creation method enables you to manually
enter information in the Receipts or QuickCash windows, or import information into
Receivables using AutoLockbox.
3. Check the Require Confirmation option for this receipt class to be confirmed before these
receipts can be remitted.
4. Choose a remittance method according to the type of receipt class you want. The options are
Standard, Factoring, Standard and Factoring, and No Remittance
5. Check the Bill of Exchange box if creating a bill of exchange receipt class. You cannot change
this attribute after you assign a payment method.
6. Choose one of these Clearance Methods:
○ Directly: Use this method if you do not expect the receipts to be remitted to the bank
and subsequently cleared. These receipts will be assumed to be cleared at the time of
receipt entry and will not require further processing.
○ By Automatic Clearing: Use this method to clear receipts using the Automatic Clearing
program. Receipts using this method can also be cleared in Oracle Cash Management.

○ By Matching: Use this method if you want to clear the receipts manually in Oracle Cash
Management.
7. Enter the payment method for this receipt class.
8. Save the data and click the bank account button to assign remittance bank information. When
you click the bank account button, the Remittance Banks window is displayed, as shown -
 The Remittance Banks Window

In the Remittance Banks window:

1. Enter information related to the remittance bank, such as the bank name, branch, account
name, and a range of effective dates.
2. Enter a minimum receipt amount if the creation method of the receipt class is automatic.
3. Clear the Primary check box, if you do not want this account to be the primary remittance bank
account in this currency for the payment method.
4. Enter GL Account information for the remittance bank. When you select a receipt batch source
to enter receipts, AR automatically uses the cash, unapplied, unidentified, on-account, or
earned and unearned discount account information assigned to this payment method.
5. Enter the formatting program information only if the creation method of the associated receipt
class is automatic.
6. Save the data and close the window.

Entering Receipts
You use the Receipts window to enter receipt transactions. There are two types of receipts:
• Cash receipts: Receipts, such as cash or cheques received from customers for goods or
services.
• Miscellaneous transactions: Receipts earned from investments, interest, refunds, and stock
sales other than regular sales.

You apply receipts to invoices, debit memos, deposits, guarantees, on-account credits, and
chargebacks. You can apply receipts either fully or partially to a single debit item or to multiple debit
items from the Receipts window, as shown -
 The Receipts Window

Receipts can have the status:

• Approved: Receipt has been approved for automatic receipt creation.
• Confirmed: Manually entered receipts that require remittance.
• Cleared: Payment is transferred to the bank account and the bank statement has been
reconciled.
• Reversed: Customer has stopped payment on a receipt.

To enter receipts:
1. Open the Receipts window and choose a receipt type.
2. Enter the receipt number, currency, receipt amount, GL date, and receipt date.
3. Enter a payment method. The payment method determines the accounting and remittance
bank accounts for this receipt.
4. Enter a unique document number if you are using manual document numbering. If you are
using automatic document numbering, a unique number is assigned automatically.
5. Enter the transaction number of the customer for the receipt. The name customer associated
with this transaction appears in the Receipts window.
6. If you have not entered the transaction, apply the receipt number by pressing the Application
button and then choose the transaction.
7. From the remittance tabbed region enter the receipt deposit date. This value is optional.
8. The default remittance bank account is displayed from the payment method you enter. Accept
this value or enter any bank account assigned to the payment method if the bank account is in
the same currency as that of the receipt.
9. Save the data.
Manually Applying Receipts
If the receipt is not applied to the respective debit item in the Enter Receipt window, then you need to
use the Applications window to apply the receipts. You can apply all receipts, a part of the receipt, or
on account credit to a single debit item or to several debit items, as shown -
 The Applications Window

To manually apply receipts:

1. In the Receipts window, click Application Button to apply the receipts.
2. Enter the name or number of the customer if the receipt is unidentified.
3. Select the transaction to apply this receipt from the list of values. AR enters the amount applied
for this receipt and updates the unapplied amount of the receipt and the balance due for this
transaction.
4. Enter On Account in the Transaction Number field to place an amount on account.
5. Save the data and Receivables will update the customer's account balances.

Remittances
You need to perform the remittance process to initiate receipts to the bank from the bank account of
the customer. You have to create, approve, and format remittances. You can also combine these
tasks into a single task. Screenshot shows the Remittance window, where you perform the
remittance process:
 The Remittance Window

You can create remittance batches to automatically select receipts for remittance to the customer's
bank and to initiate the transfer of funds. You can either create one remittance batch for every
remittance bank account or choose a clearing institution to get the receipts cleared. If you choose to
approve and format your batch when you create it, then AR initiates an additional process that
creates the formatted batch information.

To create a remittance batch:

1. Open the Remittances window and enter the currency for this batch.
2. Enter the batch and GL dates. The default batch date is the current date and the GL date must
be within an open accounting period.
3. Choose a remittance method. The standard method remits the batch of receipts on the maturity
date. The factoring method lets you borrow money against the receipts before the maturity
date.
4. Enter or select from the list the information related to the receipt class, payment method, and
remittance bank for this batch. The default remittance bank is generally the primary remittance
bank account associated with the payment method.
5. Select Auto Create to create this remittance batch automatically.
6. Enter the selection criteria to create this remittance batch. AR selects all confirmed automatic
receipts and manual receipts that match the criteria.
7. Check the Approve and Format options to approve and format this remittance batch.
8. Click OK, and then select Yes from the Remittance window to acknowledge the message that
is displayed. A unique Request ID number is assigned for your concurrent request.
Manually Creating a Remittance Batch
To create a remittance batch manually:
1. Choose Manual Create from the main menu and specify the receipts to include in this batch.
2. Using selection criteria, specify the transactions that will be displayed by AR.
3. Enter a range of payment methods and maturity dates to display or choose from:
○ Query Batch Only: Displays receipts that are associated with this batch.
○ Ignore Override: Displays all receipts matching the selection criteria.
 ○ Select All: Marks transactions that AR displays to be included in this remittance batch.
4. Query the receipts.
5. To add the receipts to the batch, check the box next to each receipt.
6. Save the entered data to create the batch. A unique Request ID number is assigned for the
concurrent request. Using this Request ID, check the status of the remittance process in the
View Concurrent Requests window.
Note After you submit the request, AR creates the Automatic Receipts and
Remittances Execution report. The report lists the number and amount of
remittances in this batch.