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Accounts Payable and Accounts Receivable Netting

ap2 ar3 financial1 create new tag

First Release Version: 12.0

Accounts Payable and Accounts Receivable Netting Introduction

Out of the three netting solutions given in 11i, 1. Single Third-Party in Oracle Public Sector Financials International, 2. Contra Charging in Oracle Financials for Europe and 3. Receivables and Payables Netting in Oracle U.S. Federal Financials, the 2nd and 3rd solutions have been upgraded to a better AP/AR Netting in 12i.

When you have a supplier to whom you have to pay and the same supplier is also a customer from whom you are getting paid, it is advisable that you net the amounts and pay the final transaction only. This will reduce the number of transactions in the system.

For example, if you have a Supplier ABC to whom you will have to pay an invoice of $1000 and the same ABC is also your Customer from whom you have to get an amount of $400 then the system nets both these amounts and finally you have to pay only $600 to the Supplier ABC.

This process has become easy and streamlined because now all the suppliers and customers are trading partners in TCA.

-- SudhirKandagatla - 08 Jan 2009

Process

The process of Netting comprises of two important steps

• Creating Netting Agreement
• Netting batch Process.

Agreements

Netting Agreement is created to be used in the Netting Batch process. The following screen shot shows the first step of creating a "Netting Agreement". The important fields on this screen are described below.

<screen shot 1 has to be uploaded>

• Operating Unit is defaulted from the responsibility that you are using to create this Netting agreement
• Start Date is defaulted as the system date on which you are creating this netting batch
• Trading partner approval Required has to be checked if the netting process needs the approval from the trading partner.
• Netting Bank account is the account from which the funds would be transferred upon netting. This bank account should be created for netting to be used here.
• Select Only Past Due Receivables Transactions gives option to choose only the AR transactions that are due by the number of given days in the Days Past Due Field.
• Netting Order Rule, Netting Balance Rule and Netting Currency Rule should be chosen appropriately and the options are self explanatory.
• Invoice type gives the list of all the Invoice types in Account Payables and you can add as many as they are
• Transaction Type gives the list of all the Transaction types in Account Receivables.

<Screen shot 2 has to be uploaded>

In the second Step, give the list of all the suppliers and customers whom you wish to Net.

<Screen shot 3 has to be uploaded>

In the final step, review the setups you have done and confirm by clicking "Finish".

Batching

The important fields in the netting batch window are described below.

<Screen shot 4 has to be uploaded>

• Batch Name should be given in order to identify this batch in future. It is recommended to use a standard naming convention.
• Netting Agreement field is to be filled if you opt to choose any particular netting agreement. If this field is left blank then all the netting batches would be picked up by the process
• Transaction due date is the date on which the transactions are due.
• Settlement Date is the date on which the Netting Occurs
• GL Date is the date that appears in General Ledger. The Date that you enter here supersedes the GL date on the transactions
• Response Date is the date on which a response from the trading partner is required if "Trading Partner Approval is Required" check box is checked.
• Exchange Rate Type to be used can be Corporate, Spot or User.
• Submit Batch without review gives option to review the batch after it is built and before netting occurs.

Comments

Links

• Related: Accounts Receivable, AP and AR Netting, Auto Lockbox, Auto Invoice, Bill Presentment, Bill Receivable, Deduction Management, Electronic Payment, Invoice Transactions, Oracle Payments, Receivable Workbenches, Receivable Suppliers, Subledger Accounting, Trading Community, XML Receivable Transactions

This Topic Is Referenced By These Topics:
Related Links: AccountsPayable, AccountsReceivable, AdvancedCollections, APandARNetting, ARSetupSteps, AutoInvoice, AutoLockbox, BillPresentment, BillReceivable, CreditManagement, DeductionManagement, ElectronicPayment, InvoiceTransactions, OracleiReceivables, OraclePayments, OtherPayableTopics, PayableHolds, ReceivableSuppliers, ReceivableWorkbenches, TradingCommunity, WebStatistics, XMLReceivableTransactions

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Collaborating Authors and Reviewers: BillDaley - 21 Mar 2007